The North Sea propane market was still regarded as oversupplied despite sales into the petrochemicals sector, industry sources said Tuesday.
North Sea propane is historically used as a heating fuel during the winter period, but this winter the lack of a sustained period of cold weather has reduced requirements for the heating sector.
"The market looks long on the basis of low [heating] demand," said one trading source.
Propane can also be used as an alternative feedstock to naphtha providing the delivered propane price is at a significant discount to the delivered price of naphtha.
Based on Platts data the physical CIF naphtha was at a premium to CIF propane spread of about $60/mt at the beginning of this month, but last week this widened out to reach just over $100/mt and at this level petrochemical producers could justify buying propane.
Sources said that BASF, Dow and Sabic all recently bought 20,000 mt CIF propane cargoes to be used as feedstock.
Despite these sales into the petrochemical sector sources said that the lack of demand from the traditional heating sector had still left the North Sea market with some unplaced cargoes over the end January-early February period.
