Barge shortage plagues US spot naphtha market

01 June 2006 23:48  [Source: ICIS news]

HOUSTON (ICIS news)--A barge shortage has continued to affect the US naphtha market as naphtha supply partners seeking to do spot business were being forced into long-term contract deals to ensure barge availability, sources said on Thursday.

Outdated and defunct equipment has contributed to the barge shortage, sources said, which in turn has affected naphtha market logistics since last year.

Another factor in reduced barge availability was a slowdown in the production of new barges as manufacturers shifted to double-hull barges from single-hull barges.

As a result of the shortage, naphtha suppliers have found that renting barges for spot deals has taken longer than usual, sources said. Naphtha suppliers were having an easier time using barges already contracted out from barge companies for long-term deals, said a market source.

The logistic problem for spot naphtha deals was not new, said one trader, but combined with the volatility in the market, naphtha buyers were less apt to buy as much product for spot deals.

Most leading oil producers in the US, including Shell, BP, Exxon, ConocoPhilips and Valeron, market naphtha, which is produced when creating gasoline from crude oil.

Naphtha N+A prices have ranged from 175-198 cents/gallon during April and May.

By: Leslie Contreras
+1 713 525 2653

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