Shell Moerdijk PO Unit Scheduled for December Startup
Europe Nov propylene contract reduction welcome but still not enough
30 October 2015 14:44 Source:ICIS News Shell_400
Focus article by Nel Weddle
LONDON (ICIS)–The €40/tonne reduction in the European propylene contract price for November, while welcome, was at the lower end of some buyer targets, market sources said on Friday.
“The issue we have is still the same, a lack of competitiveness against other regions,” a buyer said. “We still have some gap to cover in order to be in a better position,” he added.
“From my point of view, it won’t have much effect in regaining competitiveness and balancing the market,” another buyer said.
“Europe is getting a little more in line [with the rest of the world], but [the November settlement] is a little disappointing,” a third buyer said.
Buying side sources generally indicated that they had been hopeful for at least a €50-60/tonne reduction.
“Europe needs to do more to narrow the propylene price gap between the regions,” a source said.
“This process should continue in December,” it added.
Other sources thought the settlement fair and in line with their own expectations, given the uptick in naphtha values in October versus September, and signs of a firming trend in Asia.
Some sources felt the outlook for Europe had improved because supply length was being offset to a certain extent by the resolution of some derivative issues, export deals, and preparations for a late-planned maintenance due to take place at Borealis’propane dehydrogenation (PDH) unit in Antwerp in Belgium.
Spot polymer grade propylene (PGP) prices are holding steady but steep double digit discounts to the prevailing contract price remain.
Nonetheless, most sources generally believed that European propylene supply would remain fairly ample through November, with some derivative sectors expected to continue to struggle to cover their contractual offtake commitments, but at the same time crackers running at high rates to cover stronger than expected ethylene demand.
A much better balanced market could however start to be seen as early as December when Shell expects to bring its Ellba propylene oxide (PO) derivative unit at its Moerdijk, Netherlands site back online.
The November propylene contract price settled at €670/tonne FD (free delivered) NWE (northwest Europe), the lowest contract price since July 2009.
http://www.icis.com/resources/news/2015/10/30/9938723/europe-nov-propylene-contract-reduction-welcome-but-still-not-enough/« Previous Post Next Post »