European olefin markets had a miserable time in Q2. As the chart shows, based on APPE data, ethylene production (red square) was just 4.7MT. This was the lowest Q2 volume since 1998. Of course, crackers had switched severity to produce more propylene and butadiene. But even propylene volume at 3.6MT was the lowest Q2 volume […]
Tag Archives | olefins
Volume is a key driver for chemical company profits. High volume means operating rates increase, reducing unit costs. Companies also gain more pricing power. But when volume is low, the reverse happens. Thus the above chart from leading analyst Paul Satchell of Collins Stewart is telling an important story. It shows: • Volumes were very […]
Q1 saw near record margins for European petchem producers. And there was also a scramble for product, as buyers rushed to secure product ahead of feedstock price-related increases. But this remained a supply-led market. As the chart above shows, based on APPE data, Q1 production (red triangle) was just 5.1 million tonnes. It was slightly […]
The ICIS weekly margin reports continue to provide essential reading for anyone in the petrochemical value chain. The above chart is particularly fascinating, as it highlights the significant differences between cracker margins on a regional basis over the past 2 years: • Europe (red column) is the clear winner over the period. Its margin bottomed […]
European operating rates (OR%) for ethylene averaged just 82% in 2010, according to APPE data this week. This meant there was no improvement over H1 OR%, suggesting the recovery from 2009′s 76% OR% has stalled. Of course, in terms of profitability, 2010 will have been a great year. The industry did its usual excellent job […]
Last March, the blog highlighted the major changes taking place in ethylene, propylene and butadiene prices versus naphtha. It also analysed them in ICIS Chemical Business in September. The above chart now summarises the 2010 outcome, using European prices to enable comparison over the last 30 years. It was a most remarkable year. The chart […]
Q3 showed no real improvement in European cracker operating rates (OR%). As the chart shows, based on APPE data, these remained at 82% for the Q1 – Q3 period. Of course, this is much better than the 76% OR% seen in 2009, but it would not normally be a matter for celebration. However, the ‘silver […]
A month ago, Nigel Davis called attention in his ICIS Insight column to the alarming fall taking place in US ethylene values. He noted that “inventories seem to have filled“, and presciently concluded that “buyers have been on the look-out for the turn and, by all accounts, expect any downward movement to be swift and […]
The chart above, from Paul Ray’s excellent ‘ICIS Weekly Margin Report’, clearly shows the level of pain currently being suffered by naphtha-based cracker operators. Based on European pricing, it also demonstrates the great difference between today’s recession versus the ‘dip’ of 2002/3: • Margins based on contract prices fell to €151/t in January • They […]
Propylene prices have been relatively strong in recent years, compared to ethylene. As the chart shows, they averaged 90% of the ethylene price between 2003-8. Now, however, they have returned to the historical 70% – 85% range. Propylene’s recent strength was well founded: • Benzene prices rose in 2004, making PP more attractive versus PS […]
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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.
Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.