UpdateEurope May propylene confirmed down €15/t at €1,230/tonne

27 April 2012 14:10  [Source: ICIS news]

LONDON (ICIS)--The European May propylene contract price has been fully confirmed at €1,230/tonne, down by €15/tonne ($20) from the previous month, two main producers and two consumers said on Friday.

An initial settlement was reached between one major producer and one pure consumer earlier on Friday. After some buyer reluctance, one net consumer later confirmed the reduction with a second main manufacturer. A third producer also agreed this with the first settling consumer.

The initial settling seller said that cost recovery at cracker level had been an ongoing issue, as cracker operators had been “chasing their tail” in passing on recent upstream naphtha increases.

It said that the reduction in the propylene contract weighed up the “need to sustain cracker margins, as well as to support downstream demand and margins.”

A decrease was widely expected by consumers on the back of feedstock relief and softer market conditions.

Some buyers, however, said they were not prepared to agree to the €15/tonne decrease, as they considered this insufficient in view of the softer trend in upstream naphtha costs in April, lengthier propylene supply and some demand uncertainty because of heightened economic concerns.

As a result, they said that decreases of €20–30/tonne, in some cases as a minimum, would have been more realistic.

Producers had been holding out for rollovers or a very minor price reduction. While naphtha was softer in April, they were mindful of the heightened upstream volatility and poor cracker margins over recent months.

The propylene May contract was agreed on a free delivered (FD) northwest Europe (NWE) basis.

($1 = €0.76)


By: Heidi Finch
+44 20 8652 3214



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