BASF Ludwigshafen naphtha demand hinges on cracker restart date

18 October 2016 16:29 Source:ICIS News

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LONDON (ICIS)--Any potential reduction in naphtha sales to the BASF Ludwigshafen petrochemical complex in Germany is contingent on when the two steam crackers at the site restart, traders and analysts said on Tuesday.

The impact could be minimal in a bullish naphtha market.

BASF’s Ludwigshafen site has two steam crackers which process about 2m tonnes of naphtha per annum, according to the company's website.

Each year, a total of around 620,000 tonnes of ethylene and 350,000 tonnes of propylene are produced at the two plants.

“Until we know how long the crackers will be down it is hard to say what sort of effect on demand [for naphtha] there will be,” Robert Campbell, an oil market analyst at Energy Aspects said.

The crackers consume approximately 6,000 tonnes of naphtha per day, a naphtha trader said.

"I assume it will be shut down until the end of November. It will depend on what damage they find. If they find some nasty things it may last longer than a month," a second analyst said.

The second analyst estimates a loss of over 150,000 tonnes of naphtha demand from the site per month will lead to a more bearish naphtha market.

"Sadly, it is good for the petrochemical margins," the second analyst said.

On Monday, an explosion at BASF’s Ludwigshafen site caused a fire which left two people dead and one missing, while eight workers suffered serious injuries, according to BASF’s update at 10:00 London time on Tuesday. It added that 17 more people had suffered minor injuries.

Product

Company

Country

Location

Capacity

Unit

Propylene

BASF AG

Germany

Ludwigshafen

140000

tonne/year

Propylene

BASF AG

Germany

Ludwigshafen

200000

tonne/year

Ethylene

BASF AG

Germany

Ludwigshafen

220000

tonne/year

Ethylene

BASF AG

Germany

Ludwigshafen

400000

tonne/year

Source: ICIS Plants and Projects Database

While the fire was extinguished at 21:30 local time on Monday, the site remains closed as fire fighters and authorities continue investigating the accident. BASF said earlier that, in addition to the steam crackers, around 20 other plants were either closed or partially running.

“The plant is down, but since the main fire seems to have happened at the barge jetty I wouldn’t think the plant is going to be idle for too long but this is not something I know,” a second naphtha trader said.

A third naphtha trader said: “Nobody knows the impact for now. Depends on when they restart [the crackers].”

Naphtha spot cargo prices was relatively stable on Monday evening at $437-439/tonne cost insurance freight (CIF) northwest Europe (NWE).

The European naphtha market is bullish on renewed gasoline demand from the US, Latin American and West African markets.

“The paper market doesn't seem to care too much. I would have thought that we could have seen some impact,” the second trader said.

Additional reporting by Jonathan Lopez, Nel Weddle

By Cuckoo James