25 September 2008 11:34 [Source: ICIS news]
The contract was agreed at €953/tonne on Wednesday by a large integrated polyolefins producer and one of its suppliers, a key Mediterranean producer.
Both parties later confirmed the settlement, which was done on a free delivered (FD) northwest Europe (NWE) basis.
Another key Germany-based producer reported that it had since agreed this number with at least three of its customers, two of whom are non-integrated.
Confirmation was still pending from one of these consumers.
The reduction was widely expected following the downturn in crude and naphtha feedstock markets over the past couple of months.
However, other propylene sellers said that while they would follow the settlement, as it was largely in line with general market expectations, they had been a little surprised at the extent of the decrease.
“Its at the low end of our expectations, [given] the volatility and uncertainty with naphtha,” one major merchant seller said.
Another seller said that the decrease was “a bit on the high side” pointing to the possibility that energy would go higher in the fourth quarter. The seller had been targeting a decrease of €50/tonne.
European propylene was currently being viewed as balanced to long.
Widely-rumoured cracker cutbacks to combat ethylene length was expected to offset any potential weakness in demand.
($1 = €0.68)
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