Naphtha Continues to Drop Amidst European Oversupply and Feedstock Competition

European Surplus

The European naphtha market remains heavily supplied due to the seasonal end of gasoline blending demand and reduced operating rates at local petrochemical facilities caused by high regional energy costs. This surplus is weighing heavily on the global benchmark.

LPG Substitution Impact

The price action in Liquefied Petroleum Gas (LPG), specifically propane and butane, has made it a cheaper alternative feedstock for flexible petrochemical crackers. This substitution reduces the total demand for naphtha, effectively capping its price upside despite strong end-user demand in Asia.

Asian Demand Pull

Robust demand from Asian petrochemical crackers continues to pull surplus European naphtha eastwards. However, the high cost of shipping and the price competition from alternative feedstocks are limiting the extent to which Asian demand can support the global price.