Availability of coaster butane in Northwest Europe has tightened ahead of the upcoming switch to winter-grade gasoline in Europe, according to industry sources.
"There are bits and pieces [of butane] around, but hearing it's getting tight," a gasoline blending source said on Tuesday. "There are bits available if you're willing to pay up a bit for them."
Winter specification gasoline, which has a higher RVP than summer spec gasoline, is typically blended with low-cost butane to increase the fuel's volatility in cold weather, allowing motor vehicles to start more easily.
Consequently, demand for butane for use in gasoline blending typically peaks in September as European refineries and blenders move first to higher-RVP intermediate specification, and then winter-grade production.
"It is very difficult to find product," said one industry source.
Spot prices for delivered cargoes of coaster butane have strengthened as refinery exports gradually decreased.
Based on Platts data, CIF prices increased by $150/mt during August rising from the low $780s/mt up to $932.50/mt.
Prices have moved up even higher in the early part of September to reach $947.50/mt at Monday's European close.
During the summer refineries in Northwest Europe export surplus butane as coaster cargoes which are typically between 1,000 and 3,000 mt in size. Most of this product is absorbed by the petrochemicals sector and as an alternative feedstock to naphtha.
