Operating rates are high throughout the ethylene chain on healthy cracker margins and strong downstream demand, sources said on the sidelines of the EPL conference in Brussels Thursday.
The rise in the March ethylene contract price by Eur100/mt to Eur910/mt has boosted cracker margins.
Contract cracker margins were at Eur331/mt FD NWE on Thursday, a high not seen since the end of January 2015. This figure stands in stark contrast to contract cracker margins of Eur247/mt at the end of February, a low not seen since December 2013.
This followed four consecutive monthly falls in the ethylene contract price.
The rise in contract cracker margins has significantly driven up operating rates. From cracker operating rates pegged at or under 85%, earlier in the year,
“Crackers are now operating at effectively 100%,” a buyer said Thursday.
Higher operating rates and margins have also been seen downstream. European polymer margins have recently widened to as much as a four-year high, following the crash in the euro.
This has stifled imports, reducing availability, in turn boosting European polymer prices.
European polyethylene demand has also benefited from seasonality and restocking. So much so that Italian petrochemical producer Versalis closed its polyethylene order books Friday after reaching its target level of orders for March, a company source said Tuesday.
“It is a seller’s market right now,” one polyethylene converter said Tuesday. “European producers have export opportunities to countries like Turkey, and there are no imports in Europe. They are in the driving seat.”
– Platts.com
