FocusC2, C3 Europe sellers bullish on Q1

14 December 2007 14:29  [Source: ICIS news]

By Edward Cox

LONDON (ICIS news)--European olefins producers were bullish on first-quarter contracts, repeating on Friday the need for big increases of about €80-90/tonne ($118-132/tonne) to avoid negative margins heading into 2008.

"Record high naphtha prices are a major part of price negotiations. Right now we are looking at negative cracker margins and need an increase of €80-90/tonne on ethylene," said one producer.

Sellers had previously mentioned target ethylene target hikes of €100/tonne for the first quarter, with a similar aim for propylene.

Whatever increase was achieved on ethylene, propylene was likely to rise less, however, following the trend seen in previous recent settlements, said a number of sources. 

Buyers were largely resigned to notable increases, but some drew attention to suggestions that upstream costs might ease later in the first quarter and hoped this would be factored into negotiations.

One consumer said on Friday it expected both ethylene and propylene to increase €50-80/tonne and this broadly reflected price ideas of other sellers and consumers.

Feedback was emerging from discussions held on the sidelines of the European Petrochemical Luncheon this week in Brussels, Belgium, where key market sources had a chance to sound out respective contract partners.

Naphtha prices once again reached an all-time high this week, with a trade at $849/tonne CIF (cost, insurance and freight) NWE (northwest Europe).

Naphtha prices have been volatile in the fourth quarter, moving well above levels anticipated by most olefins players, and up from the low $700s/tonne CIF NWE when fourth-quarter contracts were established. 

Most sources expected settlements to come in the week beginning 17 December, the last really active trading week of 2007.

With the wide gap in ideas between some contract partners there were suggestions, however, that talks could take longer, and possibly run into the new year.

($1 = €0.68)

By: Edward Cox
+44 20 8652 3214

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