Europe cracker margins slip on co-product credits

22 April 2013 17:02  [Source: ICIS news]

LONDON (ICIS)--European contract cracker margins fell slightly in the week ending 19 April because of a 1.3% drop in co-product credits on lower raffinate 1 and pyrolysis gas (pygas) values, despite lower feedstock costs, according to ICIS margin analysis on Monday.

Contract margins based on naphtha feedstock fell by nearly 2% but naphtha costs were down by 0.3% as a $4/tonne reduction in prices was limited by a strengthening of the dollar.

Spot margins saw the biggest decline because of softer ethylene spot prices. Spot prices have dropped significantly below contract because of demand concerns. Co-product credits fell by 1.2% as higher spot benzene prices offset lower spot propylene prices.

The contract advantage over spot has widened to €345/tonne and this will reinforce some cracker operators' decisions to produce only in line with contractual obligations.

Conversely, contract margins based on liquefied petroleum gas (LPG) were up by €52/tonne after a 4.3% fall in LPG costs.

May ethylene and propylene contract price discussions are due to get under way this week and settlements are expected by Friday.

Contract v Spot 19 Apr

LPG v N 19 Apr 2013

($1 = €0.76)

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By: Nel Weddle
+44 20 8652 3214

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