Ethylene cracker margins based on naphtha drop to lowest 2014 level

Heidi Finch

29-May-2014

LONDON (ICIS)–European ethylene contract cracker margins based on naphtha have dropped to their lowest level this year on higher feedstock costs, which have been further exacerbated by the strengthening of the US dollar against the euro, according to ICIS margin analysis on Thursday.

In week ending 23 May, (naphtha-based) ethylene contract margins have decreased by €76/tonne on the rise in upstream naphtha costs. Euro-denominated costs rose by 4.0% on an increase of $32/tonne in naphtha prices combined with a 0.6% stronger dollar.

Contract co-product credits have moved up by 0.8%, driven by higher raffinate-1 and pyrolysis gasoline (pygas) values which has mitigated the feedstock impact to some extent.

Also last week, (naphtha-based) ethylene spot margins have plummeted by €82/tonne to the lowest level so far in 2014 on higher euro-denominated feedstock costs. Dollar denominated spot ethylene prices remained steady.

The marginally higher credits for certain co-products, however, failed to curb the downtrend in ethylene spot margins over the last three weeks, outweighed by the rise in naphtha costs and as well  as spot price losses for other co-product credits .  

In week ending 23 May, ethylene contract margins based on liquefied petroleum gas (LPG) have decreased by €71/tonne on a 5.7% rise in euro-denominated LPG costs. Despite this, the LPG advantage over naphtha rose to €252/tonne.

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