Europe cracker margins plummet as ethylene contract prices drop

and feedstock costs edge up

Author: Miguel Rodriguez Fernandez

LONDON (ICIS)--European contract cracker margins plummeted week on week on the back of a steep fall in the
ethylene contract reference price for April and a small recovery in feedstock prices, ICIS margins analysis showed on
Monday.

The April contract price was settled at €720/tonne, down by a record €200/tonne from March. Spot pricing also
dropped by a similar amount as demand remained subdued.

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.

Naphtha and liquefied petroleum gas (LPG) costs rose last week as crude oil prices surged on hopes of a price war
truce between Russia and Saudi Arabia.

In the week to 3 April:

 Naphtha prices rose by 6%

 LPG costs increased by more 13%

Naphtha-based contract margins declined by 37% week on week, co-product credits fell:
LPG-based contract margins dropped by 37%, co-product credits fell:

Contract margins by feedstock:

Spot margins by feedstock:

In the week to 3 April, a similar drop was seen in spot margins as ethylene and co-product prices
fell sharply.

Demand was mixed in the market, depending on the sector. Supply was long even though one
third of crude oil refining capacity in Europe is offline or operating at low rates, according to
ICIS analysis.

All demand was contract demand, as there was no movement in the spot market.