A series of unplanned cracker and derivative issues in Europe are driving ethylene (C2) and propylene (C3) markets in opposite directions, as per ICIS. Currently, cracker reductions are reported at Priolo, Italy; Tarragona, Spain; Carling, France; Cologne, Germany; and Grangemouth, UK. However, none were officially confirmed by the companies concerned.
Borealis’ cracker at Porvoo, Finland with capacity to produce 380,000 tpa ethylene and 220,000 tpa propylene, is confirmed to be running at reduced rates due to a furnace issue. Dow Chemical’s No 2 cracker at Terneuzen, Netherlands has been out of action after having tripped on 5 May. The cracker has the capacity to produce 590,000 tpa ethylene and 295,000 tpa propylene. Feedstock constraints triggered some production difficulties at Dow’s cracker in Spain that has now been sorted and the cracker is currently running at near full rates. Scheduled maintenance continues at Dow’s cracker at Boehlen in Germany and a restart is not due for another two to three weeks. LyondellBasell’s Berre, France cracker continues to run at reduced rates following its restart after planned maintenance a week or so ago. Its butadiene (BD) force majeure had been extended into May because of feedstock crude C4 constraints.
Ethylene supply is tight for May, contrary to earlier market expectations that supply would be long as cracker rates were high and scheduled maintenances almost at an end for the spring season. Shipping of up to five cargoes out of northwest Europe and the Mediterranean to the US Gulf in April has left no scope for any production hiccups, as there is nothing in the pipeline.
Conversely, propylene was still showing signs of easing despite reduced cracker running rates. This is because some producers had earlier experienced derivative problems that freed up propylene- a problem intensified by a force majeure declaration on polypropylene (PP) production in Belgium by Total. Congestion is reported to be building at certain ports and at some sites inland. Two or three May loading cargoes from the US Gulf and Venezuela had been mooted to be destined for Europe, but even last week, sources reported there was little appetite for all the volume and as such at least one of the cargoes was being re-routed to Asia.
Softening of the Euro vs the US dollar as a result of the Greek financial crisis meant market participants were also unwilling or simply unable to take any trading risks. Ethylene available from the Middle East and Mexico, is dollar-priced and a weakening euro negated any potential gains from firming ethylene spot levels in Europe. US ethylene values had weakened significantly in recent weeks, prompting speculation whether this would make US cargoes economically viable for European buyers.