Coronavirus Outbreak: Europe petchems, crude prices down sharply as coronavirus, oil price war escalate



Crude oil and European petrochemicals spot prices fell in Thursday morning trading as fears over the spread of coronavirus failed to be offset by extraordinary measures approved by governments and central banks.

By 10:45 GMT, Brent crude oil futures for delivery in May had fallen by 6% to $33.63/bbl (down by $2.15/bbl).

After the increase in output announced over the weekend of 7-8 March, Saudi Aramco continued to deploy ammunition in its crude oil price war on Wednesday (11 March) – the Saudi major aims to produce 13m bbl/day in April, likely flooding an already-oversupplied market with more product.

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In Enugu: Controversy as octogenarian living with dogs goes missing   European petrochemicals prices continued to take a battering this week on the back of crude oil price volatility.

Benzene – a key petrochemical building block and closely related to crude oil price movements – also opened trading in Europe sharply down in a shaky market that expects demand to be very poor in coming months as measures to contain the virus extend.

Compared to prices at close on Friday 6 March, before Saudi Arabia launched a price war to increase its crude oil market share, benzene has fallen around 13% to $560/tonne for March offers, and to $540/tonne for April offers.

Benzene’s prices falls had deepened by 11:00 GMT on Thursday from early morning trading.

Prices for that commodity are on a CIF (cost, insurance, freight) ARA (Amsterdam-Rotterdam-Antwerp) basis.

Naphtha, the most important feedstock for the European petrochemicals industry and closely linked to crude oil prices, was also falling sharply in Thursday morning trading.

Prices were trading at $278/tonne CIF (cost, insurance, freight) NWE (northwest Europe) in morning trading, down more than 6% from the close on Wednesday ($296/tonne) and far from the last close before the crude oil price war kicked off.


Stock exchanges in Asia and Europe were also sharply down compared to Wednesday; the European index listing large chemicals players was down more than 5% by 11:00 GMT, with some companies losing between 6% and 9% of their market capitalisation.

All main European bourses were down. Paris was 7.3% lower, while London’s FTSE 100 and Frankfurt’s DAX were both down around 5%.

Despite extraordinary spending packages approved in major countries like the US, the UK, or Italy, markets found Germany’s Chancellor’s comments on Wednesday worrying.

Angela Merkel said if measures to contain the virus did not work, up to 70% of Germany’s population could catch coronavirus at some point – not reassuring comments in a goods export-oriented economy where that scenario could cause havoc in industrial facilities.

European chemicals major BASF confirmed this week it has registered the first case of coronavirus at its Ludwigshafen flagship site by the River Rhine in Germany.

After the UK’s Bank of England (BoE) and government approved extraordinary measures and spending on Wednesday, the European Central Bank (ECB) that rules monetary policy in the 19-country eurozone is set to announce later on Thursday its own package of measures.

The World Health Organization (WH) officially declared coronavirus a global pandemic on Wednesday. (hellenicshippingnews)
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