Olefins prices roll over

15 September 1997 00:00  [Source: ACN]

Outages and low inventories cause spot benzene markets to fluctuate

Ethylene: Prices were stable. Spot prices were 20-21 cent/lb, and the August contract price is expected to roll over from July's price of 25.5-26 cent/lb.

Ethylene consumption for polymer production had been declining for the last two months, but reportedly reversed in August. If this trend is sustained, it could generate robust ethylene sales in September.

Cash costs for ethylene production were 6.1-10.8 cent/lb. The low side of the range had declined by 1 cent/lb in July, but returned to June levels in August.

Chevron is expanding its ethylene plant in Port Arthur, Texas, by 730m lb/year (331 000 tonne/year). The plant is expected to restart in mid-September.

Production in August is estimated at 4.162bn lb, up by about 34m lb from July because of slightly higher operating rates.

The industry-average cracker operating rate is estimated at 93.2% during August, a 0.75% increase from July. After Shell's outage at Deer Park in June, cracker operating rates had dropped from 95% in June to 92.5% in July. The rise in August was due to Shell coming back onstream.

A further increase is expected in September when Chevron resumes production.

Propylene: August contract prices for chemical and polymer grades were 19.75 cent/lb and 21.25 cent/lb respectively.

The contract price for refinery grade was 16.5 cent/lb. All contract prices were rollovers from July.

Despite the Shell Deer Park outage and the subsequent supply problems for chemical-grade material, supply and demand were almost balanced by the end of August. Chemical-grade buyers who were in the market for refinery-grade material appear to have satisfied their requirements.

Production was marginally lower in August because cracker operators chose a heavier feedstock slate.

Operating rates for propylene fell to 93% from 95% in July.

Butadiene: The contract price was 22 cent/lb for August, a rollover of the July price.

An announced 2 cent/lb price increase for August was withdrawn.

Inventories had fallen to near-record lows in July. However, producers were able to rebuild to comfortable levels in August.

Easy availability of imports in large quantities and higher inventories may support another rollover in September. Some market players even believe a decrease is possible for September.

It is not clear how long producers and buyers will be able to keep inventories at comfortable levels. Some market players are already predicting shortages later this year.

Methanol: Supplies were good. Large buyers were paying 58-62 cent/gal. Spot prices were 60-64 cent/gal.

Sterling had problems as it attempted to restart its plant after a short turnaround in August, but Enron and Millennium have restarted after operating problems in July.

MTBE: August prices were 87-94 cent/gal. Demand and prices climbed in response to increased demand for gasoline.

Production rose to 209 000 bbl/day in June, up 15 000 bbl/day from May. Stocks fell by 1.5m bbl to 7.1m bbl at the end of June.

Acylonitrile: Export prices were US$780-800/tonne cfr Asia. Export and domestic demand remained good.

Vinyl chloride monomer: Demand continued to slow. The formula price was estimated at 22.25 cent/lb in August, a decline of 0.5 cent/lb from July. Ethylene dichloride demand also weakened.

Monoethylene glycol: The price of fibre-grade was 34 cent/gal. Spot prices for antifreeze-grade ethylene glycol climbed to 36-37 cent/lb. Producers are attempting to hike prices by 4 cent/lb. Only part of the increase is expected to go through.

US bulk chemical prices*
	Contract		Spot
	July	Aug	Aug	Sept
Ethylene5	25.5-26	25.5-26	20-21	20-21
Propylene7	21.25	21.25	na	na
Butadiene	22	22	22-23	21-22
Methanol4	66-702	66-702	60-64	58-64
MTBE4	96.5-117	87.5-119	94-95	86-87
Acrylonitrile8	810-820	780-800	na	na
Ethylene glycol3	34	34	na	na
VCM	23.25	22.25	na	na
Benzene	80	90	96-97	97-104
Toluene4	na	na	88-89	89-91
Xylenes4,6	90	90	94-95	91-93
Styrene	27.5-29.52	27-292	24	23-23.5
Paraxylene	22.5	22.5	na	na
Orthoxylene	19.5	19.5	na	na
1 actual 2 estimate 3 fibre 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: Spot markets continued to be volatile because of outages and low inventories. Spot prices have been fluctuating daily in the 97-104 cent/gal range.

Prices firmed at US$1.04/gal after the news that Exxon's allocation plan will be rolled over for September.

However, spot prices are again beginning to weaken. Market players were talking about US$1.02/gal for September and US$1/gal for October.

September contracts were settled at US$1/gal. Producers had nominated price hikes of 10-15 cent/gal. August contract prices were 90 cent/gal, up 10 cent/gal from July.

Toluene: Weaker demand for derivatives drove spot prices down to 90-95 cent/gal through August.

Prices fell to 89-91 cent/gal in early September. Weaker demand for the gasoline market has also hit prices.

The gasoline-blending value in late August for toluene was calculated to be 90 cent/gal for conventional gasoline and 94 cent/gal for reformulated gasoline.

Mixed xylenes: Spot prices were about 92 cent/gal in early September.

The September contract price was settled at 91 cent/gal, up 1 cent/gal from August. This was the first increase after three consecutive rollovers.

Styrene: Spot prices increased in August to 24-24.5 cent/lb. The August contract price was steady at 27-29 cent/lb.

Plant outages and scheduled turnarounds have kept supplies snug. Several producers attempted a 2 cent/lb price increase, but buyers mounted stiff resistance.

Paraxylene: US producers were reportedly considering a price increase of 3 cent/lb for Q4 contracts. Q3 contracts were settled at 22.5 cent/lb.

Orthoxylene: The August contract price was settled at 19.5 cent/lb, uchanged from July.

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