22 October 2012 14:30 [Source: ICIS news]
LONDON (ICIS)--European contract cracker margins have held steady week on week as lower naphtha costs are counterbalanced by lower co-products credits, ICIS margin analysis showed on Monday.
In the week ending 19 October, euro-based feedstock costs fell by 1.5% through a combination of a $10/tonne drop in naphtha prices and a 0.5% weakening of the dollar versus the euro. However, co-products credits fell by 2.3% because of lower pyrolysis gas (pygas) values.
The October contract margin average to date stands at €415/tonne ($539/tonne), a little below September’s average of €444/tonne, but still way below the second quarter peak of €701/tonne.
However, the 2012 margin average – currently assessed at €427/tonne – is close to the margin average for 2011 at €446/tonne.
Spot margins fell by €13/tonne because of weaker propylene, butadiene (BD) and pygas values.
With contract margins more than €230/tonne higher than spot margins it is no wonder that European cracker operators’ continue to tailor output to suit contractual obligations only.
Contract margins based on liquefied petroleum gas (LPG) fell by €20/tonne as feedstock costs increased by $12/tonne or 0.6% in euro terms. Co-product credits fell by 0.9%.
Ethylene, propylene and butadiene contract players will be gearing up this week for the next round of contract negotiations to settle November contract prices. All of the markets are facing a trying fourth quarter with upstream volatility on the one hand, but poor demand and an uncertain economic outlook on the other.
The October butadiene contract price was agreed at €1,540/tonne FD NWE.
($1 = €0.77)
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