Propylene shortfall

11 August 1997 00:00  [Source: ACN]

Propylene hit harder than ethylene after Deer Park fire

Ethylene: Spot prices were stable at 20-21 cent/lb. Producers indicated buyers were taking close to the maximum volume allowed by their contracts, but no panic buying was apparent due to the Shell outage. July contracts were settled at 25.5-26 cent/lb, a rollover of the June price.

Ethylene consumption for polymers has been declining for the last two months. Production of hdPE, ldPE and PVC peaked in April-May. The production of lldPE continues to increase, but this polymer is showing the most price weakness and may also be on the verge of production cuts.

Production is estimated at 4.128bn lb (1.87m tonne) in July, nearly equal to June's level. This was in spite of the loss of Shell's Deer Park, Texas, plant and the shutdown of Dow's LHC-6 unit at Freeport, Texas, which was permanently shut down at end-June. The average cracker operating rate is estimated to have been 92.5% during July, about 2.5% lower than June. There were three scheduled cracker shutdowns in July, and two are planned for August. Inventories were stable at about 12.5 days of consumption.

Shell Chemical has reportedly told customers it plans to replace some of its lost capacity at the plant by mid-November using its OP-2 ethylene unit.

Propylene: After the Deer Park fire, meeting overall demand for propylene has been more difficult than it has been for ethylene. Through July, there appears to have been a propylene supply shortfall of about 5%. Shell reportedly advised its customers of a 65% allocation rate for August. The industry was looking to increased supplies from refineries and imports to fill the void.

Spot prices were 16.25 cent/lb for refinery grade. Chemical-grade and polymer-grade contract prices for July were 19.75 cent/lb and 21.25 cent/lb, respectively. Refinery-grade contract prices settled at 16.25 cent/lb.

Butadiene: The July contract price increased by 2 cent/lb to 22 cent/lb. Butadiene is very tight. Inventories are at near-record-low levels. But an announced 2 cent/lb price increase to be effective 1 August was withdrawn. The view appears to be that the supply tightness will not be long-lived. European supplies are becoming available and product can be obtained from South Korea.

Methanol: Spot prices were in the 60-64 cent/gal range. List contract prices were 6670 cent/gal.

Several producers experienced operating problems during July, including Millennium and Enron. Millennium was expected to be out of the market as a supplier until late July due to problems at its Deer Park plant. The Enron shutdown was expected to last 40 days.

MTBE: Spot markets remained strong, despite the volatility in the gasoline market.

July spot prices were in the 87-97 cent/gal range. However, a prompt cargo was sold at 94-95 cent/gal in early-August. High gasoline prices have raised the blending value to 95 cent/gal.

Acrylonitrile: Prices for export were US$810-820/tonne cif NEA. Export and domestic demands remained good. However, the operation of Tae Kwang's 250 000 tonne/year plant in South Korea is expected to decrease US exports to Asia.

Vinyl chloride monomer: Demand slowed in June. The formula price was estimated at 23.25 cent/lb in June and holding at that level through July. Plants were operating at 91% in July. Cash margins were estimated at 1 cent/lb for small- to medium-sized producers. Demand for ethylene dichloride has also slipped. The main reason is seasonal weakening of domestic PVC demand.

Monoethylene glycol: Fibre-grade prices moved up 2-4 cent/lb to 34 cent/lb in July. Prices for antifreeze grade also moved up spot prices were 36-37 cent/lb. Supplies are now tight but may ease as the antifreeze-canning season ends in mid-August.

US bulk chemical prices*
	Contract		Spot
	June	July	July	Aug
Ethylene5	25.5-26	25.5-26	20.5	20-21
Propylene7	21.25	21.25	na	na
Butadiene	20	22	21.5-22	22-23
Methanol4	66-702	66-702	60-64	60-64
MTBE4	83.5-115	96.5-117	87-97	94-95
Acrylonitrile8	820-830	810-820	na	na
Ethylene glycol3	30-32	34	na	na
VCM	23.25	23.25	na	na
Benzene	85	80	75-83	96-97
Toluene4	na	na	85-97	88-89
Xylenes4,6	90	90	90-91	94-95
Styrene	27.5-29.5	27.5-29.52	23-24	24
Paraxylene	21.5	22.5	na	na
Orthoxylene	19.5	19.5	na	na
1 actual 2 estimate 3 fire grade 4 cent/gal 5 list contract 6 fob Gulf 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.

Benzene: Operating problems have pushed spot prices up to 96-97 cent/gal. Amoco was having problems with its reformer in Texas City, Texas, and there were rumours of problems with another company's extraction and TDP units. A price increase of 10 cent/gal to 90 cent/gal has been accepted in August.

Toluene: Spot prices have risen to 88-89 cent/gal since end-July. Spot prices for September delivery are being talked at 90 cent/gal. Prices were erratic in July, moving up and down from the high-90s to the mid-80s.

The gasoline-blending value has climbed 15 cent/gal in August to 94-95 cent/gal, from 80-82 cent/gal in late July.

Mixed xylenes: Spot prices climbed in early August to 94-95 cent/gal, up about 5 cent/gal from July. An outage at Ultramar Dimond Shamrock's aromatics unit at Three Rivers has vastly reduced availability. Although the unit has restarted, the pipeline has been shut down until inventories have increased.

The August contract price was settled at 90 cent/gal - the third consecutive rollover.

Styrene: Supplies remained tight. Plant outages and scheduled turnarounds have kept supplies snug. Market players were preparing for another round of shutdowns in September and October.

Most spot business was completed for August at 24 cent/lb, up 0.5-1 cent/lb from July prices. The July contract price was expected to roll over at 27-29 cent/lb. Buyers were fiercely resisting the 2 cent/lb price increase nominated by several producers.

Paraxylene: Spot prices at 25-26 cent/lb were 2-2.5 cent/lb higher than contract levels. Markets were tight because of plant outages. Exxon and Chevron have customers on allocation.

Orthoxylene: Buyers have accepted a 0.75 cent/lb increase from May, to 19.25 cent/lb, for June and July contracts. The August price was expected to be a rollover.

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