13 February 2006 14:40 [Source: ICIS news]
LONDON (ICIS news)--European ethylene (C2) spot prices have increased by up to Euro180/tonne or around 20% in recent days as unplanned production hiccups have exacerbated supply concerns, market sources said on Monday.
Prompt spot deals along the ARG (Aethylen Rohrleitungs Gesellschaft) pipeline were concluded at Euro930/tonne and then at Euro1,000/tonne FCA (free carrier) Antwerp and further price gains were expected. These deals compared to Euro 820-835/tonne FCA Antwerp in January.
“The fact that spot levels have reached four digits, highlights the very tight nature of the prompt market,” said one key producer.
This additional supply disruption amid scheduled spring maintenance at several European crackers led to players tightening the reins and few were willing to part with material even if they had the flexibility to do so. Most players have sought to avoid spot exposure; few derivative producers are able to afford such price levels, leaving spot demand largely to producers caught short.
Ethylene contract demand was strong, sources said, with most consumers maximising offtake levels. However, some cautioned that a large part of this demand could be attributed to pre-buying activities as the majority of the market anticipated a higher value for Q2 contracts. The first quarter contract settled at Euro785/tonne FD (free delivered) Northwest Europe (NWE).
In contrast, propylene spot levels remained firm but steady in the low to mid Euro800s/tonne FD NWE. Production hiccups at crackers and refinery FCCs (fluid catalytic crackers) were being counterbalanced by production problems downstream and logistical issues – notably low Rhine water levels – also helped to keep a lid on spot prices at the coast.
Demand from propylene derivatives was also strong but again, expectations of a higher contract in Q2, was being seen as a contributory factor.
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