Europe cracker margins fall on higher feedstock costs

LONDON (ICIS)–European contract and spot cracker margins in Europe have risen week on week on the back of higher feedstock costs, ICIS margin analysis data showed on Monday.

Crackers using naphtha as feedstock posted bigger margin decreases than those based on Liquified Petroleum Gas (LPG).

In the week to December 13:

– Naphtha prices rose by nearly 3%.

– LPG values increased by 4%.

Naphtha-based contract margins decreased by 7%, while co product credits rose slightly:

LPG-based contract margins fell by 4.5%; co-product credits rose slightly:

Contract margins by feedstock:

Spot margins by feedstock:

In the week to December 13, prices in the spot market remained unchanged as there was little activity on the market.

Supply was described as long and demand as soft, although there were a number of outages in the region.

Although 2019 ethylene production is estimated to hit around 21.5m tonnes, about 3.5% lower than in 2018, the ethylene contract has decreased by around 9% year on year.

The structural length of the market meant that this year’s heavy cracker maintenance schedule has not impacted the market.

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Image – BASF’s cracker at Ludwigshafen. Source: BASF