European naphtha prices have come under pressure from run cuts in the polyolefin chain as well as falling crude prices, with ICE Brent futures sinking to an eight-month low Friday, sources said.
CIF NWE naphtha was assessed at $846.50/mt Friday, up slightly from Thursday's seven-month low of $845/mt. ICE Brent May was at $104.72/b Friday. "We are seeing record low cracks for this time of year," said a trading source.
Platts data shows that April CIF NWE cracks traded between minus $9.76/barrel and minus $12.10/b last week. "Demand for petrochemical products is not that great currently in Europe due to the economic slowdown," a naphtha trader said. "BASF is going to shut a big cracker facility in Antwerp next month and it is already having an impact; that is why they sold a 12,500 mt naphtha cargo in the Platts window [Thursday]."
BASF will shut its 1.08 million/year Antwerp steam cracker in Belgium, the biggest in Europe, in the second quarter for planned maintenance, a source previously said. It will be down from the second half of April until the second half of June, the source said, adding that maintenance work at the cracker is normally carried out every five or six years.
ETHYLENE OVERSUPPLY
The ongoing weakness in the derivative polyethylene market is a reflection of the sustained length in ethylene inventories for most European producers. "We are pushing back our ethylene consumption. The market is getting longer and longer as we speak," an ethylene buyer said.
Cracker operators said they were reducing cracker operating rates to around 76%-80% in order to cope with overflowing inventories. "Traders have positions on the ARG pipeline, reflecting the length in the ethylene market," the ethylene buyer said, adding that notional prices were below Eur1,050/mt ($1,368/mt) FD NWE. Regular movement from the UK to NWE was also limited due to non-availability of tank storage, sources added. A seller pegged prices at Eur1,050/mt FD NWE. Prices were assessed at Eur1,045-1,050/mt FD NWE Friday, shedding Eur45/mt on the week.
To further reflect the weakness in the ethylene market, Platts data showed that Europe's premium over CFR Northeast Asia prices fell to a 2013 low this week. Friday, CFR Northeast Asia was assessed at $1,300/mt.
The average spread so far in 2013 is $136/mt. In 2012, it stood at $114/mt.
