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Notes on the PIE tables: Petrochemical products

Basic products, intermediate products, feedstocks

European polymer production is based almost exclusively on oil. Crude oil is split up into various fractions in refineries, and the vast majority turned into fuels (kerosene, gasoline, diesel) or heating oil (heavy, light). About 10% of the refined oil is naphtha. This, in turn, is cracked at high pressure and high temperatures into other fractions.

The main product to emerge from the crackers is ethylene (chemically, C2H4, also known as the "C2" fraction or ethene), followed by propylene (C3H6, "C3", propene) and butylene (C4H8, "C4", butene), plus a fraction of aromatic hydrocarbons (the cyclic compounds benzene, toluene and xylene). Aromatic hydrocarbons are found at many levels in the upstream oil refining processes.

For production of thermoplastics, ethylene is the key feedstock for all polyethylene grades and is a major component (50%) of PVC. Polypropylene is the chain bond of monomeric propylene. Butene, on the other hand, is an important elastomer component. As concerns aromatic hydrocarbons, benzene is the chief fraction for polymer production. Styrene is produced from the combination of benzene and ethylene (in the ratio of about 5:2) by splitting off H2 (dehydrogenation). Styrene is the starting material for all polystyrene grades (PS, EPS) and styrenic copolymers (ABS, SAN, ASA). Apart from that, benzene plays a key role in the production of adipic acid  (feedstock for caprolactam (PA 6) and in the phenol chain (polycarbonate, resins).

Within the aromatic hydrocarbons group, toluene plays an important role for polyurethanes, while paraxylene (PX) – a specific form of xylene – is a principal raw material for production of polyester, and in  turn for PET, which has since become a commodity thermoplastic.

Oil and naphtha prices

The daily Opec price is quoted in USD/barrel. The PIE table gives the monthly average price of the so-called "Opec basket", a mix of seven grades from the Opec countries, which, for purposes of comparison, is converted to EUR/t using the latest exchange rates and the factor for converting volume (barrels) to weight (tonnes). The price of Brent oil from the North Sea is usually somewhat higher than the Opec basket, but moves in parallel with it.
Naphtha is generally traded weekly on the spot market. Here, the same conditions apply as described below under "Spot prices".

Contracts

The European contract prices for benzene, styrene, ethylene, propylene and paraxylene are fixed in advance between the supplier and the customer at the beginning of the relevant price period (generally just before the beginning of the month or quarter). The listed prices are gross average figures for "lead" transactions between selected contract partners having a sufficiently high trading volume (for ethylene, for example, at least 200,000 t/y), and when necessary are converted by PIE from USD to EUR on the basis of the monthly exchange rate. Depending on the trading volume, discounts on this reference market rate are usually agreed between the partners. Some 85-95% of European polymers are manufactured from monomers for which contract prices have been fixed.

Spot prices

Monomer freely available, and thus not bound to contracts, is traded on the spot market. The role played by spot transactions in European polymer production – apart from the base product naphtha – is fairly marginal in volume terms, but it does have an important regulating influence on the market and can tip the scales in one direction or another. Spot prices are thus indicators of the market situation for petrochemicals and polymer production generally. In Europe, spot prices are reported by various sources (and in some cases with differing conditions) normally once a week, based on trade in the Amsterdam-Rotterdam-Antwerp (ARA) region.

Weekly spot table “Petrochemical feedstocks – Ethylene, Propylene, …

PIE calculates an average value for each individual product from all the available weekly figures in parallel with the last reporting period for PIE polymer prices – see www.pieweb.com, Polymer Prices, Feedstocks: Time series (Excel sheets).

Monthly spot table “Petrochemical feedstocks – Ethylene, Propylene, …

PIE calculates from the weekly range of spot transactions the average value for each individual product, both at the upper and lower end of the range.

Volatility

The volatility of the spot price is defined as the standard deviation in the price curve during the reporting period, either up or down. The deviation is calculated from the difference between the average spot notations from week to week. Volatility can serve as an indicator for the intensity of trading.


Supply

 

Demand

 

Long:

Oversupply

High:

Many additional purchases

Balanced:

Supply covers demand

Normal:

Usual speculative purchases

Short:

Undersupply

Weak:

Little additional demand

Recent tables ...

Petrochemical Reports
The influence of the petrochemical feedstock markets on polymer prices has grown significantly over the past several years. Parallel to the polymer price reports, PIE will report more comprehensively on these markets in future.
© 2019 by Plastics Information Europe, Bad Homburg
Date of print: 20/09/2019
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