NWE-Morocco butane shipments down on month due to closed arb

New York — Volumes of butane moving from Northwest Europe to Morocco are down month on month so far in January as strength in the West Mediterranean relative to NWE keeps the arbitrage largely unworkable.

About 35,000 mt of butane has been scheduled to arrive into Morocco in January as of Thursday, according to S&P Global Platts trade flow software cFlow. In December, an estimated 88,000 mt of butane was sent from Northwest Europe to Morocco.

Gasoline blending and petrochemical cracking demand has strengthened the market in Northwest Europe relative to the West Mediterranean and as a consequence, the arbitrage route has become unworkable.

"FOB [seagoing coasters] is non-existent right now, I cannot see any demand form the Med," a market source said.

FOB Seagoing coasters are typically employed to serve the arbitrage from Northwest Europe to the Mediterranean. The FOB Seagoing quote most be sufficiently low compared with the FOB West Med quote by at least the cost of freight for the arbitrage to be attractive.

Morocco is the biggest destination in the Mediterranean and North Africa for butane by volume, owing to the country's dependence on the product as a cooking fuel. Northwest Europe is a significant supplier of butane to Morocco along with the US and other Mediterranean sources.

Platts FOB Seagoing was assessed at $472/mt Wednesday, a $27/mt discount to FOB West Med which was assessed at $499/mt. The discount to West Med should be in the region of $60/mt for the arbitrage to be open, sources have said.