Europe August ethylene fully confirmed at €1,120/tonne

27 July 2011 17:17  [Source: ICIS news]

LONDON (ICIS)--The European ethylene contract price for August has fully settled at €1,120/tonne ($1,623/tonne), up by €30/tonne from July, market sources said on Wednesday.

The price rise was mainly driven by an upswing in naphtha which has heavily impacted contract cracker margins. Contract parties added that underlying concerns regarding downstream demand, despite the improved sentiment in Asia, has mitigated the extent of the increase.

Players recognised that this round of discussions would be tough as it was important to keep demand going through the key August summer month while also trying to recoup some of the margin loss.

The settlement, which was agreed on a free delivered (FD) northwest Europe (NWE) basis on Tuesday, was between a key olefins producer and two of its customers, both non-integrated ethylene consumers.

A second producer then confirmed, followed by a major integrated consumer. All parties involved have confirmed directly.

Although the general view from market sources was that the settlement was in line with expectations, there was some disappointment on both sides.

One producer said; “it [the settlement] was not reflecting the higher feed and improved demand situation.”

While a consumer added that it would not confirm the settlement because it disagreed with the size of the increase.

Meanwhile, all eyes are watching the propylene market for some signs of a conclusion. So far, two producers and one major consumer have agreed at a rollover of €1,130/tonne, but remaining consumers are unwilling to settle at this stage.

Usually two producers and two consumers are required to confirm a settlement before it is regarded as an industry accepted reference price.

($1 = €0.69)

For more on ethylene visit ICIS chemical intelligence
Click here to find out more on the European margin reports

By: Nel Weddle
+44 20 8652 3214

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