Deep-sea ethylene imports weigh on Europe spot prices

18 October 2013 13:30  [Source: ICIS news]

LONDON (ICIS)--Ethylene cargoes from Mexico and the US arriving in November are putting downwards pressure on European spot prices, market sources said on Friday.

At least two cargoes – totalling about 8,000-9,000 tonnes – are loading in October in Mexico bound for Europe. The cargoes were due to load on the vessels Gaschem Caribic and Stina Kosan, according to sources.

Prices for these volumes were  between $1,350-1,380/tonne (€999-1,021/tonne) CIF (cost, insurance, freight) NWE (northwest Europe). At least one of the cargoes was made available because of a derivative – namely ethylene oxide (EO)  - maintenance shutdown.

European ethylene spot prices were assessed in the low to mid-$1,400s/tonne CIF NWE in mid-September.

Around 16,000-16,5000 tonnes of US material has also been fixed for Europe, sources said. A 12,000 tonne parcel  - possibly on the Navigator Saturn - was sold at about $1,300/tonne CIF NWE, or at about $1,070/tonne FOB (free on board) US and its arrival is due at the end of November.

Another parcel of about 4,400 tonnes was understood to have been fixed  - possibly on the Gaschem Nordsee – at a level of $1,250/tonne CIF NWE. Neither of these deals were confirmed.

A glut of ethylene in the Texas system because of operational issues on the Evangeline pipeline, which usually moves ethylene from Texas to Louisiana, is behind the US fixtures.

With some sources saying that the pipeline is not expected to run at full rates until the end of the year or the start of 2014, there is the potential for more cargoes to be seen ex-US.

Timing is an issue of course – the rapidly approaching year-end generally brings inventory and capital considerations to the fore, leaving buyers very cautious regarding pricing.

The timing and volume of these imports is leading some sources to assume that cracker operators will soon be trimming back cracker operating rates, particularly once the maintenance turnaround season comes to an end by mid-November.

However, no cracker operators have as yet confirmed any plans to reduce rates.

($1 = €0.74)

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By: Nel Weddle
+44 20 8652 3214



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