Petrochemical producers in Northwest Europe have started to reduce propane cracking rates due to a narrow CIF naphtha/CIF propane price spread, according to industry sources.
When the price spread between CIF naphtha and cheaper CIF propane was wide producers in Northwest Europe were using significant quantities of propane as feedstock, but are now cracking less propane as the premium of naphtha over propane has narrowed.
"We have switched back quite a lot [to naphtha]," said one petchems trader.
"We have started to crack less [propane] as of today," another petchems source said.
Based on Platts data the CIF naphtha premium over CIF propane was almost $100/mt at the end of October, but since then has narrowed on stronger propane prices to reach a last published level Wednesday of $31.5/mt.
The main reason for the narrower premium has been a rise in spot propane prices, driven by limited spot North Sea supplies and demand to cover trader short positions.
"It is still pretty tight," an industry source said.
The flat price of CIF North Sea spot propane has increased by just over $70/mt since the end of last month, moving up from $830/mt to reach a last published level Wednesday of $901/mt, based on Platts data.