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Petchem demand for naphtha weakens as end-users remain covered

Increase font size  Decrease font size Date:2011-07-11   Views:666
Demand from the petrochemicals sector for European naphtha weakened Friday, with end-users well covered until August and a falloff in buying further downstream, sources said Friday.

Traders said the first 10 days of July are balanced but added that they expect there to be more naphtha cargoes on offer in the second half of the month.

"During the second half of July there will be more availability of naphtha cargoes, so moving past the first 10 days of July the market will feel bearish," said one trader.

Northwest European naphtha cargoes were assessed Thursday at $929.25/mt, up $30/mt from $899.25/mt a week before.

"The downstream demand is not great, spot ethylene is weak compared to contract price so buyers of that are minimizing contract volumes. As a result producers are putting the remaining product into storage and don't really want to run their stocks higher so are reducing production rates," said one source.

The July contract price for ethylene was fully settled at Eur1,090/mt FD NWE Monday, down Eur95/mt on June. Meanwhile, the ethylene spot price was assessed at Eur895/mt FD NWE Thursday.

In the downstream markets, polyethylene demand was subdued as converters remained "hand to mouth" on inventory, anticipating a further fall in prices.

"Lower [plastics] prices are imperative in order to improve chain affordability, limit demand destruction and finally spur buying activity again, in our opinion," HSBC said in a report last week.

 
 
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