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Lower naphtha weighs on March expectations for ethylene in Europe

by ChemOrbis Editorial Team -
  • 16/02/2018 (17:25)
Spot ethylene prices in Europe steadily firmed up in Europe since mid-December before they have mostly stabilized in February. Meanwhile, crude oil prices have turned down from a 3-year high in the last few weeks, which has also pushed spot naphtha prices lower on a global scale. This has weighed on the expectations regarding the outcome of the next ethylene contracts in Europe after they settled €20/ton higher for February.

A West European PVC maker commented, “Lower spot naphtha costs may hinder new increases in the upcoming settlement although spot ethylene prices have not registered any major changes since the start of February.” Another regional producer commented that the market was stuck between the losses in upstream costs and maintenance shutdowns at some regional crackers, which makes it hard to predict the upcoming trend.

A PE distributor in Germany even thinks that new ethylene contracts might settle with some decreases considering lower energy and naphtha costs. “Plus, the ethylene market is well supplied,” he added.

According to a manufacturer in Germany, the PE outlook might weaken next month if downstream demand remains modest. Plus, lower energy prices might weigh on ethylene contracts. Players in Italy also said, “If PE demand remains slow, further hikes would be difficult to apply for sellers especially in case ethylene contracts do not increase.”

The PE market across Europe has already been less firm than the PP market due to lack of supply concerns. Sellers’ PE hike targets exceeding the €20/ton gain of the monthly ethylene contracts have widely failed while rollovers have even been reported in some PE deals as sellers yielded to stagnant demand in the face of their sales pressure.
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