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Europe February ethylene, propylene prices to rise further

January 24/2011

(ICIS) -- February contract prices in Europe for ethylene (C2) and propylene (C3) are expected to increase from this month's prices because of a bullish outlook on feedstocks and robust demand, market sources said on Friday.

While upward price adjustments were widely expected for both C2 and C3, owing to the tight supply-demand balance, some consumers were unhappy with the magnitude of the increases already being discussed by some players, notably polyethylene (PE) producers.

This week, a number of PE and PP producers were already signalling extensive price increases next month for their downstream markets because of their expectations of how the monomer contracts will settle.

Margin-analysis data compiled by ICIS show this to be true, with the average December 2010 contract cracker margin at ?153/tonne ($204/tonne), while the January-to-date margin was at ?309/tonne.

Overall, price hikes of between ?15-40/tonne and ?20-50/tonne were being mooted for ethylene and propylene contracts, respectively. The settlements were expected next week.

The January ethylene contract price settled at ?1,110/tonne FD (free delivered) NWE (northwest Europe), up by ?105/tonne from December.

The January propylene contract price settled at a record high of ?1,070/tonne, up by ?110/tonne from December. Spot prices were being talked at around contract value on a CIF basis, although the much stronger US market was leading to price discussions in Europe of around the contract price plus ?70/tonne.


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