NWE ethylene, propylene supply tightens on production issues
London (Platts)--25Feb2013/1114 am EST/1614 GMT
European ethylene and propylene supply has tightened amid a spate of
production issues, though the impact of this on spot prices is being
moderated by poor derivatives demand, according to industry sources.
Availability to the market had already been constrained by the prolonged
outage at Naphtachimie's 745,000 mt/year cracker in Lavera, France, which has
been on unplanned shutdown since December and is only expected to be back on
stream in the first half of March.
More recently, Versalis' 380,000 mt/year Dunkirk steam cracker in France
has been shut for up to 10 days for minor repairs. It is expected to restart
later this week.
LyondellBasell meanwhile has declared force majeure on propylene supply
out of its Muenchsmuenster site in Germany, effective mid-March, following
technical problems with the 400,000 mt/year cracker, according to sources.
The force majeure will be in place for four weeks, sources said, quoting
a letter sent by LyondellBasell to customers. The site also hosts a 320,000
mt/year polyethylene plant.
PropanChem's 350,000 mt/year propane dehydrogenation plant in Tarragona,
Spain has been shut for maintenance work from February 7 until end of March.
PropanChem is jointly owned by BASF and Algeria's Sonatrach.
The heavy cracker turnaround season, due to start next month, has
further curbed supply. Shell's 940,000 mt/year Moerdijk cracker in the
Netherlands will be offline within the March-April period.
"We currently plan to ramp down over a few days and commence shutdown on
March 10 and then start up again by end-April," a company source said Friday.
BASF's 1.08 million mt/year cracker in Antwerp, Europe's largest, will
also be down in April-June for maintenance.
SPOT BUYING SUBDUED DESPITE SUPPLY ISSUES
The supply issues have not however triggered frantic spot buying.
Interest has remained subdued despite the specter of increased March contract
pricing on the back of curbed availability and higher feedstock cost.
The market was described by sources as calm, with no sign of a rush to
Products were available for those who needed them, but interest was
thin, a trader said, adding: "I am not attacked by requests."
A producer agreed, saying: "There is no push for volumes, no request for
support. Overall, people appear to be managing their issues pretty well."
The market has so far largely been preoccupied with swapping products
and using up contractual volumes, sources said, adding that there is little
need for spare supply amid rising worries over falling downstream demand and
Europe's escalating economic woes.
The production issues also gave some cracker operators the chance to
ramp up output, which helped bridge the supply gap, sources said.
Downstream, polyethylene and polypropylene demand has continued to
soften, prompting further pricing flexibility from producers who have given
up on their significant price hike targets for February.
The strong upstream market is buoying expectations of firmer feedstock
propylene pricing for March but this has failed to propel prebuying, sources
said, adding that consumers are generally purchasing hand-to-mouth amid
Naphtha averaged $995/mt (Eur742/mt) CIF NWE in February, up from
January's $933/mt (Eur701/mt). It crossed the $1,000/mt mark on February 14
and closed at $1,019.50/mt on February 18, a 10-month high, before easing to
$979.50/mt on Friday's close, down from $1,014.50/mt a week earlier.
Spot polymer grade propylene prices were Eur10/mt ahead Friday
week-on-week to be assessed at Eur Eur1,090-1,095/mt FD NWE and
Eur1,070-1,075/mt CIF NWE. Ethylene prices were assessed unchanged Friday at
Eur1,160-1,165/mt FD NWE and $1,525-1,530/mt CIF NWE.
--Monicca Egoy, firstname.lastname@example.org
--Edited by Alisdair Bowles, email@example.com
Similar stories appear in Polymerscan.
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