22 September 2008 17:12 [Source: ICIS news]
By Nel Weddle
LONDON (ICIS news)--European ethylene contract cracker margins have reached a new peak this year, even when taking into account last week's fourth-quarter C2 drop of €108/tonne, according to ICIS analysis on Monday.
The average third-quarter contract margin was around €392/tonne ($568/tonne), but margins were around 27% higher - around €500/tonne - by the end of the week ending 19 September, following the fourth-quarter settlement at €1,120/tonne.
Last week, US dollar based naphtha prices had fallen 8%, while the US dollar slipped 1.5% against the euro.
Spot naphtha margins were relatively flat, as lower naphtha values were offset by lower spot ethylene and other co-product prices.
With spot margins around 45% lower than that of contract, it was not at all surprising that cracker operators were reported to have undertaken rate reductions in order to avoid producing the incremental tonne, and not least to combat the increasing supply length.
Contract margins for LPG (liquefied petroleum gas) and alternative cracking feedstock remained below those for naphtha and it has been seen by some market players as the end of the LPG cracking season.
Crude and naphtha prices had picked up on Monday.
At 12:00 GMT, October Brent stood at $106.68/bbl, up $2.13/bbl, while naphtha cargoes were assessed at $845-855/tonne CIF (cost, insurance and freight), up $41/tonne from last week's close.
($1 = €0.69)
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