Europe olefins demand healthy in shutdown season

08 August 2008 12:31  [Source: ICIS news]

By Nel Weddle

 

LONDON (ICIS news)--A number of scheduled cracker shutdowns in Europe from August to November would put some constraints on supply for the remainder of the year given current healthy demand, olefins market players said on Friday.

 

Unplanned production issues earlier in the year together with restart delays after planned outages, as well as reduced cracker rates because of economics, had all impacted on balances.

 

Some producers were not in as healthy a position as they would have liked to have been and this would mean that their supply constraints would be greater.

 

Most agreed, however, that the turnaround slate was not as pronounced or as concentrated as in similar periods in 2006 and 2007.

 

A couple of producers said demand was still surprisingly strong, despite August typically being the time for a seasonal dip and the significantly higher third-quarter contract prices for ethylene (C2) and propylene (C3).

 

“Demand is still healthy. It was my assumption that customers would reduce [consumption] after the settlements,” said one key producer.

 

“Obviously, we didn’t increase prices enough!”

 

Another major producer said: “From a nomination standpoint, not only for next month but also for the next quarter... if you look at the numbers, you do not see any slowdown.”

 

Only one consumer was reported to have reduced its ethylene offtake as it had struggled to pass the higher ethylene costs on to its consumers.

 

However, some sources said that several derivative shutdowns were also planned to coincide with cracker maintenances, so the overall picture was such that the markets would most likely be balanced.

 

The wild card would be the import potential from the Middle East, Asia and the US, some sellers said, and it would be this which would determine the European outlook.

 

Spot ethylene and propylene were dropping in Asia and in the US and traders were already eyeing future arbitrage opportunities to Europe.

 

Third quarter C2 and propylene C3 contracts were settled up €190/tonne at €1,228/tonne and €88/tonne at €1,015/tonne, respectively on a FD (free delivered) NWE (northwest Europe) basis.

Operator	Location	C2 capacity - 000 tonnes/year	Shutdown dates
INEOS Olefins	Grangemouth KG, UK	725	Four weeks mid-August*
ExxonMobil	Mossmorran, UK	820	August*
Total/ExxonMobil	Antwerp, Belgium	250	Aug-September*
Lukoil Neftokhim	Burgas 2, Bulgaria	150	Three weeks September
Dioki	Zagreb, Croatia	90	Four weeks September
HIP-Petrohemija	Pancevo, Serbia	200	September
ExxonMobil	Notre Dame de Gravenchon, France	400	H2 2008*
Polimeri	Priolo, Italy	745	Six weeks from mid September
LyondellBasell	Munchmunster, Germany	340	Oct-November
Unipetrol	Litvinov, Czech Republic	519	Three weeks October
Repsol	Tarragona, Spain	660	8 weeks Oct-November

*not confirmed.

For more on European cracking facilities visit ICIS plants and projects
For more on C2 and C3 visit ICIS chemical intelligence
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By: Nel Weddle
+44 20 8652 3214

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