Slim demand, abundant supply leads to fall of European naphtha crackers

06-Jun-05

High paraffinic naphtha, with minimum paraffin content of 70-85% attracts a premium of about $10/mt over standard open spec material, which only has paraffin content of about 65%. It also produces a higher proportion of ethylene and propylene, but with European margins for these two products showing downward trend in the recent weeks, naphtha cargoes are not attracting much interest. Sentiment in the Northwest European naphtha market turned increasingly bearish as petrochemical users showed little interest in buying cargoes being offered by the producers of Middle East. The decline in the crack spread came amid reports of large number of cargoes of high paraffinic naphtha being offered from the Red Sea and Persian Gulf. Another reason for this was that the cargo size on offer was probably too big for many end-users to take up.