Gasoline, crude push Europe naphtha prices above $400/tonne

Cuckoo James

16-Jan-2015

Focus article by Cuckoo James

Naphtha crackerLONDON (ICIS)–European naphtha cargo prices staged a recovery this week by trading above $400/tonne following strong West African gasoline blending demand, loading delays at Mediterranean and Baltic ports, and an increase in Brent crude from Wednesday, ICIS data showed on Friday.

In early January, naphtha cargo prices fell below $400/tonne for the first time in six years.

On Thursday 15 January, naphtha traded at $401/tonne CIF (cost, insurance, freight) NWE (northwest Europe) as Glencore sold a cargo to petrochemical producer BASF in the open market for loading in early February.

February Brent was at $48.23/bbl at 16.30 GMT on Thursday, up $2.02/bbl from the previous day, but $4.58/bbl lower than when naphtha fell below $400/tonne in early January proving the incentive was not from Brent alone.

The increase in Brent merely added to the upward pressure in a market that was already strengthening because of rising exports and logistical difficulties.

Demand for European naphtha cargoes has picked up for use as a blend stock after Nigeria’s Petroleum Product Pricing Regulatory Agency issued its first-quarter gasoline allocations.

Naphtha has also derived some support from a more favourable pricing ratio with the cheaper alternative feedstock liquefied petroleum gas (LPG). A naphtha price drop of more than 60% since a June 2014 peak has contributed to a rise in overall demand for the product.

In addition, one trader remarked on Wednesday that it was seeing tightness in the US markets, and added demand from Latin America had improved.

Meanwhile, on going weather-related loading delays at Mediterranean and Baltic ports – especially at Skikda in Algeria and  Tuapse in Russia – have also led to naphtha buyers scrambling to secure product, creating a perception of tightness in the market.

A second naphtha trader said on Friday: “There are a  lot of delays in the Med and the Baltics. My perception is people are trying to order elsewhere because of the delays.”

However, the source added this could be temporary, and the delayed cargoes could flood the market at a later stage if unsold: “All those delays they are at some point going to overflow the market.”

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?