Dow restructure to add pressure to Europe naphtha

08 December 2008 15:56  [Source: ICIS news]

LONDON (ICIS news)--Dow Chemical’s announcement that 20 plants will be closed in high-cost locations will pile further pressure on Europe naphtha’s current supply saturation, traders said on Monday.

“I think a number of closures will be in America. This will undoubtedly make it much harder to work arbitrage opportunities to the US,” said one source.

 “At the same time, we have already had very limited petrochemical interest, with currently only relatively small amounts of naphtha being taken by gasoline blenders,” the source said.

Although the European spot naphtha market had pulled itself up from the demand crisis in early-November, conditions have again become quiet as the year-end period approaches.

The crack spread to crude oil barrels, a key indicator of demand for the feedstock, fell as low as -$24.85/bbl (-€19.63) on 3 November, which was the lowest on record.

This has since come down to -$15.70/bbl on Monday, a significant improvement but still more than a dollar less than the summer’s record low of -$14.15/bbl.

“Not a lot has been happening. Not much business gets done in the run-up to Christmas anyway, but obviously there are more reasons to be quiet this year,” said another source.

It was reported last week that there were 127,000 tonnes of naphtha held in independent storage in the Amsterdam-Rotterdam-Antwerp hub, compared with only 45,000 tonnes at the same time in 2007.

($1 = €0.79)

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By: Alex Davis
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