05 December 2011 16:26 [Source: ICIS news]
LONDON (ICIS)--The European contract ethylene cracker margin fell by 24% over a week to its lowest level since early January because of firm feedstock values combined with a drop in ethylene, co-product propylene and butadiene (BD) December contract prices, according to ICIS margin analysis on Monday.
In the week ending 2 December, the contract margin slumped by €93/tonne ($124/tonne) because of a 2% rise in euro-based naphtha costs after taking into account a 1.2% weakening of the US dollar.
Co-product credits fell by 2.5% primarily on the back of the reductions in the December propylene and butadiene contract prices.
The average contract cracker margin was at €350/tonne in January, peaked at €667/tonne in June and apart from a brief improvement in August because of post-summer restocking ahead of planned maintenance shutdowns, the margin has steadily declined ever since.
Spot margins fell by €25/tonne in the week ending 2 December. At just €21/tonne, it is clear why European cracker operators have significantly cut output and have tried to align production extremely closely with the low levels of demand.
Sources estimate average operating levels at a maximum of 70% of nameplate capacity.
The December propylene contract price was settled at €995/tonne FD (free delivered) NWE (northwest Europe), down by €18/tonne from November, while the butadiene contract price settled down by €200/tonne to €1,650/tonne FD NWE.
The ethylene contract price for December is down by €15/tonne at €1,080/tonne FD NWE.
The decreases were because of poor demand and lengthy supply.
($1 = €0.75)
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