Home > Chemical News

Chemical News

NWE propane discount to naphtha at widest in six months

https://www.chemnet.com   Apr 27,2015 Platts
The discount of the front-month CIF Northwest Europe propane swap to the equivalent CIF Northwest Europe naphtha swap -- a relative measure of the competitiveness of the LPG against Europe's traditional steam cracker feedstock -- hit its widest in six months Thursday on balanced propane fundamentals and more bullish sentiment in the naphtha market.

The discount, referred to as the propane/naphtha spread, was assessed $2 wider Thursday at $133/mt, the largest discount since October 24 last year when it was $140.25/mt, according to Platts data.

The larger the discount the more incentive olefin producers have to maximize consumption of propane against the more expensive naphtha.

Low propane prices has helped support petrochemical cracking margins, which have risen above the $600/mt mark since Tuesday.


"The downstream market is great, olefin markets are tight," an end-user said, referring to bullish ethylene and propylene markets also keeping steam cracking margins supported.

Fundamentals in the propane market for May are more balanced than in March and April, sources said, when inbound cargoes from the US were barely sufficient to cover residual regional heating and more active petrochemical demand.

The backwardation between spot propane and the front-month swap has fallen back to $3/mt after hitting a peak of $48/mt March 10 due to the tight supply.

"The first half of May is pretty balanced...Petchems are relaxed in terms of what is owed to them," a source said.

In the naphtha market, an overhang of prompt cargoes has started to clear due to demand from refiners and small pockets of demand from gasoline blenders.
 Print  |    add to Favorites  |    Close