The CIF Northwest Europe naphtha cargo physical premium over the balance-month and the front-month swaps fell Tuesday to respectively $2.25/mt and $13.75/mt, their lowest level in April, according to Platts data.
On April 2, the physical premium over April swap future was assessed at $15/mt, while the physical premium over the May swap future was assessed at $33/mt, Platts data shows.
According to trading sources, cash premiums for open spec naphtha trading in NWE outside the Platts window have been following the same trend, falling to low-single digits Tuesday from highs of $12-15/mt earlier this month as demand thinned.
"Premiums for open spec naphtha are now flattish... not even mid-single [digit]," said a naphtha trader.
"There does not seem to be much demand for naphtha in Northwest Europe and while there are still bids for May delivery, the market is feeling a bit heavier," said a broker.
While the front-month gasoline/naphtha spread -- the premium of the Eurobob gasoline swap over the CIF NWE naphtha swap -- widened marginally to $102.75/mt Tuesday from $101.50/mt Monday, demand for gasoline blending was reportedly limited to very specific grades of naphtha.
In the meantime, most European petrochemical end-users were said to be covered for April, while May naphtha demand was still facing competition from rival cracker feedstocks propane and butane.
"LPG is still a good feed as an alternative [to naphtha] and some people expect that the six- to eight-week long maintenance of SABIC's cracker will reduce the purchase of naphtha," said a trader.
Saudi-owned SABIC's cracker at Wilton in northeast England is due to undergo maintenance from May into June for a period of around six weeks.
Market participants also said that the naphtha arbitrage from the Mediterranean to Asia is currently barely workable while the arbitrage from northern Europe to Asia remains closed, thus limiting export opportunities for European naphtha.
