Run rates at European crackers currently averaging about 80% of capacity, up from 70%-75% in November, December, boosted by higher prices for ethylene, propylene; ethylene assessed at €1,325-€1,330/tonne CIF NWE on Jan. 19

Alison Gallant

LOS ANGELES , January 20, 2012 (Industry Intelligence) – European cracker run rates are ramping up slowly, averaging about 80%, boosted by higher prices for olefins, Platts reported Jan. 20.

In November and December, run rates averaged about 70% to 75% of capacity due to diminished demand and low prices for ethylene and propylene.

But many in the industry are still cautious as the recovered demand may be short-lived as it is mostly stock replenisment. Many are also reluctant to return to higher operating rates because of thin margins and eurozone debt concerns.

In the downstream markets, demand for polyethylene and polypropylene has picked up, but that too is not likely to be sustained as it reflects only an attempt by buyers to stock up before a triple-digit price hike forecast for February.

Margins at European steam crackers dipped to record lows early in January but have recently recoved, Platts reported.

On Jan. 19 cracker and spot margins were at minus €170 per tonne and minus €238/tonne. On Jan. 10, in the upstream market, naphtha hit a record high of €751/tonne cost and freight northwest Europe.

Ethylene prices in the spot market continued to see gains in the week ended Jan. 20, up €20/tonne week-over-week to €1,080-€1,085/tonne free delivered northwest Europe and €1,325-€1,330/tonne cost and freight NWE.

The primary source of this article is Platts, New York, New York, Jan. 20, 2012.

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