Europe cracker margins soar on May contract price hikes

LONDON (ICIS)–European contract naphtha cracker margins have increased by almost 40% week on week on the back of the €80/tonne gain in the ethylene contract price for May as well as a 6.8% boost in co-product credits, according to ICIS margin analysis on Tuesday.

In the week ending 1 May, contract cracker margins based on naphtha feedstock increased by €147/tonne. However, further margin gains were held back by a 0.3% increase in euro-based naphtha costs, the result of $18/tonne higher naphtha prices that were offset by a 2.9% weaker dollar.

Spot cracker margins based on naphtha were up about 6% week on week as higher ethylene spot prices and co-product credits outweighed the gain in naphtha costs. Co-product credits were up by 1.6% on the back of higher propylene and raffinate 1 spot values.

Spot naphtha margins are about 18% higher than contract naphtha cracker margins.

Contract cracker margins based on LPG (liquefied petroleum gas) increased by 24% week on week, as feedstock costs fell by 1.7% and co-product credits rose by 7%.

LPG margins remain at a premium to naphtha margins, by €195/tonne.

The ethylene contract price for May settled last week at €1,045/tonne FD (free delivered) northwest Europe (NWE), while the contract price for propylene was agreed at €990/tonne FD NWE, up by €75/tonne from April.

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