London — European petrochemical spot cracker margins have been holding around a three-month low after a recent strengthening in outright values of naphtha and falling spot prices for ethylene, the bellwether of the plastics industry.
Cracking margins rose to $520.62/mt Wednesday, up $23.22/mt from Tuesday when it was at its lowest point since May 29, S&P Global Platts data showed.
The spot price of physical Dated Brent has surged since mid-August, from a four-month low of $68.865/b on August 15 to $76.89/b on Wednesday.
The flat price of naphtha has tracked upwards in tandem, with CIF Northwest Europe physical cargoes assessed at $672/mt Wednesday, pricing $53.25/mt higher than where the value stood August 15 at $618.75/mt.
While higher feedstock prices have reduced margins, a fall in European ethylene spot prices has also contributed to the lower margin.
The market has been struggling to understand why ethylene spot prices have fallen while about 11% of European cracker capacity has maintenance scheduled in coming weeks, with reasons cited ranging from "ethylene dropping like a stone" in Asia to an impact from downstream markets.
Ethylene in Europe was last assessed at Eur1,022.50/mt ($1,190/mt) FD NWE, down Eur40/mt week on week. The assessment was down Eur45/mt month on month.
In Asia, ethylene has dropped $65/mt over the past week to be assessed at $1,335/mt CFR Northeast Asia.
Downstream polyethylene and monoethylene glycol prices have both been stubbornly flat, despite ethylene registering a drop. Low density PE has been steady at Eur1,140/mt FD NWE for over a month. MEG prices have also been flat at Eur940/mt FD NWE for over a month.
About 50% of European ethylene oxide/MEG capacity is up for maintenance in September-October period, which was expected to add to the pressure on ethylene. EO serves as a precursor for producing MEG.
