20 May 2013 15:06 [Source: ICIS news]
LONDON (ICIS)--European contract cracker margins have fallen for the fifth week in a row and spot margins are at their lowest since December 2012, according to ICIS analysis on Monday.
In the week ending 17 May, a $19/tonne (€15/tonne) increase in naphtha prices combined with a 1% strengthening of the dollar pushed up euro-based feedstock costs by 3.3%. The margin fall was cushioned by a 0.7% increase in co-product credits primarily because of higher pyrolysis gas (pygas) values.
Spot margins fell by about a third to a five-month low as spot ethylene prices remain weak. This will reinforce even more cracker operators’ decisions to run assets at much less than nameplate capacity to produce solely in line with contractual obligations rather than incremental needs. Co-product credits were slightly up as higher benzene and pygas values just outweighed the fall in butadiene (BD) spot prices.
Conversely, contract margins based on liquefied petroleum gas (LPG) were up by €13/tonne because feedstock costs fell by 0.8% following a $13/tonne downturn in LPG prices. LPG’s margin advantage over naphtha is over €100/tonne.
($1 = €0.78)
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