08 May 2013 13:23 [Source: ICIS news]
LONDON (ICIS)--Algerian state-owned energy group Sonatrach has declared force majeure on naphtha cargoes from its Skikda complex, industry sources said on Wednesday.
News of the unconfirmed force majeure broke on 8 May, but Sonatrach had already cancelled three of its naphtha cargoes on the previous day, sources added.
Sources estimate the cancelled cargoes amount to a loss of 100,000-120,000 tonnes of naphtha supply.
Sonatrach was not immediately available for comment, and has not officially confirmed the force majeure. “We haven’t seen anything official yet,” a trading source said.
Two of the naphtha cargoes were bound for Brazil. A fourth cargo, for US producer Dow Chemical, has merely been postponed and not cancelled, a second trader added.
However, “there isn’t any issue with the actual refinery”, the first trader said. Sonatrach runs a 335,000 barrel/day refinery at Skikda, which had recently been partially shut down for maintenance.
European spot naphtha cargoes rose sharply to $837/tonne CIF (cost, insurance and freight) NWE (northwest Europe) – €636 CIF NWE – on Tuesday evening, with US finance major Morgan Stanley buying from Swiss trader Vitol when news of the cancelled cargoes first broke out.
"[Prices rose] because Skikda has cancelled three or four cargoes today. So [there is] 100,000-120,000 tonnes less supply. [The] cracks [naphtha refining margins] have bounced back massively,” a third trader said on Tuesday.
Sentiment has turned bullish in the naphtha market, fuelled by news of the reduced naphtha supply from Skikda, coupled with improving gasoline demand and good Asian export volumes.
The second trader source estimated the Skikda cargoes were cancelled as a result of the improved gasoline demand: “They [Sonatrach] want to keep [the naphtha cargoes] for gasoline.”
Naphtha, which is used as a petrochemical feedstock, is also used as blendstock for gasoline production, often by refineries.
Initial reporting by Felicia Loo
($1 = €0.76)
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.
|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|
Asian Chemical Connections