Ethylene spot trades in Europe at premium to contract price ahead of cracker turnaround season starting March

22-Feb-17

European ethylene spot traded Monday at a premium of Eur80/mt to the monthly contract price of Eur1,020/mt FD NWE for February, reflecting a tightening market ahead of a major cracker turnaround season beginning in March, as per Platts. This trade represents a marked change in the market as spot prices were heard bid at a discount of about Eur50/mt just last week. "For me the [trade] is a combination of product availability and required incentives for producers to release some of their stocks," said a source Tuesday. Material availability had been heard tightening on the pipe as early as the first week in February as producers built up inventory.
Compounding material availability issues in Europe is the strong Asian market which has acted to curb import availability in Europe. Asian ethylene prices were assessed Tuesday at US$1385/mt CFR Northeast Asia. The region's high prices have attracted material from Middle Eastern producers who favor netbacks from the region. "Prices in Europe are too low to attract imports," said a source earlier in the month. With a lack of imported material availability as a result of strong Asian prices, downstream markets have become increasingly dependent on domestic production. Should the trends in material availability continue, March ethylene prices will increase over February levels.