27 February 2012 16:10 [Source: ICIS news]
LONDON (ICIS)--An initial European ethylene March contract settlement has been agreed at a record-high €1,305/tonne ($1,764/tonne), up by €86/tonne from February on the back of firm upstream costs, a major non-integrated consumer said on Monday.
"It is a good compromise," the consumer said. "Some suppliers were not willing to move even a number beginning with a nine."
The previous highest settlement was in May 2011 at €1,230/tonne.
The contract, which is agreed on a free delivered (FD) northwest Europe (NWE) basis, is fully confirmed between the major consumer and one of its suppliers, a major merchant ethylene seller. Confirmation from another two contract buyers is pending.
"It is a decent settlement, it’s not too far away [from market expectations]," the major ethylene seller said.
An increase had been expected to alleviate the pressure on cracker margins, but consumers rejected producer calls for a three-digit increase on the grounds that demand, albeit improved compared with the beginning of the year, was still fragile.
($1 = €0.74)
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