Europe November ethylene fully agreed down by €20/tonne

28 October 2011 12:31  [Source: ICIS news]

LONDON (ICIS)--The Europe ethylene contract price for November has fully settled at €1,095/tonne ($1,564/tonne), down by €20/tonne because of ongoing soft demand, market sources said on Friday.

The first settlement came late on Thursday afternoon between a major producer and one of its consumers, a major integrated polyolefins producer.

Two other producers and two other consumers, both of whom are non-integrated ethylene consumers, have also confirmed the new settlement.

Sources remarked on the spread of support from derivatives with polyethylene (PE), polyvinyl chloride (PVC), vinyl actetate monomer (VAM) and others all in the contract mix from the buying side.

Increasingly soft demand from ethylene’s key derivative PE, initially on the back of weak demand in Asia, but then subsequently because of uncertainties over the global economy as well as the traditional year-end de-stocking, has seen supply lengthen to the extent that cracker operators have been steadily reducing output.

Crackers are running at around 70-80% according to sources, the majority weighted towards the lower end of the range.

One consumer said that there had been mixed feelings from buyers. A few had been in favour of a decrease to alleviate pressure on their downstream margins, but others were swayed towards promoting some stability, suggesting that a rollover would be “not so bad”.

The €20/tonne decrease in the end reflected expectations of a continued decline in demand in November as well as slightly weaker naphtha prices on average in October compared with September.

“Cracker margins are being squeezed, but downstream margins are being squeezed more,” the major integrated polyolefins producer said.

($1 = €0.70)

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Click here to find out more on the European margin reports

By: Nel Weddle
+44 20 8652 3214

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