The Northwest Europe naphtha market is experiencing slow demand as petrochemicals and gasoline blenders remain on the sidelines, leaving buyers and sellers in a "stalemate" situation, sources said Wednesday.
"Petrochemical [players] are bidding low numbers, they're not chasing the market. They want to see if the [CIF NWE naphtha price] weakens," a trading source said.
The CIF NWE naphtha price has hovered around $930/mt since last Thursday, while the front month crack swap has remained between minus $6-8/barrel since last Wednesday, levels not seen since April, Platts data show.
Although petrochemicals have reportedly been buying "a bit of volume" due to rising propane prices -- naphtha's competitive feedstock in petrochemical cracking -- they are not expected to buy significant quantities of naphtha until September, traders said this week.
"A small change would have a big effect," the trading source said, citing petrochemicals buying more naphtha. "But people are sitting on their hands and waiting and seeing."
Additionally, the market is awaiting a pick up in gasoline blending demand for a West African program expected to pull gasoline in September. Naphtha is an ideal component for the specification as it is low octane. However, so far any demand in advance of the export program is being covered by gasoline already in tank, the trading source said.
"They [gasoline blenders] will sell those cargoes in tank first, get that stuff out and then make new product," the source added.
CIF NWE open specification naphtha cargoes were last pegged Wednesday morning at a $2-3/mt premium versus the August swap, two trade sources said. However, only one trade has been recently reported in the market, outside the Platts Market on Close Assessment process, currently dominated by heavy selling by Vitol.
A company source at Glencore confirmed it had sold an open specification naphtha cargo recently into the Amsterdam-Rotterdam-Antwerp trading hub at plus $4/mt versus the August swap for August 20-31 delivery dates.
The source also reported some isolated buying interest above plus $4/mt as some traders had open specification shorts for dates no longer trading in the Platts MOC.
