27 July 2010 11:58 [Source: ICIS news]
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LONDON (ICIS news)--An initial European August ethylene (C2) contract has been agreed down €18/tonne ($23/tonne) at €940/tonne, while propylene (C3) simultaneously settled €38/tonne lower at €940/tonne, a major olefins producer said on Tuesday.
Decreases had been anticipated by many sources because of the very wide price discrepancy between Europe and the US and Asia. Such a wide gap was not sustainable since it was killing export demand for European derivatives. It was this export demand that had supported the European market throughout the economic crisis.
Some producers had argued that tighter-than-expected supply and few signs of any slowdown in offtake by consumers – particularly for ethylene – meant that a rollover or even an increase could be justifiable.
The contracts settled at parity for the first time since the pricing mechanism went monthly in January 2009.
The contracts, which were fully confirmed, settled on a free delivered (FD) northwest Europe (NWE) basis. The buying counter party was a key non-integrated consumer.
Usually, a further two contract parties - one consumer and one producer - are required to confirm the number before it is regarded as an established contract price.
($1 = €0.77)
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