European naphtha imports fell in August as an oversupplied regional market, weak petrochemical demand and Rhine shipping disruptions curbed requirements for imported barrels.
Imports into Europe fell to 1.40mn metric tonnes (t) in August from 1.69mn t in July, Vortexa data show. The decline was led by lower arrivals from Algeria, which dropped by about 61pc to 155,700t from 397,400t a month earlier. Arrivals from Italy, Spain and the US also fell from July levels.
Exceptionally low Rhine water levels hampered European demand through much of August, restricting barge movements into Germany and disrupting feedstock deliveries to inland petrochemical consumers. Several crackers cut operating rates because of logistical constraints, while facilities around Wesseling and Ludwigshafen were among those most exposed to the disruption. Water levels at the Kaub bottleneck fell to a record low of 17cm during the month before recovering after rainfall later in August.
The logistical issues compounded already weak petrochemical demand, leaving Europe increasingly plentiful naphtha. Independently held naphtha stocks in the Amsterdam-Rotterdam-Antwerp (ARA) hub rose to around 600,000t by mid-August from 392,000t in early July, before dropping to 459,000t in the week to 26 August, according to Insights Global. The build-up was partly offset by stronger gasoline blending and a modest recovery in cracker feedstock demand as Rhine conditions improved. Northwest European naphtha cracks against North Sea Dated crude stayed negative throughout August, averaging a discount of $6.41/bl.
As surplus barrels accumulated, European suppliers increasingly turned to export markets. Mediterranean naphtha exports to Asia rose during August, supported by recovering Asian petrochemical demand and an open east-west arbitrage. Flows across the Atlantic also increased, with Europe exporting about 104,000t of naphtha to the US in August — roughly triple July volumes — Kpler vessel-tracking data show.
Market participants said mounting European supply coincided with firm US naphtha values, improving arbitrage economics for Europe's growing surplus. Strong US gasoline and natural gasoline (C5) prices supported demand for imported material, while discounted European cargoes could be used in gasoline blending or re-exported to Venezuela, where naphtha is used to dilute heavy crude. One trader said Europe was producing more paraffinic, petrochemical-grade naphtha than traditional outlets could absorb.
Some fundamentals nevertheless supported naphtha values toward the end of the month. Strong west African demand for European gasoline boosted blending activity, while lower operating rates at Dangote's 700,000 b/d Lekki refinery in Nigeria increased regional gasoline import requirements. The gasoline-naphtha spread widened to $391/t on 27 August, its highest level in more than four years, helping absorb excess naphtha supply even as petrochemical demand stayed subdued.
Improving Rhine logistics and firmer blending demand offered some support heading into September, although market participants continued to describe the European naphtha balance as well supplied.

