Prices for large cargoes of butane in Northwest Europe fell Tuesday to the lowest level in a year on low demand and ample supplies.
Platts assessed the price of a 4,000 mt CIF refrigerated cargo of mixed butane loading 10-25 days forward at $717.00/mt, down $1.00/mt from Monday.
This equated to 77.4% of the price of CIF NWE naphtha, which was assessed at $926.50/mt.
Prices were last seen at this level on May 2, 2013, when they were assessed at $697.00/mt.
Demand for butane falls over the summer as the warmer weather sees it removed from the typical blending pool. This usually prompts petrochemical buyers to switch to LPG feedstock for their steam crackers as butane becomes more profitable than naphtha. Apart from seasonal price weakness in the butane market, there were several vessels loading at the end of May, with cargoes in the North Sea awaiting buyers looking to cover any remaining shorts for the month.
Exports from the Gulf Coast and East Coast of the US were also said by sources to be contributing to a structural change in butane prices.
Low LPG prices in the US mean arbitrage cargoes flowing into Northwest Europe are becoming increasingly common.
"The logistics for exports [from the US] will improve over time," a source said.
But additional supply is not finding higher demand, with European producers potentially having to look outside the region to find buyers.
"There is demand there, but [the US cargoes] may displace other cargoes," the same source said.
Platts vessel tracking software, cFlow, currently shows one such VLGC loading at the port of Marcus Hook on the US East Coast. Market players expect the Telendos to be sold into Europe.
