Deer Park repercussions

21 July 1997 00:00  [Source: ACN]

The fire at Shell's Deer Park cracker dominated discussions of June events

THE fire at Shell Chemical's Deer Park, Texas, plant dominated discussion of June events in the petrochemical industry in the US. Information about the cause of the fire and an estimate of how long it would take to complete repairs had not yet been given by Shell in early July. However, industry observers believed it would take months to complete repairs.

Ethylene: Spot prices for ethylene climbed after the fire at Shell's cracker at Deer Park, Texas, on 23 June. Spot prices moved to 20.5 cent/lb, up 0.5-1 cent/lb from before the outage. June contracts settled at 25.5-26 cent/lb, down 0.5 cent/lb from May. Buyers are resisting producer attempts to raise the contract price by 0.5 cent/lb for July.

Cash costs for producing ethylene declined for the entire slate of feedstocks for most of June, with ethane the lone exception. The cash cost for producing ethylene from ethane increased slightly.

The range of cash costs for the various feedstocks was fairly narrow such that feedstock slates could be altered to meet specific operating needs with minimal economic detriment. After the Deer Park fire, prices for all feedstocks, except ethane, reversed course and began increasing.

Production is estimated to have been 4.157bn lb (1.886m tonne) in June, slightly higher than May.

Supplies were down because of the Deer Park fire and the eight days of lost production at Union Carbide's Texas City, Texas, plant due to a delayed restart after a turnaround in May and June.

The industry steam-cracker operating rate is estimated to have been 95% during June, about 4.4% higher than May.

Propylene: Contract prices for chemical-grade and polymer-grade propylene for June were settled at 19.75 cent/lb and 21.25 cent/lb respectively.

Refinery-grade propylene contract prices were done at 16.5 cent/lb for June.

Several producers have proposed a rollover for the prices of chemical-grade and polymer-grade propylene from June to July, but no agreement has been reached. Refinery-grade propylene prices continued to weaken.

Following the Deer Park fire, propylene supplies are expected to be tighter than ethylene supplies.

Butadiene: The July contract price moved up by 2 cent/lb to 22 cent/lb. The contract for May and June was 20 cent/lb. Butadiene is very tight. Inventories are near record-low levels.

Continuing problems with several European olefin plants have restricted availability of product for export to the US. Product is available from South Korea, but the six-week transit time will limit its immediate impact.

Methanol: Several producers experienced operating problems during June.

Millennium will be out of the market as a supplier until late July because of an operating problem at its Deer Park plant. Spot prices were 60-64 cent/gal, a 6-8 cent/gal increase for July.

MTBE: Demand and prices moved up in response to the beginning of the driving season. Spot prices had climbed to 88.5 cent/gal by early July. June prices were 76-84 cent/gal.

Production increased to 186 000 bbl/day in April, up by 4000 bbl/day from March. Stocks decreased by 100 000 bbl to 8.9m bbl at the end of April.

Acrylonitrile: Prices for export were US$820-830/tonne cif Asia. Both export and domestic demand remained good.

Vinyl chloride monomer: Demand slowed in June. Ethylene dichloride demand also decreased. Formula prices were estimated to be 23.5 cent/lb in June, unchanged from May.

US chemical prices*
	Contract		Spot
	May	June	June	July
Ethylene5	26-26.5	25.5-26	19-20	20.5
Propylene7	20.75	21.25	20.5-21	na
Butadiene	20	20	19-20	21.5-22
Methanol4	66-70	66-702	58-64	60-64
MTBE4	78.5-116	83.5-115	78-78.5	88.5
Acrylonitrile8	850-860	820-830	na	na
Ethylene glycol3	229-302	30-322	na	na
VCM	23.5	23.52	na	na
Benzene	105	85	82-83	75-83
Toluene4	na	na	90	90-91
Xylenes4,6	86	90	90	90-91
Styrene	27.5-29.5	27.5-29.5	22.75-23	23-24
Paraxylene	21.5	21.5	na	25-26
Orthoxylene	18.5	19.52	na	na
1 actual 2 estimate 3 fibre grade 4 cent/gal 5 list contract 6 fob Gluf Coast 7 polymer grade 8 US Gulf Coast export price in US$/tonne cif NEA Prices are cent/lb unless indicated otherwise. * The information contained in this table is based on data supplied by Pace Consultants, 4848 Loop Central Dr. II, Houston, Texas 77081, USA. Tel +1 713 669 7803, Fax: +1 713 661 8476.

Monoethylene glycol: Fibre-grade prices appeared to be holding in the 30-32 cent/lb range in June. Antifreeze-grade prices were estimated to have increased to 28-29 cent/lb.

Benzene: The July contract price settled at 80 cent/gal. The June contract price settled at 85 cent/gal, down 20 cent/gal from May. Weak derivative demand is putting downward pressure on prices. Spot prices were in the 75-83 cent/gal range.

Toluene: Strong demand and tight supplies have driven spot prices higher with prices moving erratically in the low 80s to high 90s cent/gal range. Prices in early July were 90-91 cent/gal.

The calculated gasoline-blending value in late June was 72 cent/gal for conventional gasoline and 75 cent/gal for reformulated gasoline.

Mixed xylenes: The June contract price settled at 90 cent/gal, up 4 cent/gal from May. Spot prices were around 90 cent/gal in early July.

Styrene: Spot prices eroded in June with prices at 22.75-23 cent/lb. June contract prices settled at 27.5-29.5 cent/lb. Plant outages and scheduled turnarounds have kept supplies snug.

Paraxylene: US producers followed Asian and European producers and settled Q3 contracts at 22.5 cent/lb. Producers had proposed increasing PX prices to 24.5 cent/lb for Q3.

China American Petrochemical Co settled Q3 contracts at US$495/tonne cfr Taiwan and several parties in Europe agreed to a similar price.

The spot price was 25.26 cent/lb. The Q2 PX price was finalised at 21.5 cent/lb, an increase of 1 cent/lb from Q1.

Orthoxylene: Contract prices had not been settled. Producers have nominated 19.5 cent/lb for June and July, a 1 cent/lb increase from the price for May.

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