European ethylene prices further extended their gains this week, finding support from Asian markets, a sharp rise in naphtha costs and generally strong demand, industry sources said Thursday.
Ethylene spot prices were assessed at Eur1,030-1,035/mt ($1,263-1,269) FD NWE Thursday, up from last Friday, when prices were assessed at Eur1,010-1,015/mt FD NWE, which in turn was up Eur135 from the week before.
Spot prices have reversed declines seen since end-June, when they fell to their lowest level in 25 months at Eur830-835/mt FD NWE, according to Platts data.
"There is a strong recovery in demand, as derivatives are restocking," a source said.
European buyers began to build stocks amid a bullish August ethylene contract price outlook. Since the July contract price was settled on June 28, naphtha prices have swelled by $131/mt, assessed on Thursday at $872.75/mt CIF NWE. The July ethylene contract price was settled at Eur1,035/mt FD NWE, down Eur170 from June.
The rise in feedstock punished contract cracker margins, which on Tuesday turned negative for the first time since March 30. Contract cracker margins were assessed at minus Eur12/mt on Wednesday.
In the ethylene spot market, two 9,000 mt cargoes were booked into the Mediterranean last week, both for late-July delivery, sources said.
Another 4,000 mt was booked into the Mediterranean for prompt delivery, earlier this week, a buyer said, at Eur1,000/mt FOB.
"Now that Asian prices are rising, Europe needs to pay higher prices to attract product, paying at least $1,200/mt CIF NWE," a producer said.
Ethylene CFR Northeast Asia was assessed at $1,100/mt Thursday, down $10 from Wednesday but holding to the level seen Friday and Monday, according to Platts data.
