12 April 2013 12:46 [Source: ICIS news]
LONDON (ICIS)--European ethylene and propylene market sentiment remains bearish, with unplanned issues at crackers in Germany and Italy this week having had little to no impact, despite the ongoing cracker turnaround season, market sources said on Friday.
“We are not so optimistic about the market,” a major producer said, adding that the problems were the “only excitement of the week”.
BP Refining and Petrochemicals (BPRP) experienced “operational issues” at its Gelsenkirchen, Germany site earlier this week, resulting in a short-term limitation on cracker production, but said the impact on its customers would be minimal.
The UK-headquartered company owns and operates two crackers at the site, totalling 1.65m tonnes/year of ethylene.
Italy-based producer Versalis said it had reduced production its Priolo, Italy cracker following some problems recently, but that operations were now back to the planned operating rate.
The Priolo cracker has the capacity to produce 745,000 tonnes/year of ethylene, according to ICIS data.
At the start of the year market sources had expected more support from the maintenance season, and cracker operators had hoped to have a chance to run their crackers at higher rates than seems to have become the norm over the past year.
“Even if we have maintenance we cannot increase production,” a second major producer said.
It added: “we really need to control [production] to avoid over-production, I do not expect any [demand] improvement.”
Some sources said crackers were operating at “no more than 80%”.
A trader said: “I thought demand would be better in April, but it is the same. I am happy not to be long otherwise it would be a mess.”
Many sources echoed this view, describing a quiet and mostly inactive spot market for both ethylene and propylene – but particularly for the former.
Propylene sellers are a little less flexible when it comes to spot availability, largely because of the ethylene concerns and potential resulting influence on cracker operating rates.
Softening upstream values this week will have done little to encourage buying activity, and consumers are postponing requirements where possible to watch for further price falls – and potentially a lower May contract price for both ethylene and propylene.
($1 = €0.76)
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