03 January 2008 11:53 [Source: ICIS news]
By Lucy Craymer
LONDON (ICIS news)--European petrochemical producers expressed concern on Thursday that margins would be further squeezed after NYMEX and ICE Brent crude futures, as well as naphtha, hit record highs.
Naphtha was valued at $872-876/tonne (€593-596/tonne) while NYMEX light sweet crude futures were at $99.77, up $0.15 in early morning trading, after hitting the $100/bbl peak on Wednesday.
Ten parts per million (ppm) premium unleaded gasoline prices in Europe reached a record high of $877/tonne FOB (free on board) AR (?xml:namespace>
Higher blending costs meant methyl tertiary butyl ether (MTBE) prices were at their highest level since July 2007, and one trader said it expected MTBE values would imminently surpass this level on what it said were likely crude increases.
With first-quarter ethylene and propylene contracts already agreed in December when oil and naphtha feedstock prices were lower, the spikes upstream confirmed European olefin producers’ worst fears, a producer said.
The main concern was the record high cost of naphtha, which was already eating into narrow first-quarter margins, the producer added.
Olefin spot prices are usually determined more by supply and demand than feedstock costs but most producers said it made no sense to sell marginal tonnage with upstream costs so high.
A styrene trader said higher crude would not affect prices today but it would in the longer term.
“Refinery margins, cracker margins, are all squeezed and as a result producers are cutting back on production,” he said.
“The same is true with styrene. It has been cut back in Europe, the
Spot styrene prices are up $100/tonne on last month while upstream benzene has increased $50/tonne in the same period.
An acetic acid trader said increased raw material costs were causing concern among traders and buyers as they were already relatively high.
The effects would be seen on aromatics prices first and it will take some time before the increases on other products follow, he added.
Acrylonitrile-butadiene-styrene (ABS) sources said prices would not be impacted until the high crude prices had filtered through benzene and styrene.
The increased price of oil has yet to hit European petrochemical company stocks. The Dow Jones European Stoxx Chem Index was only slightly down at 632.66 points.
($1 = €0.68)
Fiona Bond, Ed Cox, Linda Naylor, Charlie Shaw, Peter Salisbury and Sam Weatherlake contributed to this article
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