Petrotahlil -- European naphtha-based contract cracker margins fell week on week while operators using liquefied petroleum gas (LPG) posted a slight uptick, ICIS margin analysis showed on Monday.

Spot cracker margins posted a steep increase over the week as market sentiment firmed on a combination of unexpected supply issues in Italy and Sweden, signs of a pickup in demand, and higher upstream costs.

In the week to May 15:

- Naphtha rose by more than 9%

- LPG rose by nearly 1%

Naphtha-based contract margins dropped by nearly 8%, co-product credits rose slightly:
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LPG-based contract margins rose by 3%, co-product credits rose slightly:
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Contract margins by feedstock:

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Spot margins by feedstock:

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In the week to 15 May, sources said there was growing buying appetite in Europe, not least from the construction sector, as countries across the continent start easing coronavirus-related restrictions.

The supply and demand balance has improved at least for the time being, and prompt availability even seems limited in some areas.

Demand overall is quite cautious.

Inventory levels are high in some derivative chains and consumer confidence has yet to return.

Spot prices were higher in some cases but remain very low relative to the contract price.

Crackers were running well, albeit with some limitations due to the soft butadiene (BD) market.