22 February 2013 10:23 [Source: ICB]
The robustness and tight conditions seen recently in the European naphtha market are still expected to persist during the coming weeks, sources said.
"The market is dry, there's no nap available at the front," a trader said on 15 February. "[It will last] for March at least."
"Premiums are still at record highs, propane is recovering and gasoline is holding firm," a trader said on 14 February. "I think it [the market strength] can go on for a while."
In contrast to usual seasonal patterns, propane has been priced far below naphtha for most of the winter, rendering the former the first choice for petrochemical buyers.
On 15 February, a liquefied petroleum gas (LPG) market participant said that 150,000 tonnes of propane were cracked in January. Normally at that time of year, none would be, with LPG normally in demand as heating fuel.
However, this does not mean that naphtha is ruled out of the cracking pool.
"Petchem margins keep steaming on," a producer said. "Petchem runs should [remain] stable."
While buyers are choosing propane where possible, the source said, they still require base volumes of naphtha, and propane prices are volatile, with pockets of tightness temporarily boosting values.
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