¡¡¡¡Large propane cargoes have widened to their largest discount against CIF NWE naphtha cargoes since November, with naphtha reacting faster to strengthening crude oil prices than propane, which has weakened at the beginning of the first quarter.

¡¡¡¡Large CIF propane cargoes in Northwest Europe were assessed at $397/mt Wednesday, while CIF NWE naphtha cargoes were assessed at $468/mt, widening the spread between them to $71/mt, the largest gap since November 13 last year.

¡¡¡¡On an outright price basis that has meant propane is now pricing at 84.8% of naphtha, which should mean full propane cracking is now a viable option in Europe, say sources.

¡¡¡¡"LPG is a favored feedstock with the recent pro/nap drop," said one source. "But also I think petchems are fairly low on inventory, so some physical [naphtha] barrels are still clearing."

¡¡¡¡Meanwhile, the recent improvement in water levels along the River Rhine has meant end-users are now able to overcome the supply logistics of barging another alternative petrochemical feedstock, butane, to inland crackers.

¡¡¡¡Though the butane complex has strengthened where propane has weakened in the first trading weeks of the new year, at current levels of 86% relative to physical naphtha on a large cargo and FOB coaster basis, generally weak butane prices have made that market attractive for petrochemical players.

¡¡¡¡The displacement of naphtha cracking barrels in favor of gaseous feedstocks in the region comes against the backdrop of heavy steam cracker maintenance expected in the spring, which is poised to reduce overall petrochemical demand in the region.

¡¡¡¡Dow Chemical's cracker in Bohlen, Germany and Shell's Moerdijk cracker are two units expected to undergo maintenance.