LONDON (ICIS)--An initial European ethylene contract price for June has been agreed at €1,170 tonne, up by €10/tonne from May, said a main producer on Wednesday.
The agreement was reached between the seller and two customers and confirmation has been received from both buyers. The contract price is settled on a free delivered (FD) northwest Europe (NWE) basis.
The increase in price was agreed because of higher upstream naphtha costs over the last month, said the initial settling parties.
However, the extent of naphtha increase reflected in the ethylene contract price has been limited because of an ongoing disconnect in ethylene spot and contract price levels.
The seller said that ethylene spot prices have moved up during May but not as much as expected. It added the modest price rise in the contract price was a compromise between buy and sell-ideas.
One of the settling buyers said: “Naphtha costs have increased, but spot [ethylene] is way below the contract level. Plus €10/tonne is as far as can stretch it.”
It added the contract price should come down to address the disconnect with spot and contract, but this is not possible with naphtha costs that high.