Europe cracker margins lowest since 2002 - bank

21 July 2008 11:14  [Source: ICIS news]

LONDON (ICIS news)--Soaring naphtha prices in Europe have brought cracker margins to their lowest levels since 2002, while Middle East producers reap the benefits, said a report by Citigroup released on Monday.

 

Small, higher fixed cost crackers in Europe were now loss-making, while a number of crackers had cut operating rates since May, the bank said.

 

“The irony is that while the surge in oil and natural gas prices is hastening the downturn of profits for European and US producers, it is at the same time benefiting the new Middle Eastern producers,” said Citigroup.

 

Middle East producers have been able to ramp up production on fixed feedstock price allocations, with profits rising to record levels in the region.

 

Citigroup said price increases in ethylene and propylene chains might lead to some temporary relief for European producers in the third quarter but the onset of Middle East capacity would drive down profitability in the first half.

 

Click here to find out more on the European polyethylene margin report

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By: Mark Watts
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