07 November 2011 16:24 [Source: ICIS news]
LONDON (ICIS)--Contract ethylene cracker margins based on naphtha feedstock have fallen to the lowest level since April on a combination of a lower November contract price, firmer naphtha prices and the strength of the US dollar against the euro, ICIS margin analysis showed on Monday.
Contract margins fell by 30%, dropping €162/tonne ($222/tonne) week-on-week because of a 4% rise in feedstock costs. A slight rise in naphtha values was magnified by a 3% strengthening of the US dollar.
Spot margins fared a little better, supported by higher spot ethylene euro-based prices and co-product credits. However, spot margins remain significantly below contract margins, at a €347/tonne disadvantage.
The November ethylene contract settled at €1,095/tonne FD (free delivered) NWE (northwest ?xml:namespace>
The ethylene market has been suffering from poor demand for its key derivative polyethylene (PE), as uncertainties over the global economy have drained consumer confidence. This has been further complicated by end of year de-stocking activities.
Cracker operators have been cutting back production rates in response, and rates are pegged at about 70–80% on average.
($1 = €0.73)
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