The widening spread between delivered prices for naphtha and for propane could tempt petrochemical companies in Northwest Europe to buy more propane, according to industry sources.
Propane can be used by several petrochemical companies in NWE as an alternative feedstock to naphtha providing the delivered propane price is below the delivered naphtha price, and the wider the spread in these prices the more attractive propane becomes to use as a feedstock.
Based on Platts data, the naphtha/propane price spread was at almost $130/mt around the middle of October with ample supplies of refrigerated propane cargoes available.
In the last week of October the spread narrowed to the mid $60s/mt, which resulted in propane attracting little buying interest from petchems.
Since then the spread has widened out again to a last published level Tuesday of $88.75/mt, which according to sources could renew petchem interest in buying additional propane.
"It [the current spread] would incentivise us to crack more propane," said one petchem trader.
Other petrochemical companies, however, said that they would need the naphtha/propane spread to be nearer to $100/mt before they were persuaded to buy more propane.
