The price spread between CIF naphtha and cheaper CIF propane has narrowed on less bearish propane sentiment as well as weakening naphtha, according to industry sources.
The CIF propane swap reached a $171/mt discount to the CIF Northwest European naphtha swap Thursday, but since then narrowed, heard at $130/mt Wednesday from assessed $136.25/mt Tuesday.
Limited demand for propane from the traditional heating sector in Northwest Europe, and about 250,000 mt of imports said by sources to be arriving over the next couple of weeks has weighed on the market, but these cargoes have now mostly been placed and propane sentiment is improving, sources said.
"Looks like they have been placed a while ago, otherwise the propane/naphtha would widen, not narrow," a second source said of the propane arrivals.
The petrochemical sector in NWE has taken advantage of the much cheaper propane versus naphtha and maximised propane cracking.
Dow Chemicals, Borealis, BASF and Sabic are all reported to be cracking significant quantities of propane.
"It is full blast on propane cracking," said a petchems trader.
Naphtha meanwhile has suffered from limited demand.
"It is looking weak for sure, not sure it should be this weak but momentum is certainly for weakness," trading sources said on softer naphtha crack swaps Wednesday morning.
The CIF Northwest European naphtha cargo crack swap was heard trading at minus $7.70/barrel Wednesday, from assessed minus $7.20/b Tuesday, from minus $5.55/b September 17, Platts data showed.
