Open-spec naphtha heads for the US Gulf

27 September 2007 14:42  [Source: ICIS news]

LONDON (ICIS news)--Open-spec naphtha from Europe, the  Mediterranean and Arabian Gulf had moved into the US Gulf, European naphtha traders said on Thursday. 

 

A good amount of material was fixed to the US Gulf during the past 10 days, a Norwegian based naphtha trader said.

 

The arbitrage window partly drove the record high trade at $720/tonne (€508/tonne) CIF (cost, insurance & freight) NWE (northwest Europe) for a 12,500 tonne cargo on 21 September.

 

The European and Mediterranean arbitrage window to the US Gulf also was opening and closing on short notice but the Arabian Gulf to US window remained open.

 

In addition to this, one trader said demand from the petrochemical sector was moderate partly due to delayed cracker restarts in Europe.

 

BPRP’s Gelsenkirchen No 3 cracker in Germany was facing a delayed re-start from planned expansion work but this was not confirmed at source.

 

ExxonMobil/Shell’s 820,000 tonne/year cracker in Mossmorran, UK, went down on 22 August for planned maintenance.

 

Restart was due on 20 September but was expected to be delayed slightly.

 

BASF’s cracker in Antwerp, Belgium was expected to be back on-line from early October.

 

This was expected to raise domestic demand for naphtha.

 

Market sources agreed that demand for naphtha was likely to remain strong for the medium term amid stronger petrochemical support.

 

Liquefied petroleum gas (LPG) was deemed to be too expensive relative to naphtha and likely to remain uneconomical as a petrochemical feedstock as it would be headed for the heating pool.

 

The gasoline sector had to some extent withdrawn some support for the naphtha market as the US gasoline market, although remaining short on stock, was in a better position.

 

The EU to US gasoline arbitrage window, which had been open since mid-September was deemed marginal according to gasoline traders.

 

European benchmark 10ppm gasoline barges eased as a result of the Energy Information Administration (EIA) reported a 600,000 bbl increase in US gasoline stock.

 

However, winter spec 10ppm barges climbed and trades were in the range $704-706/tonne FOB (free on board) AR (Amsterdam, Rotterdam), which suggested the arbitrage window was marginal to break-even.

 

($1 = €0.71)

By: Kawai Wong
+44 20 8652 3214

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