Europe olefins producers revise Q3 offers upwards

30 June 2008 16:14  [Source: ICIS news]

LONDON (ICIS news)--Recent record highs for crude and naphtha have led to an upwards revision of third-quarter contract offers for ethylene (C2) and propylene (C3), some producers said on Monday.

A key producer said that it had moved to plus-€220/tonne ($349/tonne) for ethylene, a gain of €40/tonne compared with its pricing indications last week, and was now also targeting a three-digit increase for propylene.

“Producers’ targets have changed,” said another supplier, adding that the risk premium for a 90-day set price would not be insignificant given the unrelenting volatility upstream.

It was not clear whether another producer, who had previously targeted an increment for ethylene of €275/tonne, had also revised its offer.

On the buy-side, one ethylene consumer said that it was still looking for a number in the region of €1,200/tonne FD (free delivered) NWE (northwest Europe).

Last Friday, crude oil moved above $140/bbl and naphtha reached $1,150/tonne CIF (cost, insurance, freight) NWE which caused some producers to retreat in order to discuss internally whether the first offers were still viable.

Crude hit another record high on Monday, reaching $143.91/bbl and naphtha was pegged at around $1,160/tonne, according to global chemical market intelligence service ICIS pricing.

Contract talks for Q3 were already challenging, sources said, but the constantly shifting upstream backdrop, was making the situation all the more difficult.

Significant price hikes were required in order to restore cracker margins which were currently negative and under increasing pressure. Most buyers had accepted this argument, but had differed - quite widely in some cases - on the size of the hike.

Second-quarter contracts for ethylene and propylene were established at €1,038/tonne and €927/tonne FD NWE.

For more on ethylene and propylene please visit ICIS chemical intelligence
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By: Nel Weddle
+44 20 8652 3214

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