07 May 2010 15:14 [Source: ICIS news]
LONDON (ICIS news)--European olefins markets are being impacted by a raft of unplanned cracker and derivative issues, driving ethylene (C2) and propylene (C3) markets in opposite directions, market sources said on Friday.
Sources said cracker reductions were in force at ?xml:namespace>
Borealis’ CEO Mark Garratt told ICIS on Thursday its cracker at Porvoo in
Dow Chemical’s No 2 cracker at Terneuzen in the
Dow recently had some production difficulties at its
Scheduled maintenance was still under way at its cracker at Boehlen in
Ethylene supply was now tight for May, sources said. This was contrary to earlier market expectations that supply would be long as cracker rates were high and scheduled maintenances almost at an end for the spring season.
The shipping of up to five cargoes out of northwest Europe and the
“If there are some [production] hiccups, immediately there is a reaction because there is nothing in the pipeline,” an integrated producer said.
“[We] got lots of [ethylene] enquiries this week, more than ever in my trading history,” a trader said.
Spot prices were being pegged at €875/tonne ($1,108/tonne) FD (free delivered) NWE (northwest
Conversely, propylene was still showing signs of easing despite reduced cracker running rates, because some producers had earlier experienced derivative problems that had freed up propylene. This was exacerbated further by Total’s force majeure declaration on polypropylene (PP) production in
However, some sources thought reduced cracker output would be offset by lower demand due to derivative issues.
Sources talked of congestion building at certain ports and at some sites inland. Two or three May loading cargoes from the US Gulf and Venezuela had been mooted to be destined for Europe, but even last week, sources reported there was little appetite for all the volume and as such at least one of the cargoes was being re-routed to Asia.
Propylene spot prices were recently assessed at around €1,000/tonne CIF (cost insurance freight) NWE or below.
Apart from the uncertainties surrounding supply, the softening of the Euro against the US dollar as a result of the Greek financial crisis meant market participants were also unwilling or simply unable to take any trading risks.
Ethylene was available from the Middle East and Mexico, but product from these regions was also dollar-priced and a weakening euro negated any potential gains from firming ethylene spot levels in
US ethylene values had weakened significantly in recent weeks, prompting speculation whether this would make US cargoes economically viable for European buyers.
$1 = €0.79
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