Naphtha prices jump amid tight supply and strong global demand

24 November 2010 19:57  [Source: ICIS news]

HOUSTON (ICIS)--US Gulf naphtha prices skyrocketed around 15% this autumn because of tight local supply and strong global demand, market sources said Wednesday.

Heavy naphtha recently reached $2.1075–$2.1175/gal, a premium of 7 cents/gal over the price at the US Gulf Colonial Pipeline.

In early September, heavy naphtha was at a discount of 7 cents/gal under the Colonial Pipeline spot price benchmark of $1.8325–$1.8425/gal. At the beginning of November, it was at a premium of 2 cents/gal.

Some refiners have begun to restart their facilities following turnarounds, yet others have had prolonged outages or had planned turnarounds during the fourth quarter. ExxonMobil had two large turnarounds at its Texas refineries in Beaumont and Baytown. No restarts have been confirmed.

ConocoPhillips completed work in October on a fluid catalytic cracker that produces gasoline it its Alliance refinery in Louisiana, and began work in November on an alkylation unit. 

In late October, Flint Hills shut down two diesel hydrotreaters, a crude unit, a hydrocracker and sulpholane units in its Corpus Christi, Texas, refinery with no confirmation of any process restarts.

Motiva’s refinery in Port Arthur, Texas, had a snag with a fluid catalytic cracker in mid-November.

Traders on the US Gulf said Valero has been the largest supplier of naphtha.

US Gulf product has been exported to Hovensa’s St Croix refinery in the Virgin Islands, to refineries in Mexico and, according to a broker, to Asia as well.

One trader said refineries in China were gearing up to optimise diesel production for electric generation instead of using coal. This resulted in less production of naptha, which is used by China petrochemical makers.

Another factor has been the closure of the arbitrage from Europe, resulting in less paraffinic materials for US Gulf petrochemicals. The arbitrage was not likely to open, according to a trader, because liquefied petroleum gases (LPGs) were cheaper than paraffinic naphtha in the Gulf coast.

In the US chemical sector, companies have been buying naphtha with caution. The differentials between LPGs and ethane, compared with naphtha, have remained wide.

However, most chemical plants use a small amount of naphtha. Companies have been buying short for naphtha in order to have as little in storage possible at year’s end, when stored product is taxed.

To discuss issues facing the chemical industry go to ICIS connect


By: Sheena Martin
+1 713 525 2653



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index