EPCA ’15: Ethylene holding up but for how long, propylene dire

Nel Weddle

04-Oct-2015

BERLIN (ICIS)–As usual the 49th annual European Petrochemical Association (EPCA) meeting will be a chance for business partners to review the year so far, exchange expectations for 2016, update counterparts on strategies, build new business relationships and cement old ones.

The main feature this year has been supply or rather the lack of it.

The low oil environment and the weak euro boosted demand, raising cracker operating rates to levels not seen and/or sustained for some time and several force majeures ensued.

Ethylene consumers will now likely be looking for reassurances from their supply partners over reliability, and that the extreme shortages faced by many in the first half will not be repeated, conditions that, it must be said, helped drive up cracker margins.

The healthy margin environment has meant that few sources envisage any new cracker closure announcements. Total’s Carling, France cracker being the last to be mothballed, in October.

Versalis recently confirmed that it would run its Porto Marghera, Italy cracker throughout the whole of 2016.

All in all, the European ethylene market fared better than had been expected in 2015 from a global perspective, cocooned by all the supply constraints but sources are wondering when this will come to an end.

Propylene is certainly feeling the full impact of weak global pricing now that there are no supply issues to offset them and sources are not feeling upbeat about 2016.

Ethylene is holding up, but there are some small signs here and there that demand is slowing a little, supply is improving, and spot prices are weakening.

It has been challenging for cracker operators to manage ethylene demand versus propylene length.

Olefins players will be concerned about China growth stalling and upstream volatility like everyone else, but so far Europe has done a fair job in managing whatever has been thrown at them since the fourth quarter of 2008..

The annual EPCA meeting runs from 3-7 October.

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