European contract cracker margins fall despite increase in Contract Price

05-Dec-13

European steam cracker contract margins have fallen this week despite the increase in December contract prices for ethylene and propylene, on the back of strong cracker feedstocks, as per Platts. Contract cracker margins were assessed at Eur 290/mt (US$394/mt) Tuesday, compared to November's average of Eur 309/mt, the fall attributed to higher naphtha and propane prices. Ethylene and propylene contract prices for December settled at an increase of Eur 30/mt to Eur 1,225/mt FD NWE and Eur 1,110/mt respectively. Naphtha was assessed at US$979.50/mt CIF NWE Tuesday, compared to November's average of US$929/mt. Sustained short-covering, low stocks and continuous flows East supported a firm European naphtha market, sources said. Additionally, propane has become a much less attractive feedstock for steam crackers. At the beginning of November the premium of CIF naphtha over CIF propane was US$54/mt, based on Platts data, which was sufficiently wide to encourage the petrochemicals sector in Northwest Europe to continue cracking propane as an alternative feedstock to naphtha. This changed in mid-November as propane demand for heating led to a rally in prices and propane prices overtook naphtha. Propane was assessed at US$1010/mt CIF ARA Tuesday, compared to November's average of US$934/mt.