European butane coaster market hits 6-month low as demand from gasoline blenders thins

FOB Northwest Europe coaster prices fell to six-month lows March 12 amid falling demand for butane from the gasoline blending sector.

Strong offering activity in the Platts Market on Close assessment process pulled the butane FOB NWE coaster price down by 4.5 percentage points as a proportion to naphtha on March 12.

ENI offered a 4,000 mt coaster of butane meeting Platts specifications on Teesside basis for loading over March 21-23 at a flat rate of 88.75% as a percentage to the balance month naphtha swap. The offer was deemed competitive and therefore set the assessment.

Platts assessed the FOB Seagoing butane coaster market at $540/mt, or at 88.5% as a percentage to naphtha. This is the lowest price versus naphtha since Aug. 15, 2024 when the market was assessed at 84%.

"[The] market [is] on the big downswing," a source told Platts.

Other butane prices are also seeing downward pressure, with CIF seagoing coasters similarly hitting six-month lows on March 12.

Platts assessed the CIF seagoing butane market at $555/mt, or 91% as a proportion to naphtha. This is the lowest price since Aug. 30, when the proportion to naphtha was marked at 89%.

Slower demand from blenders

The upcoming switch to the lower Reid Vapor Pressure summer gasoline blending specifications has been weighing on demand for butane as a blendstock, prompting prices to slide.

Summer gasoline blends usually only contain around 2% of butane in order to keep the blend's RVP low, as opposed to up to 10% in the winter months.

"Well, blending has disappeared, so we are [switching] to petchems," the source said, "They [petrochemical companies] know we are [switching to] petchems so they won't pay."

In the summer months, petrochemical steam crackers become the main demand outlet for butane. However, a depressed petrochemical sector means that butane prices need to come off some more before it is economical to crack butane over other feedstocks like propane or naphtha.

Also, healthier supply levels are failing to lend support to prices, with participants pointing to strengthening butane exports to Europe from the Gulf Coast.

"There is quite a bit of material and that's what's driving the price down," the source added.