Saudi Aramco's decision not to cut the volume of term butane exports for December will help narrow the price spread between butane and propane, trade sources said Friday.
The move to maintain the export volumes for December comes after three consecutive cuts -- 20% for September, 25% for October and 20% for November.
Aramco's decision came as a pleasant surprise to the market, which anticipated the Middle Eastern oil giant to press on with a cut in butane volumes on its term customers for December too.
"The market was expecting as usual, a 20-25% cut; to that end, it seems like a welcome relief," a Western trade source said Thursday.
"At such a high price level, it really doesn't matter though," observed a source at a North Asian refiner, an end-user of the petrochemical cracker feedstock.
Amid tight availability, Platts assessed prices of CFR butane cargoes for delivery 30-45 days forward soared to a near 28-month high of $912/mt Tuesday, while CFR propane cargoes touched a near 27-month high of $912/mt, bringing the butane-propane spread to a 17-month high of $45/mt.
The last time prices of CFR butane and propane cargoes settled any higher was July 29, 2008, and September 1, 2008, respectively, while the butane-propane spread was last seen at $45/mt on June 26, 2009.
"Yeah, it does seem like the [butane-propane] spread will come off a bit from the prevailing levels. But it's unlikely that it will drop drastically as there's still high demand for evenly split cargoes," said a Japanese trader.
Prices of CFR propane cargoes for second half December delivery were assessed at $857/mt Thursday, while CFR butane cargoes were at $897/mt. The butane-propane spread slipped $5/mt to $40/mt from its 17-month high Tuesday.
The move to maintain the export volumes for December comes after three consecutive cuts -- 20% for September, 25% for October and 20% for November.
Aramco's decision came as a pleasant surprise to the market, which anticipated the Middle Eastern oil giant to press on with a cut in butane volumes on its term customers for December too.
"The market was expecting as usual, a 20-25% cut; to that end, it seems like a welcome relief," a Western trade source said Thursday.
"At such a high price level, it really doesn't matter though," observed a source at a North Asian refiner, an end-user of the petrochemical cracker feedstock.
Amid tight availability, Platts assessed prices of CFR butane cargoes for delivery 30-45 days forward soared to a near 28-month high of $912/mt Tuesday, while CFR propane cargoes touched a near 27-month high of $912/mt, bringing the butane-propane spread to a 17-month high of $45/mt.
The last time prices of CFR butane and propane cargoes settled any higher was July 29, 2008, and September 1, 2008, respectively, while the butane-propane spread was last seen at $45/mt on June 26, 2009.
"Yeah, it does seem like the [butane-propane] spread will come off a bit from the prevailing levels. But it's unlikely that it will drop drastically as there's still high demand for evenly split cargoes," said a Japanese trader.
Prices of CFR propane cargoes for second half December delivery were assessed at $857/mt Thursday, while CFR butane cargoes were at $897/mt. The butane-propane spread slipped $5/mt to $40/mt from its 17-month high Tuesday.
