18 December 2008 15:55 [Source: ICIS news]
LONDON (ICIS news)--A large back-integrated polyolefins producer has followed January monthly contract settlements for ethylene (C2) at €520/tonne ($743/tonne) with two major suppliers, down €600/tonne on the fourth-quarter value, a company source said on Thursday.
“We have followed €520/tonne for ethylene, but this does not mean that we have changed our position [on contract mechanisms],” the source added.
“We will have free discussion for February and for March and at the end of the first-quarter we will review. Let’s see how it goes,” the source said.
The company source said that a monthly settlement was a way of coping with volatility in these uncertain times but should not be viewed as an “opportunistic approach.”
“The degree of uncertainty [for the first quarter] is too great,” it said.
On Tuesday two ethylene contracts for January were agreed between two olefins producers and another key integrated polyolefins producer, all well-known advocates of a move away from a quarterly contract basis.
More support for the monthly system was now emerging. Two back integrated polyolefins producers and one non-integrated consumer had confirmed a monthly settlement on the buying side.
On the selling side, the two largest European producers and another key producer have so far followed and confirmed settlement. Meanwhile, some quarterly discussions were still under way.
The ethylene contract is settled on a free delivered (FD) northwest Europe (NWE) basis.
($1 = €0.70)
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