Hints of China interest

28 August 1995 00:00  [Source: ACN]

NAPHTHA markets rallied last week on the back of rising crude to US$165-166/tonne cfr Japan for first half October delivery, from the low of US$160/tonne cfr two weeks ago. Japanese and South Korean cracker operators are again buying or enquiring for naphtha and physical deals have been reported. One Japanese producer purchased 25 000 tonne of naphtha for first half October delivery at US$160/tonne cfr Japan.

In SEA, no physical deals were reported, but buyers may return to the spot market this week for first half October delivery. The MoPS price was US$16.70-16.80/bbl fob Singapore mid-week. Singapore's PCS confirmed it is making no spot purchases ahead of its 2 October shutdown.

Ethylene markets continue to drag as long inventories and low price levels limit spot business. Several fixtures totalling 9000 tonne have been concluded by one producer at US$260-270/tonne fob Korea for September shipment to SEA. Buyer ideas for ethylene in SEA are falling and trader speculation indicates buyer ideas may reach US$350-370/tonne cfr SEA for September delivery.

Propylene price levels continue to slip and sales are reported around US$455-470/tonne cfr SEA for September shipment. One 4-6000 tonne cargo of Libyan material was concluded at US$460/tonne cfr Thailand for September/early October delivery. A second cargo of 4500 tonne of Iranian material was reportedly concluded at US$455/tonne cfr SEA for end September/early October delivery. Q4 propylene contract negotiations for Japanese and South Korean exports to Taiwan are expected to begin end August and traders anticipate settlements around US$500-520/tonne cfr Taiwan. The limited availability of propylene in Japan reported during Q3 is believed to be easing, but planned shutdowns for the end of Q3 and during Q4 in South Korea and Japan should tighten supply again and help firm prices.

Bulk chemical spot prices - US$/tonne
	Asia/Pacific spot		US/Euro contracts
	NEA1	SEA2	US3	NWE4
Naphtha	1607 cfr Japan	171.456 fob Sing	N/A	N/A
Ethylene	310-320	260-270 fob Korea	0.32/lb	880
Propylene5	420-430	460 cfr Thai	0.2473/lb June	750
Butadiene	517 cfr China8	N/A	0.25/lb	675
Benzene	270 cif Korea	330 cfr India6	0.90/gal Aug	415
Toluene	265	3106	0.79-0.80/gal	360 fob
Xylenes	300-3106 cfr China	35510	0.85/gal Aug	N/A
Styrene	650 cfr Taiwan	-	51-53/lb	1775-1820
Paraxylene	1200 cfr6 Taiwan/Korea	N/A	0.40/lb FD Q3	1267
Orthoxylene	300 fob Taiwan	500 fob Sing6	34/lb	910
Methanol	170 cif Taiwan6	200	-	250 fob
MTBE	2639	280	N/A	1.6
Ammonia	229 cfr Korea	220 cfr wc India cash	N/A	N/A
1Prices are fob Korea unless indicated 2Prices are cfr SEA unless indicated 3US prices are July contract levels on an fob basis unless otherwise indicated 4European FD Q3 contract price in DM/tonne courtesy of ECN 5Propylene is polymer grade 6No known recent business 7For first half October. delivery 8With credit 9For mid-September delivery to west coast US 10For a small parcel Prices in this report are obtained through consultation with producers, consumers and merchants in the regions indicated. They are intended as a guide to price levels of recent business and reflect medium to large tonnage sales. Spot prices are quoted as indicated: cfr - cost and freight; fob - free on board; cif - cost, insurance and freight; FD - free delivered. Spot prices are based on information available mid-week prior to the date of issue. Dollar prices are based on rates of exchange prevailing at this time.

Butadiene markets remain bullish and one South Korean producer's offer price has increased to US$540-560/tonne cfr China for September shipment. Buyers are countering at US$520/tonne cfr China. Some traders feel that butadiene prices may have already peaked and should now stabilise.

Benzene markets are relatively calm with limited South Korean export availability. Japan and China appear to have a good balance of product. South Korean domestic suppliers' offers are reported to have dropped to US$260-270/tonne cif, although other reports indicate offers of US$260-265/tonne fob Korea for September. Yukong purchased 4000 tonne a few weeks ago at US$270/tonne cif from a South Korean domestic supplier for August delivery. Yukong's September benzene requirements will depend on styrene production. Yukong's TDP unit closed in early August for a one-month turnaround, although the company has decided to keep the plant closed until market economics improve, purchasing replacement product instead.

The only new buying interest is from India where a total of 5000 tonne of enquiries are reported as low as US$240/tonne fob Korea, despite a 3000 tonne Indian tender expected to be awarded at US$260/tonne fob Korea for September delivery.

Toluene markets are confusing with conflicting reports of difficulty selling and of prices firming. An enquiry at US$270/tonne fob Singapore was rejected. Two Chinese enquiries of 1000 tonne and 2000 tonne have been reported at US$280/tonne cfr China for end August/early September shipment, netting back to US$255/tonne fob Korea. South Korean producers continue to offer at US$270/tonne fob for September, although business is believed to have been done for September lifting at under US$265/tonne fob Korea from a cracker to a South Korean trader, believed to be for China.

Mixed xylenes offers have reportedly dropped to US$295/tonne cfr Korea for isomer grade product for September delivery, which South Korean buyers claim to have rejected last week, despite bidding at this price two weeks ago.

A small parcel of 300-400 tonne solvent grade has been sold at US$335/tonne cfr SEA for September delivery.

Styrene buyer ideas have weakened further to US$620-650/tonne cfr China, with South Korean producers' offers remaining at or below US$700/tonne fob Korea. Main interest is for small parcels to China, as well as limited interest from Taiwan and Hong Kong. Buyer inventories have been declining due to low levels of purchasing. Yukong's styrene production is currently running at 100%, although there still is a tentative schedule to shut down production for one week in September.

Paraxylene offers continue around US$1450-1500/tonne cfr Korea and China for September delivery, with South Korean buyers bidding around US$1400/tonne cfr Korea and other buyers continuing to bid as low as US$1300-1350/tonne cfr NEA and SEA. Honam Oil's new paraxylene facility is reported to be running at 50-60%. Kohap's new paraxylene plant is due to begin test-run-ning mid to end November and one source suggested that South Korea would have little excess spot export availability until then.

Orthoxylene bids are reported from China at US$450/tonne cfr China for September delivery, with indications below US$400/tonne cfr NEA. Kohap has a 1000 tonne lot available for export in September and has offered at US$520/tonne fob Korea (ACN 28 August p20).

Methanol markets continue quiet with some softening in price ideas. Methanol price levels in Singapore continue at US$190-200/tonne cif Singapore for end August/early September delivery. Producers are offering at US$190/tonne cif SEA for end September delivery. Japanese methanol contracts were US$170-175/tonne cif Japan for August deliveries and Japanese traders expect prices to weaken gradually. One Japanese trader anticipates that prices may drop to the US$150s/tonne cif Japan by end Q4.

MTBE demand in SEA is described as stable. One 2000 tonne fixture was reportedly concluded at around US$280/tonne cfr SEA for end August/early September delivery. CPC was last week considering issuing another 3500 tonne MTBE tender for October delivery.

Ammonia markets are relatively quiet. Marubeni's recent sale for 9300 tonne to FAI will be shipped aboard the Kapitan Luka (ACN 21 Aug, p29).

The CPDC 15 August 12-15 000 tonne tender is reported to have been awarded to Sanapik at US$229/tonne cfr Korea. Details of new purchases from FAI are awaited.

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