Buyers in Asia's petrochemical sector are likely to start taking up liquefied petroleum gas again in June due to a sharp fall in prices for the fuel, after shunning LPG as a feedstock for several months in favour of naphtha, as per Reuters. Some 200,000 tons of naphtha could be replaced in June by LPG, traders estimated, and this could quicken the drop in naphtha prices as supplies balloon.
"The current price spread between naphtha and LPG is about US$50-60/ton, making it quite workable to do a switch," said a Singapore-based trader. For substitution to take place, LPG prices have to be at least US$50/ton lower than naphtha. The expected LPG volumes would be only about half the record quantities used in June a year ago. But they would be up significantly from negligible usage in January through May this year due to an unexpected cold snap in Europe and North America that kept LPG prices high, the sources said. Asia's petrochemical units are able to replace up to 15 percent of naphtha with LPG to produce products such as ethylene and propylene, which are used mainly for making plastics.
Naphtha sellers, who until recently were cashing in on strong spot prices, could be hard hit. The sudden LPG influx is coming at a time when more European naphtha cargoes are streaming to Asia and as cracker maintenance is set to pull down Asian naphtha demand. Additionally, Abu Dhabi National Oil Co will raise its naphtha exports as soon as it ramps up its expanded Ruwais refinery to about 90% in June.
08-May-15 
{{comment.DateTimeStampDisplay}}
{{comment.Comments}}