Europe cracker margins rise 25% on soft naphtha, weak dollar

23 September 2013 13:49  [Source: ICIS news]

LONDON (ICIS)--European contract cracker margins based on naphtha feedstock have risen by 25% on the back of a drop in naphtha costs, which was accentuated by a weaker dollar, according to ICIS analysis on Monday.

In the week ending 20 September, euro-based naphtha costs fell by 4.4% because a $25/tonne (€19/tonne) drop in naphtha prices, benefiting from a 1.8% weaker dollar.

This third consecutive margin rise was held back by 1.2% lower co-product credits because of weaker raffinate-1 and pygas (pyrolysis gasoline) values.

The contract cracker margin is at its highest level since late June.

Spot margins based on naphtha showed the biggest gain over the week, rising by almost 44%. The rise could have been steeper but for the weaker dollar, which impacted on the unchanged dollar-denominated spot ethylene price.

Contract naptha prices vs spot naptha prices June - September 2013

Contract cracker margins based on alternative feedstock liquefied petroleum gas (LPG) rose by around 18% as feedstock costs fell by 5.3%. Co-product credits fell by 1%.

LPG margins are showing a €94/tonne premium over naphtha margins.

LPG vs naptha June - September 2013

The ICIS margin model is generic and does not refer to any individual operation because of variation among crackers. It can be mainly used as a reference in terms of step-change rather than in absolute values.

($1 = €0.74)

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By: Nel Weddle
+44 20 8652 3214



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