Europe March C2, C3 spot soars as planned cracker turnarounds start

10 April 2017 13:24 Source:ICIS News

Focus article by Nel Weddle

LONDON (ICIS)--European ethylene and propylene spot prices ramped up considerably higher in March than the prevailing contract reference prices as the planned cracker maintenance season got under way in earnest and some players were unexpectedly caught short following production hiccups in their own systems.

However, most ethylene players were fully covered and/or very well-balanced heading into the key crunch turnaround season so had little to no requirement for spot tonnes. Spot volumes traded were significantly below those done for February deliveries, by around 70%.

The spot propylene market was a different story, with unexpected derivative issues increasing availability on the one hand and higher US pricing and bullish sentiment on the other setting the scene for some much-higher-than-expected spot prices.

Again, while most propylene players were well-covered, hiccups in some producer systems saw some players looking for volume. Spot polymer grade propylene (PGP) volumes traded for March deliveries more than quadrupled when compared with the previous month.

Ethylene

Deal period

delivery

Feb-March

March

Volumes*

4,800

Pipeline

Fixed price €1,100-1,115/tonne

* tonnes

The April ethylene contract reference price rolled over from March at €1,050/tonne FD (free delivered) NWE (northwest Europe).

Propylene

Deal period

delivery

Feb-March

March

Volume* CGP

1,650

Volume* PGP

22,100

CGP

Vs March CP flat to plus 10%

PGP

Vs March CP plus 6.5-7%, Fixed price €900-1,060/tonne

*tonnes

The April propylene contract reference price increased by €15/tonne to €865/tonne FD NWE.

Deep-sea

The ramp-up in European ethylene and propylene spot prices during March triggered some interest from players keen to capitalise on any potential arbitrage. At least one US ethylene cargo and one US propylene cargo was fixed for Europe, but otherwise buy-sell pricing disconnects, shipping challenges and of course the lead times, led to little else coming to fruition in March.

Meanwhile on a structural basis, imports are ongoing ex-Middle East for ethylene, albeit amid some production constraints, and the first of a series of structural propylene imports shipped from Brazil arrived in March.

Ethylene and propylene exports are ongoing ex-Italy, some propylene volumes ex-Sarroch have been fixed to Egypt in a term contract while supply from traditional Middle East source remains offline.

Production

There was still talk of production issues at Wesseling in Germany throughout March and also for some hiccups at one of the remaining Terneuzen, Netherlands crackers not already on planned maintenance.

Unipetrol’s Litvinov, Czech Republic cracker went down for late-planned maintenance mid-February and was back online in early March.

Planned turnarounds at crackers in Antwerp, Belgium, Terneuzen and Geleen in the Netherlands got under way.

Borealis’ splitter restarted in mid-March having failed to restart around 20 February following planned maintenance. The company’s propane dehydrogenation (PDH) unit is due to return from planned maintenance in early April.

The FCC (fluid catalytic cracker) at Gunvor’s Ingolstadt refinery in Germany was still offline for maintenance in March but was expected to be back by mid-April – a delay of 1-2 weeks. Maintenance at Repsol’s Bilbao and La Coruna refineries in Spain was completed in March.

NOTE: contract prices are gross prices subject to individually negotiated rebates and discounts which are kept private and confidential.

Follow Nel Weddle on Twitter @nelweddleICIS

By Nel Weddle