01 March 2013 12:49 [Source: ICIS news]
LONDON (ICIS)--March contract price settlements for downstream ethylene and propylene are unlikely to have an impact on petrochemical demand for naphtha due to the preference for cheaper rival feedstock propane, sources said this week.
“[Naphtha] Demand for petchems is weak,” a buyer said on Friday. “It’s good for LPG [liquefied petroleum gas], they’re [crackers] running max on LPG.”
A broker said: “Demand [from the petrochemical industry] will stay poor.”
“No,” a naphtha producer said on Thursday when asked whether the downstream settlements would influence the naphtha market. “Petchem demand is good, but they try to find anything to crack that is not nap right now.”
On Friday, March propane was priced $90/tonne (€69/tonne) below naphtha, continuing to render the former the first choice for buyers with the ability to choose between the two feedstocks.
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 LPG production in Asia and imports from the US, combined with lower demand, have kept the European LPG market long and prices low.
However, on Thursday, one trader was unsure whether the settlements would have no impact on the naphtha market: “LPG [lower LPG prices] is already priced in anyway. C2 and C3 I find rather bullish, the cracker margin still OK.”
($1 = €0.77)
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