The difference between the contract prices of ethylene and propylene should remain high in 2016, and producers will adjust the operation of steam crackers in favor of ethylene so as to maximize their profit from the high level of the petrochemicals margins, according to Czech petrochemical producer Unipetrol Thursday.
The difference between the contract price of ethylene and propylene is currently at Eur250/mt ($279/mt), up from Eur50/mt a year ago.
The ethylene contract price for March was settled at Eur810/mt FD NWE, down Eur20/mt on the month, and the lowest since September 2009.
The March propylene CP was settled at Eur560/mt FD NWE, a rollover on the month, and the lowest monthly CP since May 2009. Expectations for the April settlements are bullish, according to sources, amid the global spring maintenance season.
"The ethylene market should become balanced," Unipetrol said in its annual report. "The noticeable drop in prices in the second half of 2015 should continue in the first quarter. The prices should then start rising."
The average difference between the CPs was Eur268/mt this year. The averages in 2014 and 2015 were Eur45.8/mt, and Eur109.15/mt. The global build out in on-purpose propylene production accelerated in 2015.
"The relatively balanced ethylene market will face the oversupplied global propylene market. Especially non-polymer derivatives of propylene should face the pressure of competition from Asia and the US."
Petrochemical margins should continue to remain relatively high, although not as high as they were in summer 2015, the company added.
Platts contract cracker margins are largely flat averaging Eur577/mt so far in 2016, compared with an average of Eur567/mt in 2015.
