April 16 2007 (Bloomberg) -- A $300 a metric ton difference between ethylene prices in Europe and Asia may boost European imports of the oil-based chemical from Iran, said Yoshinori Hasegawa, a broker at Ginga Petroleum (Singapore) Pte.
Iran's Petrochemical Commercial Co., which sold a cargo of ethylene to Europe for loading in the last week of April, can get a higher profit from selling to Europe than to Asia. The company typically exports ethylene to Qatar, India, and Asia.
"It makes sense for Iran to start exporting ethylene to Europe to benefit from the higher prices in that region,'' said Ginga Petroleum's Hasegawa. Europe may continue to buy ethylene from Iran if the price gap between Europe and Asia remains wide,'' he said.
Prices of ethylene in Europe, a key ingredient in plastic and synthetic fiber production, rose 2.5 percent to $1,220 a metric ton in the four weeks ended April 13. In Asia, ethylene fell 3.2 percent over the same period to close at $910 a ton, including the cost of shipping, over the same period, according to data by pricing service ICIS.
The price difference between Europe and Asia has widened because supply in Asia is growing faster than demand. South Korea's Yeochun NCC Co. and Exxon Mobil Corp.'s Singapore chemical unit are among companies that have completed capacity expansions. Formosa Petrochemical Corp., Taiwan's only publicly traded oil refiner, aims to start a plant capable of making 1.2 million tons of ethylene annually as early as next month.
In Europe, ethylene prices have increased because demand is strong at a time when plants are shut for scheduled maintenance and unplanned repairs, said Mazlan Razak, vice president for olefins and polyolefins at industry consultant Dewitt & Co.
Ethylene, typically made from naphtha and gas, is the basic building block of plastic packaging, water bottles, and synthetic fibers.
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Last Updated: April 16, 2007 03:17 EDT