22 August 2008 17:02 [Source: ICIS news]
By Edward Cox
LONDON (ICIS news)--European spot olefins could fall on a possible drop in demand in September, leading to lower fourth-quarter contracts if upstream energy markets stayed well below recent record levels, market sources on Friday.
“The olefins market is quiet at the moment,” said one northwest European producer.
"We hear some ethylene sellers offering material around on the back of good operating rates around ?xml:namespace>
The consensus from sources was that ethylene was now comparatively weaker against propylene, a reversal from previous patterns in the quarter.
Spot propylene was largely stable, with business reported within the same ranges of €875-900/tonne FD (free delivered) NWE (northwest Europe) for chemical grade and €990-1,015/tonne CIF (cost, insurance and freight) NWE for polymer grade quoted last week by global chemical market intelligence service ICIS pricing.
One large consumer said: “We have several offers on the table at present and did take one parcel. However, we will ignore the others because we expect the market will drop in September.”
European crackers have been running well recently, with sellers more content after the third-quarter monomer contract hikes - €190/tonne on C2 and €88/tonne on C3 - and subsequent falls in naphtha costs.
Naphtha has fallen from the high $1,100s/tonne CIF NWE in mid-July to the upper $900s/tonne CIF NWE on Friday.
Some market players cited volatility in the market, however, after spot levels shot up around $60/tonne (€40/tonne) on Thursday, on the back of a $5/bbl spike in crude oil.
Sentiment was softer on ethylene, with German consumers reporting several offers on the pipeline, although buying interest was low.
“We can see ethylene potentially coming off,” said another large supplier. "There is flexibility in the system although we don’t expect a drop in demand in September. It’s more to do with crackers running well."
“With Asian prices continuing to fall we do think the arbitrage window from the Middle East to Europe will widen, although demand in
Much reference was also made to a variety of derivative outages planned in September and October, which were likely to remove pockets of demand, especially around NWE.
($1 = €0.67)
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