07 March 2008 15:31 [Source: ICIS news]
LONDON (ICIS news)--A two-tier pricing system is developing on the European ethylene (C2) market with pipeline and deep-sea spot pricing moving separately, a major olefins buyer said on Friday.?xml:namespace>
A combination of weak Asian prices plus a soft US dollar had seen a raft of offers from Libya, Iran and Saudi Arabia over the past few weeks and spot numbers had moved from $1,400/tonne (€910/tonne) down to $1,320/tonne and below on a CIF (cost insurance freight) NWE (northwest Europe basis, according to global market intelligence service ICIS pricing.
This compares with last pipeline deals of €1,010/tonne FD (free delivered) and the first-quarter contract which currently stood at a record high €1,023/tonne FD NWE.
Sources said that the lower priced deep-sea volume was unlikely to influence pipeline prices to any great extent as few players were able to take advantage because of terminaling rights and a lack of flexibility on their supply contracts.
Additionally, capacity restrictions on the ARG (Aethylen Rohrleitungs Gesellschaft) pipeline, plus high upstream costs were seen to be supporting prices.
Contract prices were fuelled by pipeline values so the general view was that while weak deep-sea levels might colour market sentiment, little impact on upcoming second-quarter discussions was expected.
($1 = €0.65)
For more on ethylene visit ICIS chemical intelligence
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