European propylene, butadiene, prices rise above ethylene

Chemical companies, Consumer demand, Economic growth

C2 v C3 C4 Mar10.pngA remarkable thing happened this week in European olefin markets. Contract prices for butadiene and propylene were finalised for April/Q2 at higher levels than for ethylene. This has never happened before, in Europe or other regions.

The chart, based on ICIS pricing data, shows how ethylene (blue line) has normally been the highest priced olefin. Butadiene (green) has often been relatively tight during downturns. And in 2005/6, propylene (red) and ethylene were sometimes similarly priced. But we have never before seen both “co-products” higher than ethylene itself.

The rationale for the changes is the arrival of the ethane-based crackers in the Middle East, and greater use of lighter feedstocks in other regions. This is significantly reducing the amount of propylene and butadiene co-produced on steam crackers. Low refinery operating rates are also temporarily reducing propylene production from this source.

Propylene should return to better balance over the next few quarters, as more new capacity comes on stream via propane dehydrogenation and metathesis, as well as from the new Asian refining capacity. Equally, lower prices for ethylene will start to improve polyethylene’s (PE) competitive position versus polypropylene, after an extended period when PE supply has been relatively tight.

Butadiene, however, may well remain tight for some time. This was a key conclusion from our 2008 Feedstocks for Profit Study, when we warned that a Global Downturn scenario would lead to shortages of butadiene as Europe’s steam crackers “will turn down relatively harder than auto production, due to Middle East production taking a relatively higher share of C2 demand, and thus reducing the supply of butadiene“.

PREVIOUS POST

Sir James Black dies

25/03/2010

A remarkable thing happened this week in European olefin markets. Contract price...

Learn more
NEXT POST

Seasonal strength returns to chemicals demand

29/03/2010

A remarkable thing happened this week in European olefin markets. Contract price...

Learn more
More posts
Your ‘A-Z Guide’ to the Brexit Negotiations
18/11/2018

“The UK is now facing a national crisis”, according to Margaret Thatcher’s former ...

Read
Global smartphone recession confirms consumer downturn
11/11/2018

Q3 smartphone sales data show the global market in recession, as Strategy Analytics confirmed: “Th...

Read
Chemical output signals trouble for global economy
04/11/2018

A petrochemical plant on the outskirts of Shanghai. Chinese chemical industry production has been ne...

Read
Budgeting for the end of “Business as Usual”
28/10/2018

Companies and investors are starting to finalise their plans for the coming year.  Many are assumin...

Read
“What could possibly go wrong?”
21/10/2018

I well remember the questions a year ago, after I published my annual Budget Outlook, ‘Budgeti...

Read
Rising interest rates, volatile exchange rates, high oil prices and plastic waste challenge aromatics industry
18/10/2018

Fears are rising about the risks of recession, as I discuss in a new one-page summary of the key iss...

Read
Petrochemicals must face up to multiple challenges
14/10/2018

Europe’s petrochemical sector must prepare now for the trade war, US start-ups, Brexit and the...

Read
Is your business Ready for Brexit?
07/10/2018

Time is running out for the UK government to agree a Brexit deal with Europe.  As my new analysis f...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more