NWE butane strength hits competitiveness as petchem feedstock

Butane's competitiveness as a petrochemical feedstock in Northwest Europe has been hit by the market's rise to multi-month highs -- in flat price terms and relative to naphtha -- on the back of demand from North Africa and for blending winter gasoline.

The buying interest has been battling low refinery exports of naphtha and thin volumes out of the US in recent months, sources said.

US butane exports to Northwest Europe this week were expected to remain at zero, according to Kpler shipping data Aug. 10. While US butane exports were expected to rise to 23,000 mt next week, they were forecast to drop back for the remainder of August and through September, according to Kpler.

Platts, a part of S&P Global Commodity Insights, assessed the butane large cargo market Aug. 9 up $15.75/mt day on day at $587.75/mt to be 88.75% of naphtha.

Butane's recent strength has seen its spread to naphtha narrow to $74.50/mt on Aug. 9, down $33.50/mt week on week.

Additionally, butane cargoes have risen to a premium to propane cargoes in Northwest Europe since the start of the month.

Bullish sentiment for butane was set to remain in the near term, especially with the winter gasoline blending season approaching. That said, spot trading may be subdued due to the tightness in supply, sources said.

While refinery exports in the Northwest Europe and the Mediterranean have been low, prices strengthening recently could incentivize greater refinery exports.

Platts assessed the LNG DES Northwest Europe Marker for September at $12.084/MMBtu on Aug. 9, or a 40 cents/MMBtu discount to the September TTF hub price, up $2.209/MMBtu on the day. It was the strongest Northwest Europe has been since June 15, when Platts assessed it at $12.755/MMBtu

In metric tons of oil equivalent, the current LNG NWE price stands at around $467/mt, below the last heard value for the butane paper market for September at around $540/mt.