The European ethylene market showed little reaction Monday to the likelihood of fresh supply when sanctions on Iran are eased in response to a deal on its nuclear program that was reached with global powers.
“Let us see how much product there will really be on offer ex-Iran and when,” a trader said, adding Iran was tight on ethylene itself as capacity was idle.
The EU imported more than 100,000 mt of Iranian ethylene in 2010 and 2011. Ethylene’s biggest derivative, low density PE, also saw imports from Iran top 100,000 mt in 2010 and 2011.
The EU banned petrochemical imports from Iran in January 2012. France’s foreign minister said Monday the EU will likely lift some sanctions on Iran in December.
“Iranian producers have told us before that they will begin supply of product six months after lifting up of sanctions,” said one ethylene buyer, who expected the price of northwest European ethylene to return to a premium over Mediterranean ethylene on the back of renewed Iranian exports.
On Friday, ethylene CIF NWE and CIF Med were trading at parity, at $1,200-1,205/mt. In 2011 and 2012, CIF NWE carried an average premium of around $30/mt over CIF Med values. The premium started falling on the lack of Iranian product and, more recently, as Libyan capacity has been out of the market.
Europe’s steam cracker industry, capable of outputting a combined 23.6 million mt per year, has about 10% too much capacity, sources have said.
Source: platts.com
