Europe cracker margins nearly double on Sept ethylene contract hike

10 September 2012 14:02  [Source: ICIS news]

LONDON (ICIS)--European contract cracker margins based on naphtha feedstock have soared by as much as 93% week on week, following the €125/tonne ($160/tonne) gain in the ethylene contract this month, ICIS data showed on Monday.

The September average margin to date stood at €392/tonne on 7 September up from the August average of €258/tonne.

Although naphtha prices broached the $1,000/tonne CIF (cost insurance freight) NWE (northwest Europe) psychological barrier last week, this was outweighed by a 1.7% weakening of the dollar which led to a 0.8% decrease in feedstock costs.

Spot margins were up by €30/tonne primarily because of the lower euro-based naphtha costs. Co-products credits were up 1.7% because of €25-100/tonne gains on spot propylene prices and higher pyrolysis gasoline (pygas) values.

Margins based on liquefied petroleum gas (LPG) also improved on the back of the higher ethylene September contract settlement and a 4.6% gain in co-product credits. Further gains were held back by a 5.5% increase in euro-based LPG costs.

A three-digit increase for September ethylene had been widely expected given the firmness of the crude oil and naphtha markets throughout August. Olefins producers are determined to improve margins but there is some way to go to achieve the peak margin to date seen in the second quarter - €701/tonne.  

The September ethylene contract price settled at €1,300/tonne FD (free delivered) NWE.

($1 = €0.78)

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By: Nel Weddle
+44 20 8652 3214

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