Europe cracker margins reach 18-month highs

11 August 2008 15:57  [Source: ICIS news]

LONDON (ICIS news)--European cracker margins based on naphtha feed were at their highest level since February 2007, driven by gains in key olefins prices and supported by a 20% drop in naphtha values since its peak in early July, according to ICIS pricing analysis on Monday.

 

Contract cracker margins recorded a sharp increase of over €110/tonne ($164/tonne) in the week ending 8 August, as dollar-denominated naphtha prices fell by 8.4% on the close of Friday.

 

Margins would have been higher but for a strengthening of the US dollar versus the euro, which pulled margins down by around €55/tonne.

 

Spot naphtha margins were continuing to recover more strongly than contract, showing a €90/tonne advantage over contract.

 

Variable contract margins had moved into negative territory in June, when feedstock costs spiralled on the back of soaring crude prices and olefins prices were still languishing at unsatisfactory second-quarter contract levels.

 

This led cracker operators to cut production rates and change to cheaper alternative feedstocks where possible.

 

Significant rises for third-quarter ethylene (C2), propylene (C3) and butadiene (BD) contracts, up €190/tonne, €88/tonne and €280/tonne respectively, put margins back on course.

 

Open-spec spot naphtha cargoes were assessed in a $939-949/tonne CIF (cost, insurance and freight) NWE (northwest Europe) range, by global market intelligence service ICIS pricing, at noon.

 

($1 = €0.67)

 Peter Taffe contributed to this article

The weekly margin report for polyethylene (PE) in Europe includes ethylene margins. It examines margins across the business chain from naphtha to PE. For a free trial and more information email paul.ray@icis.com 
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By: Nel Weddle
+44 20 8652 3214

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