14 January 2013 15:47 [Source: ICIS news]
LONDON (ICIS)--European cracker margins based on naphtha feedstock are at their highest since June 2012 on the back of lower naphtha costs, with spot margins in particular having risen steeply since December 2012 because of higher spot prices, ICIS margin analysis showed on Monday.
In the week ending 11 January, naphtha costs fell by $45/tonne (€38/tonne) but this was accentuated by a 2.3% weakening of the dollar. Euro-denominated naphtha costs fell by 6.9%.
Contract cracker margins were up by 36% week-on-week and by 19% when comparing the average margin to date for January with that of December.
Spot margins were doubled week on week but are showing a sharp, more than five-times increase over the December 2012 spot margin average. This could support a further ramp-up in cracker operating rates.
As a result, spot ethylene prices have risen dramatically since December when prices languished around $1,200/tonne CIF (cost insurance freight) NWE (northwest Europe). Currently prices are assessed at $1,450-1,500/tonne CIF NWE, but offers - at least from European suppliers - have been heard at $1,600/tonne CIF NWE.
Contract margins based on LPG (liquefied petroleum gas) were also at their highest since June 2012 and gained about 24% week-on-week on the back of a 5.6% fall in euro-based LPG costs. Propane prices fell $60/tonne, with butane only $3/tonne lower.
Cracker operators have switched to lighter feedslates where possible with the result that propylene and crude C4 – the feedstock for butadiene (BD) – have been constrained.
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