29 May 2008 14:02 [Source: ICIS news]
LONDON (ICIS news)--Olefins producer Dow Europe has cut operating rates at all its European crackers in response to high feedstock costs which have squeezed cracker margins to unacceptable levels, a company source said on Thursday.?xml:namespace>
“We have reduced all our crackers by 5%” the source said, adding that it was no longer worthwhile to be producing incremental tonnes.
“We will still be able to fulfil all contracts” he said.
The question of whether or not to cut back cracker operations in the face of decreasing margins had been on players’ minds for some time.
It was only last week though when crude reached $135/bbl and naphtha breached $1,000/tonne for the first time, that margins reached the point where it was implied that many cracker operators would no longer be fully covering fixed cash costs.
Sources said that it was very hard to believe that more producers had not cut back.
Dow Europe operates crackers in the ?xml:namespace>
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