07 May 2013 15:34 [Source: ICIS news]
LONDON (ICIS)--European cracker margins based on naphtha feedstock dropped by almost 23% in the week ending 3 May, primarily on the back of the drop in the ethylene contract price, ICIS data analysis showed on Tuesday.
The May ethylene contract settled at €1,165/tonne ($1,533/tonne), FD (free delivered) NWE (northwest Europe) down by €100/tonne because of soft demand and weaker upstream costs.
The impact of an $8/tonne increase in naphtha costs was lessened by a slightly weaker dollar, but euro-based costs ended the week slightly higher overall.
Spot margins based on naphtha feedstock also fell by about a quarter, as ethylene spot prices continued their descent dragged down by soft demand and lengthy availability. Spot co-product credits fell by 0.9%.
Crackers utilising liquefied petroleum gas (LPG) as feedstock were not spared the hit on margins, falling about 19% because of the lower ethylene May CP as well as a 1.2% hike in LPG costs. Co-product credits were 4.4% lower.
However, LPG margins show an almost €130/tonne advantage over naphtha-based margins.
($1 = €0.76)
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