Europe ethylene April contract falls by €200/tonne to 11-year low

LONDON (ICIS)–The European ethylene contract reference price for April has been set at €720/tonne, down by a record €200/tonne from March.

This is the lowest monthly contract reference price since June 2009  and the largest single month-on-month adjustment since the contract timing changed from quarterly to monthly in January 2009 in response to the 2008 financial crisis.

The settlement was directly confirmed by four producers and five consumers, all but one are non-integrated.

The widely expected decrease was driven by the steep fall in crude oil and primary feedstock naphtha values month on month.

Demand has plummeted because of the disruptions caused by the coronavirus pandemic, but the Saudi Arabia-Russia oil spat has exacerbated the pressures by adding additional supply to the equation.

ICIS naphtha values show a decline of €179/tonne in March compared with February, on average.

Supply and demand fundamentals remain soft but demand has been better than expected for those derivatives with applications in packaging, hygiene and sanitary sectors.

Supply is lengthy but recent and upcoming export fixtures have relieved some of the containment pressures.

The contract reference price is fully established when a minimum of two producers and two consumers have directly confirmed.

It is agreed on a free delivered (FD) northwest Europe (NWE) basis.

Follow Nel on Twitter