Spot butane prices in Northwest Europe are being supported by the current strength of naphtha in the region, as some petrochemicals producers turn to cracking LPG, industry sources said this week.
At least one North Sea butane cargo has recently been sold into a petrochemicals outlet, with a refiner in the Amsterdam-Rotterdam-Antwerp region also confirming that it was moving some of its surplus production to its petrochemical affiliate rather than exporting the product.
Delivered prices for cargoes of North Sea butane have recently recovered to a last published price of $852.50/mt, after falling by $180/mt since the beginning of December from just under $1,020/mt to the high $830s/mt.
FOB butane prices in Amsterdam-Rotterdam-Antwerp have also recovered to $827.50/mt, after falling by $85/mt during the same period from the high $880s/mt to just above $800/mt.
"With an $8/mt backwardation in the prompt European naphtha market, combined with soaring flat prices, product is becoming expensive," said one naphtha trader.
As a benchmark, when naphtha reaches 90% of butane, LPG feedstocks become competitive for cracking. According to sources, the current price levels are at around parity with naphtha prices.
In December, CIF NWE naphtha prices spiked, surpassing levels last reached in the third quarter of 2008, to be assessed at $868/mt on December 23. Naphtha remains over $850/mt, delaying some new year restocking interest among European petrochemicals companies.
During the winter months, butane in NWE is usually used by the gasoline-related sector, either as a feedstock for the production of MTBE and alkylate, or for blending directly into gasoline to increase its vapor pressure.
However, gasoline-related demand has not been that strong this winter, and prices have weakened to levels that make butane of interest as feedstock for the petrochemicals sector.
At least one North Sea butane cargo has recently been sold into a petrochemicals outlet, with a refiner in the Amsterdam-Rotterdam-Antwerp region also confirming that it was moving some of its surplus production to its petrochemical affiliate rather than exporting the product.
Delivered prices for cargoes of North Sea butane have recently recovered to a last published price of $852.50/mt, after falling by $180/mt since the beginning of December from just under $1,020/mt to the high $830s/mt.
FOB butane prices in Amsterdam-Rotterdam-Antwerp have also recovered to $827.50/mt, after falling by $85/mt during the same period from the high $880s/mt to just above $800/mt.
"With an $8/mt backwardation in the prompt European naphtha market, combined with soaring flat prices, product is becoming expensive," said one naphtha trader.
As a benchmark, when naphtha reaches 90% of butane, LPG feedstocks become competitive for cracking. According to sources, the current price levels are at around parity with naphtha prices.
In December, CIF NWE naphtha prices spiked, surpassing levels last reached in the third quarter of 2008, to be assessed at $868/mt on December 23. Naphtha remains over $850/mt, delaying some new year restocking interest among European petrochemicals companies.
During the winter months, butane in NWE is usually used by the gasoline-related sector, either as a feedstock for the production of MTBE and alkylate, or for blending directly into gasoline to increase its vapor pressure.
However, gasoline-related demand has not been that strong this winter, and prices have weakened to levels that make butane of interest as feedstock for the petrochemicals sector.
