A brief observation of the Northwest European markets and its place in the global naphtha supply chain.

Tank terminals play a vital role in current global markets. Their primary function is to physically balance supply and demand along the supply chain and to facilitate opportunities. The ARA region is the main trading hub within Northwest Europe due to its outstanding infrastructure, its network with many active market players and its place within the overall supply chain. We will take a closer look at the naphtha markets in this region and its importance for the international oil markets. Naphtha is retrieved from various sources like condensate gas, petroleum distillates or the distillation of tar and is mostly used in the gasoline blending and petrochemical markets.

Within ARA, with the Port of Amsterdam being a gasoline blending hub, demand for naphtha is fairly high and it makes North West Europe net-importer for the product.Other regions like the Middle East , the Mediterranean and India are net-exporters which provide global trade flows of the product. Competition for import to North West Europe comes from petrochemical markets in East Asia, which are also big net-importers as seen in the top graph to the right. The imbalance between the supply and demand in the different regions provides trading opportunities in various ways.

The ARA naphtha import is headed by Russia, having the biggest volume compared to the other countries with UK, Germany, Algeria, France and Spain as well in the top six sources list, as seen in the graph. This shows the reliance on near as well as less local markets of the various market participants. A shrinking imbalance is negative for the ARA tank storage sector. However, considering the market size and the option to switch to the gasoline segment the impact seems small.

PJK International provides direct insight in the market by not only its annual Tank Terminal reports, but also with weekly reports on stock levels of various products (including naphtha) stored at independent tank terminals in the ARA region, a weekly report on the trade flows up and down the Rhine river and daily barge freight rates for transport within ARA and up the Rhine. This way, we provide tools for better and quicker decision making processes.

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