MOSCOW (MRC) -- Liquefied petroleum gas (LPG) intake by coastal steam crackers in northwest Europe plunged to a three-year low in June, although a widening discount of propane to naphtha has drawn a fresh deluge of US imports to the region for July, reported Chemweek.
LPG intake as petrochemical feedstock was an estimated 280,000 metric tons in June, down by 32% from May, and at its lowest level since August 2017 when intake hit 258,000 metric tons. US LPG imports in June were 66,000 metric tons, up from a year-to-date low of 32,000 metric tons in May, but down 75% year on year.
Overall volumes of LPG cargo trade remain depressed, dropping 22% from May’s total to 580,000 metric tons in June, the lowest in OPIS-IHS Markit records, and in contrast to 810,000 metric tons traded in June 2019.
Petrochemical operators fell back to local North Sea-supplied LPG, with 190,000 metric tons sourced from the region, equivalent to 68% of the total intake for the month, compared to 81% in May. The remainder of the feedstock intake in June saw 23% from the US East Coast, up from 8% in May, and none from the US Gulf Coast, the second month running that this has occurred. Supply from the Russian Baltic made up 9% of total feedstock intake.
Meanwhile, LPG exports out of northwest Europe at 180,000 metric tons were over three times more than the same month last year, with cargoes moving to North Africa, the eastern Mediterranean—112,000 metric tons to Turkey alone—and to the US East Coast. The retail and refining sector intake was down by 50,000 metric tons to 115,000 metric tons in June.
A surge of import cargoes are programmed to arrive in northwest Europe in July, with 22,000 metric tons noted during mid-June rapidly escalating to 290,000 metric tons by month-end. “That is a hefty chunk of imports,” one broker remarks. “(I) would expect some second-half (July) arrivals to come into the mix ... still early days,” comments another market source. Sailing times from the US East Coast and US Gulf Coast to northwest Europe require 10 days and 14 days, respectively.
As MRC wrote previously, unplanned outages at Sabic's Wilton, UK, cracker and Borealis' Stenungsund, Sweden, cracker may cause availability shortages in the European propylene coastal market. The Wilton cracker, which has an annual propylene capacity of 415,000 mt was shut on June 17 due to technical issues and was off-line for another two weeks. Borealis' Stenungsund cracker unit has remained offline longer than initially anticipated, after it was shut following a force majeure declaration at the site on May 11. Sources said that the unit has been offline longer than initially expected with no confirmed startup date.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.