OUTLOOK '13: Cracker turnarounds dominate Europe olefins

24 December 2012 10:03  [Source: ICIS news]

By Nel Weddle

LONDON (ICIS)--European ethylene and propylene market participants continue to bemoan the lack of visibility and predictability of upstream developments and downstream demand levels but producers do, however, feel assured of a fairly bullish start to 2013 as players prepare for a heavy cracker maintenance slate.

“[It] will be a better start to Q1 2013 compared to the end of Q4 2012 with EU cracker turnarounds in Q1 onwards,” a major producer said.

Another said: “We expect good sales in the first quarter as [there] will be 600,000 tonnes capacity loss in the second quarter unless the economy takes a further turn [for the worse].”

Planned maintenance turnarounds are expected to get under way towards the end of the first quarter, beginning with Shell Chemical’s 910,000 tonnes ethylene cracker in Moerdijk, the Netherlands, but the crunch will come in the second quarter with four crackers down for maintenance during that period, including Europe’s two largest.

Company

Location

Date

Shell

Moerdijk, Netherlands

February-April six weeks

BASF

Antwerp, Belgium

End April-mid June

Total

Carling, France

April-May

BPRP

Gelsenkirchen 3, Germany

End May-early July

INEOS

Grangemouth, UK

Q3

Versalis

Priolo, Sicily

August-September

SABIC

Olefins 4, Geleen, Netherlands

September-October

INEOS

Dormagen 5, Germany

September-October

Repsol

Tarragona, Spain

October-November

ExxonMobil

Mossmorran, UK

Q3

*none are confirmed

At the very least, demand levels in January should be better than December simply because the year-end working capital considerations are no more and because inventories have been reduced to the bare minimum, but the spectre of constrained olefins supply could see a pre-buying approach become more prevalent.

Not surprisingly, some derivative turnarounds have also been planned to take place alongside some of the cracker shutdowns but nevertheless derivative units are likely to run hard to build up stocks ahead of their own shutdowns.

Many are unsure of what the net effect of the turnarounds will be. Some suggest that ongoing economy worries will keep base-level demand depressed as crackers have been under-utilised and some temporarily idled in 2012. Add to that the associated derivative shutdowns and there could be little significant change from the supply and demand balance in 2012.  

Market players hope that there will be less volatility in the upstream crude oil and naphtha market than that seen this year which led to record adjustments and record high monthly contract prices. But prices will continue to be primarily driven by upstream costs and the supply situation, rather than the strength of demand.

Producers in some derivative sectors are worried about their competitivity in the global market and say that this will limit opportunities unless the global economy picks up.

Overall, players wish for stability and better visibility but without it they will be maintaining a cautious stance in 2013 knowing that agility remains key.

December contract prices for ethylene and propylene settled at €1,275/tonne ($1,678/tonne) and €1,103/tonne FD (free delivered) NWE (northwest Europe) respectively.

January contract price discussions are still ongoing.

($1 = €0.76)


By: Nel Weddle
+44 20 8652 3214



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