Market trends

19 September 1994 00:00  [Source: ICB]

Naphtha prices are down $2/tonne to $157-159/tonne cif NW Europe in line with crude.

The ethylene supply crisis shows no sign of abating as US cracker problems appear to multiply (ECN 19 September p10). Veba's 440 000 tonne/year No3 cracker at Gelsenkirchen is to be restarted over two weeks late on 25-26 September following its planned six-week turnaround while Exxon seeks to restart its Mossmorran ethane cracker after its unexpected late August shutdown. Spot numbers are quoted around $600/tonne cif ARA. The Hungarian MOL cracker is down for maintenance.

Propylene buyers claim they will reject DM50/tonne-plus Q4 hikes, with DM30-50/tonne increases looking increasingly likely despite some producer calls for DM100/tonne hikes.

US end-August butadiene inventories are modestly down at 94 000 tonne with October contract nominations expected to come in at least 1 cent/lb higher than September's confirmed 21 cent/lb level. The Veba shutdown will inevitably affect Hüls' butadiene output at its 120 000 tonne/year Marl unit, but the permanent closure of Hüls' SBR unit at Marl - planned for 1 October - will limit the immediate impact. A major NWE seller is expecting to see a second consecutive quarter of contract price disagreement in Q4, although most players are locked into combined Q3/Q4 contracts at FF1850/1950/tonne.

Benzene continues to weaken in Europe, reflecting lower spot numbers in the US, back at $1.30-1.35/gal, which in turn reflect lower gasoline and toluene numbers. An inter-trader deal is talked at $388/tonne fob earlier in the week but numbers now look to be settling lower in the $380-385/tonne fob range with traders talking even lower numbers.

Toluene numbers continue to weaken both in the US, where gasoline producers are said to be running down inventories and toluene demand is weakening. European prices have fallen with offers of nitration grade material seen as low as $250-255/tonne cif NWE.

Xylene numbers have remained relatively stable with strong isomer demand encouraging producers to hold out for $370/tonne fob, following a $365/tonne fob deal. US September contracts appear done at $1.12/gal.

Styrene spot activity has slowed ahead of Q4 contract negotiations with T1 deals around $950/tonne cif suggesting a slight strengthening of numbers. Strong downstream demand worldwide coincides with several major maintenance outages in the US and Amoco's force majeure declaration has reduced styrene deliveries to 60% as a result of ethylene shortages. Atochem's Gonfreville unit goes down for seven weeks' maintenance from 19 September.

Bulk chemical prices
	European contract		European spot	US price
	DM/tonne	$/tonne	$/tonne	$/tonne
Naphtha	n.a.	n.a.	157-159 (cif)	n.a.
Ethylene	6801	430	600 (cif)	518-595 (Sept)
Propylene2	5001	312	335-350 (nom)	391 (Sept)
Butadiene	540-5531	341-352	450-500 (fob)	463 (Sept)
Benzene	5101	322	380-390 (fob)	450 (Sept)
Toluene	4001 (ex works)	253	250-260 (fob)	289 (Aug)
Xylene	n.a.	n.a.	360-365 (fob)	340 (Sept)
Styrene	1190-12301	752-777	1000-1010 (T2) (nom) 965-975 (T1) (fob)	n.a.
Paraxylene	8971	560	735-745 (fob)	528 (Q3)
Orthoxylene	5601	350	600-620 (fob)	353 (Aug)
Methanol	440 (fob)1	275	412-418 (T2) (fob) 345-355 (T1) (cif)	400 (Sept)
MTBE	1.38-1.40x1	n.a.	300-305 (fob)	n.a.
Ammonia	n.a.	n.a.	200-210 (CFR)	n.a.
Prices contained in this report are obtained by ECN through consultation with producers, consumers and merchants across Europe. They are intended as a guide to price levels of recent business in Europe and reflect medium to large tonnage sales. Spot prices are quoted fob (free-on-board) NW European port, cif (cost, insurance and freight), FCA (free carrier), CFR (cost and freight). T1 = imported material subject to EC common external tariffs, T2 = EC material, not dutiable, bid = blending grade, com = commercial grade, nit = nitration grade. European contract prices are quoted on a free delivered basis (FD) unless otherwise stated, initial but unfixed negotiating range is indicated (nom), n.a. = not applicable, m = monthly contracts. Spot prices contained in this issue are based on information available on 14 September 1994. Key: a Indicates Q2 contracts. 1 Indicates Q3 contracts 2 Polymer grade. Dollar prices are based on rates of exchange on 13 September: DM:$1.564, FF:$5.350, Dfl:$1.755, $:£1.561. The dollar equivalent range is based on exchange rates prevalent at the time of contract closure if available, or an average rate for the quarter.

Paraxylene spot markets appear to have ground to a halt ahead of contract talks. US buyers are looking for just 4 cent/lb Q4 hikes just under the smallest hike nominated of 4.5 cent/lb, suggesting European talks will focus around DM1000/tonne FD.

A recovery in orthoxylene spot numbers follows on from enquiries for both export and domestic demand with buyers offering $600/tonne and sellers looking for higher numbers, closer to $620/tonne but no deals have been confirmed at these higher levels.

No methanol spot business is reported with Q4 contract negotiations still under discussion. T2 prices are reported in the DM645-655/tonne fob range with T1 material steady at $345-355/tonne.

MTBE business is slight, ahead of contract negotiations with the range under discussion said to be between 1.6 and 1.7x the premium unleaded gasoline price. Buyers are holding back to gain lower spot numbers.

Ammonia markets are in hiatus this week with almost no deals yet done on October deliveries.

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