September ethylene contracts rise by €80/ton in Europe

28-Aug-09
September ethylene contracts in Europe rose by €80/ton as per ICIS - as deals were assented to at €875/ton. The rise can be attributed to rise in naphtha costs, a large number of cracker shutdowns and better-than-expected demand for ethylene derivatives in August. Though enhanced demand has improved ability to absorb a price increase, it could be transitory. The improvement in demand is not an improvement in underlying demand but seems to be restocking. European monthly ethylene contract prices have increased 35% during 2009, mainly because of higher naphtha costs. The rise in the September contract was the fifth price hike this year. Market players are keen on arriving at a propylene settlement as soon as possible, to avoid the problems experienced with the August contract, when the naphtha price moved sharply before a price had been agreed. The initial August propylene settlement was reached on 23 July, but many suppliers felt the €35/ton price rise was insufficient to cover the rise in naphtha costs, and there was a two-week stand-off before the contract was followed by a second producer. Currently, since naphtha volatility is a major concern, it seems appropriate to have the ethylene and propylene settlements in close proximity, since a striking change in feedstocks in either direction can create an inappropriate balance between ethylene and propylene, and one of them ends up taking more of the pain of such a short-term change.
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Large capacity chemical storage tanks

Large capacity chemical storage tanks