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Saturday, October 16, 2021

European ethylene spot prices jump to 2013 high ahead of Sep CP settlement

A combination of planned and unplanned outages sent ethylene spot prices to a 2013 high of Eur1,180-1,185/mt ($1,560-1,5667/mt) FD NWE Friday, soaring by Eur98/mt on the week.

Volatility of feedstocks added to upward pressure on spot prices.

However, choppy oil prices delayed the convergence of buyers and seller in the September contract market. A monthly contract price is fully settled when two independent sellers agree the same price with two independent buyers.

Buyers and sellers have so far been unable to agree the increase for the September CP.

The August ethylene CP was settled on July 31 at Eur1,210/mt FD NWE. On that day naphtha was assessed at $869/mt CIF NWE. It was assessed on Friday at $953.25/mt CIF NWE.

The bullish stance of producers was compounded by a “marginal” increase in the butadiene contract price. The September contract price for European butadiene was fully settled Friday at Eur775/mt FD Northwest Europe, up Eur25/mt on the August contract price, according to industry sources. “Ethylene is already expensive and this will not help,” an ethylene buyer said.

A steam cracker uses hydrocarbons like naphtha to produce olefins such as ethylene, propylene and butadiene. The propylene September CP also remains unsettled.

An unplanned stoppage at Dow’s Tarragona cracker in Spain for the first half of September has exacerbated supply tightness in Europe. A heavy turnaround season in Europe began at the end of August and has already led to snug supplies.

“Good luck with finding tonnes for prompt delivery in the Mediterranean,” a producer said. A usual net-seller reported purchasing Eur1,205/mt CIF Med, 4,500 mt for early September delivery. A buyers said he expected prices to be above Eur1,120/mt FD NWE on the pipe. “We can no longer quote prices lower than $1,400/mt CIF NWE or MED in this environment of rising oil prices. IN fact, sellers will probably quote $1,500/mt CIF NWE or MED, but the derivatives cannot afford that,” the buyer said.

Source: platts.com

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