28 November 2012 15:13 [Source: ICIS news]
(adds confirmation from second producer)
LONDON (ICIS)--A second producer on Wednesday confirmed it agreed the December ethylene settlement at €1,275/tonne ($1,656/tonne), a rollover from November, thereby establishing it as the European contract reference price.
The initial settlement was between a producer – which up until March 2012 was an integrated contract buyer – and two of its consumers – both non-integrated. The initial settlers said the rollover reflected a stable upstream market and that demand that was “still good”.
The second producer also settled with one of these consumers. No other producers or consumers had followed the settlement at the time of writing.
Traditionally, two producers and two consumers are required to agree to establish the new number as the European reference.
The outcome was in line with most sources’ expectations, but even so, a few sources from both the buying and selling sides were a little disappointed that a decrease of even €10-15/tonne had not been secured.
They felt a reduction would have been appropriate in portraying more accurately the fact demand, while steady, is soft and that the vast majority of European crackers have had to reduce output to counteract this.
“It’s at the upper end of my expectations,” a major producer said, adding that among its own broad portfolio of customers only a few had been accepting of a rollover.
A source on the buying side said people were sticking to their individual agendas rather than properly reflecting the supply and demand fundamentals impacting the industry as a whole.
The contract is agreed on a free delivered (FD) northwest European (NWE) basis.
($1 = €0.77)
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