NPRA ’10: Refinery margins key to propylene future - producer

28 March 2010 20:14  [Source: ICIS news]

BPRP refinery siteSAN ANTONIO, Texas (ICIS news)--Global propylene (C3) players will need to pay closer attention to the refinery system as it becomes increasingly relied upon as a source of the product because of lower cracker operating rates, a major olefins producer said on Sunday. 

New ethylene and polyolefin capacities in Asia and the Middle East will lead to cracker rates being cut in Europe and elsewhere, meaning less propylene will be produced by them.

The producer, speaking on the sidelines of the International Petrochemical Conference (IPC), said that in the medium term refinery margins and therefore operating rates would have a larger bearing on propylene pricing.

Refinery margins had been under pressure for some time with the result that operating rates of the fluid catalytic crackers (FCCs) which produce propylene as a by-product had been reduced,  adding to the pressure already imposed on propylene supply by cracker reductions.

The view was that poor margins would lead to more refinery capacity shutting down - as in the case of Total’s Dunkirk, France refinery.

Propylene contracts for April in Europe settled for the first time ahead of ethylene last week.

Propylene rose €70/tonne ($93/tonne) to €980/tonne FD (free delivered) NWE (northwest Europe), while ethylene settled €20/tonne up at €960/tonne FD NWE.

“This was a true reflection of the supply and demand situation” the producer said.

It said that refinery maintenance at key sites was still underway and demand from its customers was still very strong.

“Our customers maximise their volumes,” it said, adding: “I don’t believe that they buy volumes to hold in inventory... it is consumed as derivative performance is good.”

The producer said that it was already well-documented that some cracker capacity in Europe would have to close in order to counteract the impact of new, more competitive capacity in the Middle East and Asia.

This would mean propylene would exist in variations of tight until there was more investment in on-purpose propylene production through propane dehydrogenation or metatthesis sufficient to fill the gap.

Hosted by the National Petrochemical & Refiners Association (NPRA) the IPC continues through Tuesday.

($1 = €0.75)

For more on propylene visit ICIS chemical intelligence
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By: Nel Weddle
+44 20 8652 3214



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