Europe ethylene margins up in 2012 but caution needed - producer

20 February 2012 11:53  [Source: ICIS news]

Repsol cracker at Sines, Portugal (Source: Repsol)LONDON (ICIS)--Ethylene margins will improve slightly this year but will not be much better overall than in 2011, a major European producer said in an interview published by ICIS Chemical Business (ICB) on Monday 

Although the seller conceded that there would be more stability in Europe this year than last, it said caution was still necessary in view of continuing feedstock volatility and the current geopolitical climate.

“By the end of 2012 or the start of 2013 we might just approach something better, but there is still a long way to go,” it said.

“Downstream markets are improving, we are increasing olefins prices but we do not control the naphtha market.”

Early February saw margins rebound to average almost €300/tonne ($395/tonne), the result of higher ethylene and co-product contract prices. However, they were weighed down by record-high naphtha prices in euro terms.

The upsurge in cracker margins may prove to be a brief reprieve for European cracker operators, but there is still room for improvement.

The producer noted that January was one of the worst months for margins for 10 years, adding that margins remained poor and olefins producers were hoping for further gains next month. “We are obliged to try and improve margins for crackers – it is more or less a must,” said the source.

It pointed out that operating rates at European crackers were higher so far this year, rising by at least 5% since December - possibly by as much as 7-10% - with utilisation rates averaging around 85%.

Cracker margins in Europe and the US made healthy gains for 2011 overall, despite a disastrous fourth quarter.

($1 = €0.76)

Elaine Burridge contributed to this article

For full story on margins in the US and Europe, see ICB's February 20 issue

By: Andy Brice
+44 20 8652 3214

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