Europe naphtha demand under threat from cheap LPG

22 February 2013 15:52  [Source: ICIS news]

LONDON (ICIS)--Petrochemical demand for naphtha remains subdued, as low prices for rival feedstock propane continue to render the latter the first choice for buyers with the ability to choose between the two, sources said this week.

This price structure is extremely unusual, as propane prices are normally driven above naphtha values in the winter as a result of strong demand for heating fuel.

This year, increased liquefied petroleum gas (LPG) production in Asia and imports from the US, combined with lower demand, have kept the European LPG market long and prices low.

“Yes, propane dumped again this week,” a naphtha producer said on Thursday.

On Friday March propane was priced $140-150/tonne (€106-114/tonne) below naphtha, giving it a clear advantage.

“It’s a record year for LPG cracking,” a naphtha buyer said on Friday, adding that at least 300,000 tonnes of propane could be cracked in March.

A week earlier, a participant in the LPG market said that 150,000 tonnes of propane were cracked in January. Normally, none would be.

However, participants emphasise that some volumes of naphtha are still required for cracking, despite the relatively high cost.

($1 = €0.76)

By: Jo Pitches
+44 208 652 3214

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