Europe naphtha-based spot ethylene cracker margins rise 17% on tight supply

LONDON (ICIS)–European spot cracker margins based on naphtha have risen by 17% as spot prices gained 10% week on week driven by tight supply, ICIS margin analysis showed on Monday.

In the week to 24 February, euro-denominated naphtha costs rose by 2% but this was more than outweighed by the supply-led gains in spot prices, which are currently at a premium to the prevailing contract price for the first time since mid last year 2016.

Spot co-product credits were up by 4% as butadiene (BD) and benzene markets remain very firm.

The spot margin average for February is the highest since August 2015.

Conversely, contract cracker margins did not fare so well.

Naphtha-based contract margins fell by 5% on the back of the 2% rise in naphtha costs and co-product credits were flat. February’s average at €623/tonne was the highest monthly average since September 2015.

Contract cracker margins based on LPG (liquified petroleum gas) fell by 3% on the back of a 1% rise in euro-denominated LPG costs – co-product credits were flat. The margin average for February was the highest since November 2016.

Naphtha-based margins remain at a premium to LPG-based margins.

Top image – BASF Ludwigshafen cracker II. Source: BASF

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