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Olefin prices shrug off a number of cracker outages in Europe:: 26 Feb 2013 :: European markets were shaken with news about unexpected production outages at several crackers across the region last week which restricted spot olefins availability at a time when maintenance season is right around the corner. Nevertheless, weak demand from derivative markets and the softer energy complex overshadowed the impact of lower availability. On NYMEX, crude oil futures registered sizeable falls by the middle of last week for two days in a row before slightly rebounding on Friday. Futures, for which March delivery contracts expired on Wednesday, lost more than $2/barrel when a weekly comparison is made. Regarding ICE Brent crude, prices for April deliveries plunged around $3.50/barrel on the week. Lower energy costs pushed spot naphtha prices down by $35/ton in Europe during last week. Softer feedstock markets combined with scant demand prevented increases in monomer markets despite recently emerging supply issues across Europe, market sources commented. Among most recent supply issues, LyondellBasell reportedly declared a force majeure on their propylene supplies from their Muenchsmuenster cracker with 400,000 tons/year capacity in Germany due to technical problems. The force majeure was expected to remain in place for around one month. Versalis took their Dunkirk cracker in France offline for repair work with 380,000 tons/year capacity and it is due to remain offline for a week or a little longer. In addition, PropanChem shut their PDH (propane dehydrogenation) unit located at Tarragona, Spain for a turnaround that will take place between February 7 and end-March, according to market sources in Europe. The unit has a capacity of 350,000 tons/year. Moreover, the unplanned shutdown at Naphthachimie’s 745,000 tons/year cracker was expected to persist until the first half of March. The maintenance at the Lavera cracker had started in the last month of 2012. This recent shutdown news came on the top of the fact that the region is set to enter a maintenance season in spring. BASF will shut their cracker in Antwerp, Belgium for a turnaround between April and June. The cracker with 1.08 million tons/year capacity is known to be the largest across Europe, sources noted. Plus, Shell will implement a maintenance at their Moerdijk cracker during March and April. For the medium term, BP Refining and Petrochemicals plans to shut their 540,000 tons/year cracker in Gelsenkirchen for two months of maintenance starting from May. Nonetheless, restricted supplies via the latest outages in addition to upcoming scheduled shutdowns have yet to find a visible reflection on European olefin markets yet as costs followed a steady to slightly firmer trend last week. Looking at the latest levels, propylene costs gained €10/ton while ethylene prices were steady both on FD NWE basis week over week. The most recent levels now represent €20-25/ton increases for both monomers with respect to early February with players eyeing the possible impact of recent developments on approaching March monomer contracts. |
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