Spot prices for delivered cargoes of North Sea propane have increased on renewed buying from the petrochemicals sector, according to industry sources.
In the early part of this month the spot price of CIF North Sea propane was just above $780/mt, but since then has increased to reach a last published level Monday of $822/mt, based on Platts data.
North Sea propane is used during the winter as a heating fuel in Northwest Europe.
But the absence of cold weather this winter resulted in weak demand from the traditional heating sector and propane was then absorbed into the petchems sector, where it can be used as an alternative feedstock to naphtha providing the CIF propane price is at a significant discount to the CIF naphtha price.
Earlier this month, however, propane was judged to be an unattractive feedstock for petrochemicals, with the price spread between CIF naphtha and cheaper CIF propane at around $80/mt.
Propane also has a high yield of ethylene, the value of which was relatively low.
By the beginning of the second decade in February the price spread widened out to $128/mt, based on Platts data, which encouraged petchems to buy some modest quantities of propane, although the spread has subsequently narrowed again to a last published level Monday of $89/mt.
At the end of last week Dow Chemicals bought a 20,000 mt CIF cargo from SHV for delivery February 24-28 at a price of 50% $810/mt and 50% balance February quotes plus $2/mt, and according to sources some propane for March delivery has also been sold into the petrochemicals sector.
"It has found a bit of support," said a petchems trader.
