27 March 2013 17:52 [Source: ICIS news]
LONDON (ICIS)--The European ethylene contract price for April, which has been fully confirmed down €60/tonne ($77/tonne) at €1,265/tonne on a free delivered (FD) northwest Europe (NWE) basis, received broad market acceptance on Wednesday.
A reduction in the April ethylene contract price was widely expected because of the downtrend in naphtha feedstock values over the last month and on softening in downstream demand, in particular for the main derivative polyethylene.
Price ideas had largely centred between minus €50-60/tonne for the April ethylene contract price and therefore the settlement was within expectations.
The first settlement was between one major producer and three consumers and further confirmation has been received from all three buyers.
The second settlement was reached soon after the first and it was agreed between one of the consumers involved in the first settlement and three producers, of which confirmation has been received from two at the time of writing.
Two of the settling parties said that the “feedstock relief was a key driver” and “the overall shape of the market” had pressured the April ethylene contract price lower.
While there was support from a number of players for the €60/tonne reduction, there were a few exceptions.
One producer said it considered a price drop of €60/tonne too much, because even though there has been a general downtrend in upstream values over the last month, this was also being offset to some extent by the recent strengthening of the US dollar against the euro.
Another player had also considered that a fall of €50/tonne for ethylene would take into account both the feedstock relief and the exchange rate fluctuation as well as be in keeping with the general context of heightened feedstock volatility over recent months.
Also on Wednesday afternoon, the initial European propylene contract price was agreed down by €50/tonne at €1,105/tonne FD NWE, as confirmed by one buyer and one main producer.
It had generally been expected the price reduction for propylene would be less than for ethylene in April, because the propylene market was not as soft.
($1 = €0.78)
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