08 March 2011 13:13 [Source: ICIS news]
(recasts, clarifying penultimate paragraph)
LONDON (ICIS)--PCK has cut propylene capacity at its refinery fluid catalytic cracker (FCC) in Schwedt, Germany, as a consequence of reducing gasoline production in order to manage burgeoning stocks, market sources said on Tuesday.
The introduction of 10% bioethanol-blended gasoline (E10) in Germany has proved unpopular with motorists and demand has been very low, forcing refineries to adjust output accordingly.
Production rates were cut last week at the Schwedt FCC, which produces propylene as a by-product of gasoline production.
“We are currently trying to mitigate the impact... we have informed our customers that we have to reduce propylene supplies” a source at one of the PCK shareholders BP Petroleum & Refining (BPRP) said.
Propylene supply in Europe is being described as “tricky” having been affected by planned and unplanned production issues since the start of the year, and the shutdown of the Libyan cracker at Ras Lanuf during a period of relatively healthy demand.
Shortness of supply had contributed to contract prices reaching their third consecutive record high in March - €1,185/tonne ($1,646/tonne) FD (free delivered) NWE (northwest Europe).
Spot prices were also at record high levels. Two US cargoes were recently reported sold into Europe at €1,240-1,250/tonne CIF (cost, insurance and freight) NWE.
Approved for use from 1 January 2011, Germany's demand for E10 has been low as drivers fear the fuel could damage car engines. This had left the country's refiners with unsold stock of E10, forcing them to reduce production.
"It's a problem with the E10 [gasoline], consumers are not accepting it,” the BPRP source said.
The PCK Schwedt FCC has the capacity to produce 250,000 tonnes/year of propylene and is key to the inland German market. PCK shareholders also include Shell, Agip and Total.
($1 = €0.72)
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