29 June 2012 13:21 [Source: ICIS news]
LONDON (ICIS)--Steep falls in European July contract prices for ethylene and propylene have not yet had any impact on petrochemical demand for feedstocks liquified petroleum gas (LPG) and naphtha, sources said on Friday.
On Thursday, European ethylene and propylene contract prices for July were fully confirmed down by €170/tonne at €1,035/tonne and €935/tonne respectively.
When asked whether these lower contract prices are likely to have any impact on demand for downstream products, and hence for feedstocks, an LPG/naphtha broker replied: “It's too early to answer that one. I don't see the effect yet.”
In response to whether there might be any impact on petrochemical demand for naphtha, a naphtha trader said: “No, I think they [ethylene and propylene market participants] reacted to the flat price of naphtha. It was due to happen. I think now the chain is more balanced.”
Following many months priced significantly below naphtha, LPG looks set to remain petrochemical buyers’ feedstock of choice wherever possible.
“I don't think the settlement will have any impact on the cracker feeds,” the broker added. “LPG will still need to find a home, so those molecules will still need to take it up against naphtha, i.e. have big enough discounts.”
By Friday morning, propane was trading at more than $100/tonne below naphtha, giving it a clear advantage.
Butane prices were lower still, trading at more than $20/tonne below propane.
“Butane’s been below propane for a while, I think,” the broker said. “We’ve been taking a lot of the stuff this year and it’s likely to continue.”
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