European ethylene April CP settles down Eur200/mt on month at Eur720/mt: sources

London — The industry-settled European monthly ethylene contract price for April settled fully Tuesday at Eur720/mt FD NWE, down Eur200/mt from March, sources involved in the settlement confirmed.

The month-on-month fall was linked to the unprecedented decline in upstream naphtha prices in March, and also reflects a loss of downstream demand due to the coronavirus pandemic.

The time the ethylene month CP was seen below this level was June 2009, when it stood at Eur705/mt FD NWE, according to S&P Global Platts data.

"It is a complicated story," one source said. "Do not expect huge demand in April. Coronavirus, the economic slowdown, Easter -- not just cautious, but also nervous about business nowadays."

In the naphtha market, a continued lack of demand from both gasoline and the petrochemical complex in March has added further length, leading to sharp price cuts. The average naphtha price so far in March has fallen by around 46% to $252/mt, more than $200/mt below February averages, Platts data showed.

On the buying side, fewer volumes were heard nominated for April ethylene contracts, in order to secure more competitive spot prices in Europe and more flexibility amid the uncertainty caused by coronavirus.

"Fair settlements I think, helping European consumers to regain some competitiveness with Asia/US," another source said.

A third source said that in the current climate, "it may be better to use the spot market if needed, rather than contract alternatives. We are all trying to be prudent."

S&P Global Platts last assessed European ethylene spot prices Monday at Eur471.50/mt FD NWE, a discount of more than 40% to the March contract price. April spot discounts were last heard at 25-35% FD NWE and around 40% CIF NWE.