European ethylene and propylene supply has tightened amid a spate of production issues, though the impact of this on spot prices is being moderated by poor derivatives demand, according to industry sources.
Availability to the market had already been constrained by the prolonged outage at Naphtachimie's 745,000 mt/year cracker in Lavera, France, which has been on unplanned shutdown since December and is only expected to be back on stream in the first half of March.
More recently, Versalis' 380,000 mt/year Dunkirk steam cracker in France has been shut for up to 10 days for minor repairs. It is expected to restart later this week.
LyondellBasell meanwhile has declared force majeure on propylene supply out of its Muenchsmuenster site in Germany, effective mid-March, following technical problems with the 400,000 mt/year cracker, according to sources.
The force majeure will be in place for four weeks, sources said, quoting a letter sent by LyondellBasell to customers. The site also hosts a 320,000 mt/year polyethylene plant.
PropanChem's 350,000 mt/year propane dehydrogenation plant in Tarragona, Spain has been shut for maintenance work from February 7 until end of March.
PropanChem is jointly owned by BASF and Algeria's Sonatrach.
The heavy cracker turnaround season, due to start next month, has further curbed supply. Shell's 940,000 mt/year Moerdijk cracker in the Netherlands will be offline within the March-April period.
"We currently plan to ramp down over a few days and commence shutdown on March 10 and then start up again by end-April," a company source said Friday.
BASF's 1.08 million mt/year cracker in Antwerp, Europe's largest, will also be down in April-June for maintenance.
SPOT BUYING SUBDUED DESPITE SUPPLY ISSUES
The supply issues have not however triggered frantic spot buying. Interest has remained subdued despite the specter of increased March contract pricing on the back of curbed availability and higher feedstock cost.
The market was described by sources as calm, with no sign of a rush to secure volumes.
Products were available for those who needed them, but interest was thin, a trader said, adding: "I am not attacked by requests."
A producer agreed, saying: "There is no push for volumes, no request for support. Overall, people appear to be managing their issues pretty well." The market has so far largely been preoccupied with swapping products and using up contractual volumes, sources said, adding that there is little need for spare supply amid rising worries over falling downstream demand and Europe's escalating economic woes.
The production issues also gave some cracker operators the chance to ramp up output, which helped bridge the supply gap, sources said.
Downstream, polyethylene and polypropylene demand has continued to soften, prompting further pricing flexibility from producers who have given up on their significant price hike targets for February.
The strong upstream market is buoying expectations of firmer feedstock propylene pricing for March but this has failed to propel prebuying, sources said, adding that consumers are generally purchasing hand-to-mouth amid macroeconomic uncertainty.
Naphtha averaged $995/mt (Eur742/mt) CIF NWE in February, up from January's $933/mt (Eur701/mt). It crossed the $1,000/mt mark on February 14 and closed at $1,019.50/mt on February 18, a 10-month high, before easing to $979.50/mt on Friday's close, down from $1,014.50/mt a week earlier.
Spot polymer grade propylene prices were Eur10/mt ahead Friday week-on-week to be assessed at Eur Eur1,090-1,095/mt FD NWE and Eur1,070-1,075/mt CIF NWE. Ethylene prices were assessed unchanged Friday at Eur1,160-1,165/mt FD NWE and $1,525-1,530/mt CIF NWE.
