The discount of a delivered cargo of mixed butane in Northwest Europe compared with the equivalent CIF NWE naphtha value hit its narrowest in over three months on Thursday, to be assessed at $125.25/mt.
The last time the discount was narrower was on April 15 when it was $121.25/mt.
The narrowing has been driven by falling spot naphtha prices, which have been steadily moving lower since the start of July on physical oversupply, dwindling demand for gasoline blending and higher freight rates for long-range tankers, trading sources said.
The CIF Northwest European naphtha cargo value was assessed at a seven-week low of $926.25/mt Thursday, down $8.25. "Apart from Asia, there is nothing giving support to the European naphtha market," said a trader.
"In NWE, there is a lack of demand from petchems and blending demand is also coming adding pressure," said another trader.
In contrast the NWE spot butane cargo market, reflecting refrigerated vessels over 4,000 mt, has been relatively stable for most of July, as balanced fundamentals have left prices greatly influenced by movements in the naphtha market.
Lower imports from outside of Europe, healthy North Sea crude production and steady petrochemical cracking demand have all been identified by market sources as contributing to the stability in prices.
The market was assessed at $801/mt Thursday, equivalent to around 86.5% of the price of naphtha.
