Wide naphtha/propane price spread makes propane attractive as petrochem feedstock in NWE

26-Aug-13

A wide price spread between naphtha and cheaper propane is making propane an attractive petrochemicals feedstock in Northwest Europe, as per Platts. When heating demand is low during the summer large quantities of North Sea propane are used by the petrochem sector as an alternative feedstock to naphtha with the delivered propane price at a discount to the delivered price of naphtha. In addition to the North Sea availability going into petchroem sector, over 200,000 mt of propane imports are expected to arrive in Northwest Europe during August, most of which should be absorbed into the petrochemicals sector. Based on Platts data this CIF propane/CIF naphtha price spread was only US$60/mt at the beginning of this month, but then widened out as propane weakened to just over US$100/mt before reaching a last published level Wednesday of US$95/mt. Industry sources said that this wide spread between the two feedstocks would encourage the petchems industry in Northwest Europe to continue cracking significant volumes of propane. At minus US$95/mt crackers will crack full blast on propane," one trader said. Dow Chemicals, BASF, Borealis and Sabic have all been regular importers of propane over this summer to use as feedstock.