Europe naphtha contract cracker margins soar on Feb ethylene settlement, co-products

Nel Weddle

06-Feb-2017

LONDON (ICIS)–European contract cracker margins based on naphtha feedstock have risen by 34% week on week, to their highest level since early November on the back of the increase in the February ethylene contract price and supported by the significant gains in co-products notably of butadiene (BD), according to ICIS margin analysis on Monday.

In the week to 3 February, euro-denominated naphtha costs rose by 1% but this was more than outweighed by the 4% rise in the ethylene February contract price – contract participants had agreed on a €35/tonne increase to €1,020/tonne FD (free delivered) NWE (northwest Europe) on 31 January.

Co-product credits rose by 12% – largely on the back of the increases in the propylene and BD contract prices for February – the BD contract price rose by 49%.

The January contract cracker margin average was 13% up on the average margin for December.

Spot naphtha-based cracker margins were also higher week on week, rising by 15% because of a 7% increase in spot prices and a 3% gain in co-product credits.

Spot margins remain higher than contract margins.

LPG (liquefied petroleum gas) based contract margins were also higher – up by 19% week on week supported by the increase in the ethylene February contract price as well as a 9% rise in co-product credits. Euro-denominated LPG costs had risen only by 1% in the week to 3 February.

Contract naphtha margins are currently 22% higher than LPG-based contract cracker margins.




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