Petchem prices drop on oil, feedstock falls

London - In January, the massive fall in crude oil and naphtha prices led to substantial reductions in petrochemical feedstock costs across Europe, according to a European Plastics News report.

The monthly contract price settlements for ethylene, propylene and styrene monomer fell €120(£90)/tonne, €130(£98)/tonne and €290(£219)/tonne, respectively.

Polymer producers were faced with no option but to grant major price concessions to their customers, the EPN report noted.

Among a range of factors impacting the market was the restart of Shell’s cracker at Moerdijk, The Netherlands, at the end of 2014 following a prolonged force majeure.

Rumours, meanwhile, that Versalis plans to restart its cracker in Porto Marghera have been confirmed. The company began preparing the plant for start-up in mid-December, and expects to process naphtha into olefins by February.

Crude oil and naphtha costs continued to fall during the first half of January and petrochemical feedstock costs are sure to follow, EPN continued.

“Brent crude oil for example, traded just above $47 (€41) per barrel in mid-January,” said the report. “This represents a price reduction of around 13 percent since the start of the year. Producers will hope that supply cutbacks and better sales will restrict any price concessions.”

Similarly, falling crude and naphtha prices, low demand, oversupply of natural rubber and weak macroeconomic conditions have contributed to a decline in butadiene global prices.

Japanese elastomers producer Zeon Corp., for instance, reported a a drop of 29% in Asian butadiene prices going  down from $1,500 per tonne in third quarter of 2014 to $1,067 a tonne in the last quarter.

Chinese as well as global demand for both SBR and PBR have slowed down in recent months, adding to the "oil impact" and over-capacities in Asia and Europe.