NPRA '10: Higher C3 spot needed to rebalance Europe market

29 March 2010 01:02  [Source: ICIS news]

Strikes at French refineries, such as this Total plant in Donges, have contributed to tight propylene stocksSAN ANTONIO, Texas (ICIS news)--European propylene (C3) spot prices need to rise further if the gaps in supply are to be filled, market sources said on Sunday on the sidelines of the International Petrochemical Conference in San Antonio, Texas.

Traders said that the market would only begin to see some relief and the return to some semblance of a balance when spot prices rise to levels that would open the arbitrage and attract deep-sea volumes away from the US market.

"Prices need to move above €1,100/tonne ($1,466/tonne) CIF (cost insurance freight) NWE (northwest Europe), given that US prices are currently around $1,700/tonne [delivered]" a trader said.

Spot prices were currently being pegged in the low to mid €1,000s/tonne according to global market intelligence service ICIS pricing.

"It will get there" another trader said, adding that the potential to work southeast Asian volumes into Europe was currently being assessed. There was still demand to cover shorts, the trader said adding that it was just a matter of time.

The first trader predicted that the arbitrage would be workable by May.

However, consumers said that they were not in a position to pay such prices. While derivative demand had indeed been better than expected, they were under constant pressure to recover the contract price increases that had been imposed all year and still remain competitive on the global market.

Producers hit by unplanned production hiccups were the only obvious buyers, sources said.

Propylene supply in Europe had been extremely tight in Europe since the start of the year because of cracker and refinery rate reductions, unplanned production problems and more recently the strikes at French refineries last month.

Derivative demand was strong supported primarily by the export market, particularly to Asia

The tight supply and demand situation was highlighted by the recent €70/tonne increase in the April contract settlement, which at €980/tonne FD (free delivered) NWE, was, for the first time, higher than ethylene.

Ethylene settled at €960/tonne, a rise of €20/tonne.

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

($1 = €0.75)

For more on propylene visit ICIS chemical intelligence
Click here to find out more on the
European margin reports
To discuss issues facing the chemical industry go to
ICIS connect

By: Nel Weddle
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index