European naphtha crack values plunge to lowest level since January 2009 on thin petrochemical margins, low propane prices, and Asian markets failing to offer arbitrage opportunities

Alison Gallant

LOS ANGELES , October 25, 2011 (Industry Intelligence) –
A number of economic factors have contributed to European naphtha crack values plunging to their lowest level since January 2009, Platts reported Oct. 25.

The gloomy mood in the market resulted from the confluence of three factors: thin petrochemical margins, low propane prices and the lack of arbitrage opportunities from Asian buyers.

Platts assessed November cost and freight Northwest Europe crack swaps at minus US$11.40 per barrel on Oct. 24. Platts noted the crack swaps haven't seen values dip this low since January 8, 2009. In early morning trading Oct. 25, November CIF NWE crack swaps dipped further, reaching minus $13.40/barrel, Platts reported, citing sources.

The petrochemical sector has seen margins for olefins and aromatics moving swinging into negative territory in the last few weeks, driving petrochemical crackers to scale back run rates.

Additionally, unseasonably low prices for propane has hurt demand for naphtha as producers turn to naphtha as a feedstock choice.

The primary source of this article is Platts, New York, New York, on Oct. 25, 2011.

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