London (Platts)--28Feb2011/622 am EST/1122 GMT
European spot coastal polymer grade propylene prices hit a record high Friday of Eur1,205-1,210/mt ($1,665-1,672/mt) CIF NWE due to numerous scheduled and unscheduled production issues, with prompt availability seen severely constrained for both inland and coastal material. The three principal regions: Germany, ARA and the Med were all affected by production issues. Spot inland values also soared on Friday to be assessed at Eur Eur1,220-1,125/mt FD NWE as an upstream rally raised bids and offers this week. Material availability was set to remain constrained in March as two steam crackers -- Dow's Terneuzen and SABIC's Geleen were to set to start their scheduled maintenance. Borealis' splitter at Antwerp resumed normal operations this week, but its PDH is not due to return from maintenance until early March. Eni's Gela refinery and FCC are to undergo maintenance from the end of February to early April. A host of further unscheduled production issues increased the pressure on supply, sources said. BPRP's hydro cracker was currently experiencing production issues and this was moderately affecting steam cracker operations, sources said. BPRP was not immediately available for comment. In related news PropanChem's PDH unit at Tarragona will remain down until early March on a mechanical issue, the company said. Force majeure on propylene supplies was declared on February 5. Meanwhile a force majeure declared on propylene supplies out of FAO's production site at Antwerp, Belgium has been extended until mid-March, market sources said. Two steam crackers -- NC2 and NC3 -- are currently down due to production issues. A Total spokesman declined to comment. Buying interest for March volume was actively expressed at the end of last week as a pronounced shortfall affected all derivative markets, sources said. Spot propylene values also reacted to the upstream rally, with global crude futures rising an intraday high of over $119/barrel Thursday as turmoil and protests continued to rock Libya, affecting the OPEC member's oil production. Selling interest has retreated to the sidelines as those who had some availability pragmatically opted to keep product for internal consumption. Some offers for ex-US product were heard in the market but no concluded deals were reported on Friday. In shipping news Monday, however 4,000 mt ex-USG were seen fixed to Antwerp on Happy Bee. With the recent surge in naphtha prices also weighing on sentiment, olefin producers were increasingly concerned about rising volatility and potential exposure to margin compression in a higher-cost environment. This soaring upstream volatility led to some upward revision of monthly contract targets for March propylene, sources said, adding that the modest increase previously expected was no longer on the table.--Ilana Djelal, ilana_djelal@platts.comSimilar stories appear in Polymerscan. See more information at http://bit.ly/Polymerscan