Europe LPG prices fall; Sept petchem demand expected to pick up

09 August 2013 20:31  [Source: ICIS news]

LONDON (ICIS)--The European propane market remains depressed as demand has dropped on low seasonal demand, resulting in a fall in spot prices, industry sources said on Friday.

The naphtha-propane spread has consequently widened to $100/tonne for September spot cargoes.

This could lead to propane retaining its position as the feedstock of choice for petrochemicals and reduce the increased pull towards naphtha that has been seen during recent times.

A petrochemical buyer said: "[Petchems] have increased their runs since June steadily. What helped is in July we cracked less [liquefied petroleum gas (LPG)]. We are obviousely not at full rates. In September, we hope to crack more LPG."

Meanwhile, a trading source said propane was seen as more attractive to petrochemical buyers than butane as a result of weaker demand downstream for butadiene (BD).

The butane market also saw less trading activity this week, with buyers deeming offers too high to be workable.

Large butane cargoes were being offered at 95% of naphtha prices in northwest Europe, but the bearish sentiment could mean trades were more likely to take place at 93% of naphtha values, a butane trader said.

Traditionally healthy summer export destinations of Morocco and Tunisia are no longer taking butane as a result of US cargoes flooding the region.

Butane is coming in from the US Gulf Coast, and three 10,000 tonne cargoes were sold to the petrochemical industry, another butane trader said.

Barges are more in demand than cargoes at this time of the year, a second butane trader said.

Prices have fallen in the butane market as a result of the weak demand.

($1 = €0.75)

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By: Cuckoo James
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