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North Sea propane: first half of 2009


By Derek Hardy


June 19 - The fairly cold weather in January produced firm demand for North Sea tonnes of propane, as during the winter months propane is primarily used as a heating fuel in Northwest Europe.


Spot CIF prices reacted to this demand and moved upwards sharply from the low $370's/mt in early January to the mid $550's/mt by the end of the month.


CIF prices stayed above $500/mt until the last week of February as heating demand began to fall.


During the summer months demand for propane as a heating fuel declines rapidly and cargoes of North Sea propane are then used as an alternative petrochemical feedstock to naphtha, providing the propane price is at a discount to the naphtha.


Initially petrochemical buyers of propane were prepared to pay above 90% of naphtha for spot tonnes, but as the second quarter of this year progressed this value gradually decreased, resulting in the subsequent fall in CIF prices from around $380/mt in early April to the low $340's/mt by the end of April.


In late Mate and the first half of June , however, higher crude has pushed naphtha upwards, which in turn has resulted in higher North Sea propane values with current price levels in the $480's/mt.


Chart: Northwest Europe (NWE) CIF Propane: January 1 - June 17, 2009


Source: Platts


Next page: Butane prices given an extra boost by tight North Sea availability


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