The CIF Northwest Europe naphtha market is currently steeply backwardated on October dates as heavy refinery turnarounds are expected to take out around 300,000 mt of total European naphtha supply, as per Platts. At the European close Monday, the October-November spread was assessed at US$19.25/mt, broadly unchanged from Friday, while the September-October spread was assessed at US$13.25/mt, down from Friday's US$16/mt, Platts data shows.
Unlike gasoline, the European naphtha market structure has not reacted significantly to the start of the refinery maintenance season in September. The refinery maintenance schedule is lighter in September than October. In October, a reduction of 300,000 mt is expected in total European supply, mainly from the UK and Russia.
UK's Stanlow and Pembroke refineries are due for maintenance in October and each produce a total of 50,000 mt naphtha on a monthly basis. UK's Grangemouth refinery, with capacity to produce 50,000 mt/month, is due for maintenance for two weeks in September. Since UK's naphtha production is mainly consumed locally, so the European market would only be significantly impacted if the UK refineries began importing, a fourth trading source said.
Meanwhile, turnarounds at petrochemical steam crackers could offset the impact of lower naphtha supply in October. Since naphtha demand is poor, despite the refinery turnarounds, the naphtha market should still be long in October.
Four steam crackers combining 2.67 mln mt of ethylene capacity are in maintenance from August-October: Total Petrochemicals and Ineos' Naphthachimie steam cracker in Lavera, France; LyondellBasell's Wesseling cracker in Germany; Borealis' Porvoo steam cracker in Helsinki, Finland, and the Shell and ExxonMobil jointly owned ethane cracker at Mossmoran in Scotland, according to petrochemical sources.