The large cargo propane market in Northwest Europe has now started to attract imports, according to industry sources.
About 100,000 mt of propane imports, mainly from the US Gulf, are currently reported to be arriving in Northwest Europe in May, although some trading sources expected this quantity to increase with the possibility of additional US cargoes and also imports from West Africa.
Propane in Northwest Europe is used as a heating fuel in winter, but during the summer period it is used by the petrochemicals sector as an alternative feedstock to naphtha, providing the delivered price of propane is at a significant discount to the delivered price of naphtha.
The physical price spread between CIF naphtha and CIF large cargo propane was $85/mt at the beginning of April based on Platts data, but has now increased to a last published level Tuesday of $127.75/mt.
This makes propane an attractive feedstock for petchems and according to sources most, if not all, of the current propane imports in May should be absorbed by the petrochemicals sector.
The flat price of large propane cargoes CIF Northwest Europe fell by almost $200/mt in March as mild weather reduced heating demand, falling from just under $1,170/mt to the low $970s/mt, again based on Platts data.
This trend has continued in April, with spot prices weakening by another $92/mt, reaching a last published level Tuesday of $880.5/mt.
