News
26/08/31
European naphtha imports retreat in August
London, 31 August (Argus) — 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. By Jide Tijani Send
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