Ethylene margins in Europe were higher than those of propylene in the first half of the year, Austrian oil and gas company OMV said in its second-quarter financial report Wednesday.
S&P Global Platts data shows that ethylene spot prices averaged a premium of Eur482/mt ($539/mt) to naphtha in the January-June period, compared with Eur229/mt for propylene.
Naphtha can be used as a feedstock for steam crackers to produce olefins like ethylene and propylene.
Polymer grade propylene spot prices have fallen from a Eur913/mt FD NWE average in the first six months of 2015 to Eur572/mt in the same period of 2016, according to Platts data.
However, prices have begun to rise again in the third quarter amid bullish fundamentals, to be assessed at Eur719.5/mt FD NWE Tuesday.
A tight European propylene market, intensified by reduced output from refineries, has led some traders to indicate prices as high as 10% above the August contract price of Eur670/mt FD NWE, this week.
“The market early August is tight, people are in urgent need of material but the heat affecting refineries is bringing down run rates,” a trade source said. A recovery of propylene supply is not expected in Q3, sources said, as European crackers are at maintenance.
A planned maintenance shutdown of one of BPRP’s two crackers at Gelsenkirchen, Germany, will begin mid-August. In addition, LyondellBasell is to carry out scheduled maintenance at one of its crackers at Wesseling, Germany, in September.
OMV’s clean petrochemicals earnings before interest and tax came to Eur57 million in January-June, below the Eur68 million reported in 2015. The company attributed this to the fall in propylene margins as well as a better supplied ethylene and propylene markets in the January-June period this year.
“In 2015, petrochemical prices and margins were especially high owing to a supply shortage in the market,” the company said.
