News Code : 44553

Petrotahlil - In the European olefins markets, the trend toward a reduction in contract volumes has also been present following a somewhat challenging 2019.

Downstream demand was relatively weak during 2019 with many expecting this to continue during 2020. As a result, both producers and consumers agreed that buyers were generally over-contracted during 2019 and that a trend moving toward reduced contract volumes would be present during 2020.

Several butadiene consumers told Platts they would be reducing contract volumes during 2020 where possible as a result of challenging downstream conditions.

Similarly, propylene traders said contractual intake by several chemical grade consumers was reduced for 2020 due to a weak automotive industry.

In recent years, contract volumes have typically accounted for some 90-95% of butadiene and propylene traded in Europe. 

According to several propylene traders, some buyers have reduced their contractual volumes to 80% for 2020. 

In 2019, polymer and chemical grade propylene spot discounts to contract prices widened to as much as 20% and 40% toward the end of the year respectively. 

Several buyers said they were unable to take advantage of attractive spot prices due to high stocks in 2019, but were considering increasing their exposure this year. 

So far, spot activity in propylene has been thin in 2020, with weak underlying demand offsetting tighter supply stemming from reduced cracker run rates and a lack of imports. 

Platts

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