Sudden shutdowns at European crackers in France, Italy, Sweden and Norway, will heavily impact the ethylene (C2) propylene (C3) and butadiene (BD) markets, as per ICIS news. Crackers that hade been operating at 75% for the first six months of the year, hiked run rates to almost 85-90% in July. The outages came at a time when operators had only just managed to increase operating rates because of better-than-expected demand for ethylene (the main driver of cracker operations) and improved margins. Propylene and butadiene output had been impacted by the cracker reductions and further constrained by the preference for lighter feed cracking, which produces less C3 and BD feedstock crude C4 molecules.
Borealis has declared force majeure on olefins output at its 625,000 tpa Stenungsund Swedish cracker after an unexpected shutdown. Frances’ Total has also had an unexpected shutdown due to an explosion at its 320,000 tpa cracker at Carling-Saint-Avold, France. The market is speculating about production problems at INEOS’ 550,000 tpa Rafnes cracker. Additionally, maintenance shutdown has been planned in September-October at Borealis, INEOS, LyondellBasell, Polimeri and Shell.
This expected supply shortage due to the cracker outages, has resulted in offers at higher spot prices on ethylene and propylene, despite muted demand and lack of deal conclusion. Ethylene spot levels have been assessed at €700/ton (US$986/ton) FD (free delivered) NWE (northwest Europe), up from the low range of €600/ton from a couple of weeks ago, according to ICIS pricing. Propylene spot prices were pegged above the July contract value of €650/ton FD NEW, currently ranging from the high €600s/ton CIF (cost insurance freight) NWE to €800/ton CIF NWE.
But the fact that few crackers in Germany, Belgium, Portugal and East Europe continue to be offline for economic reasons, indicates weaker demand than in 2008.