Ethylene faces surplus

20 October 1997 00:00  [Source: ACN]

Ethylene: Spot prices were 20-21 cent/lb in the first half of October. Contract prices for September were still being discussed. A few settlements were reported at US$25.5-26 cent/lb, a rollover from August.

Although inventories are low, oversupply is expected in November after the completion of turnarounds.

Chevron's cracker in Port Arthur, Texas, came out of a turnaround in late September, about two weeks later than planned.

Moisture problems were reportedly preventing full utilisation of the plant's new capacity. The company expanded its ethylene capacity by 730m lb/year (331 000 tonne/year) during the turnaround.

Huntsman is expected to begin a 60-day shutdown of its Port Arthur cracker for expansion. The company will increase ethylene capacity at the site by 700m lb/year.

Production is estimated to have been 4.01bn lb in September, down about 150m lb from last month due to slightly decreased operating rates.

The industry steam-cracker operating rate is estimated to have been 92.7% during September, about 0.5% lower than August. Ethylene production is forecast to be about 4.15bn lb for October.

Cash costs for producing ethylene ranged between 7.2 cent/lb and 11.5 cent/lb. The low side and the high side of the range increased by a penny in September compared with August.

Ethylene inventories have moved from the caverns to palletised form. Inventories have been building for all polymers except PVC through the first seven months of the year. In September, the build-up may equate to 350-425m lb of ethylene.

Propylene: Contract prices for September for chemical grade and polymer grade were at 19.75 cent/lb and 20.75 cent/lb respectively, a 0.75 cent/lb decrease from August. Refinery-grade contract prices were at 16.50 cent/lb. Suffering from shrinking margins, buyers are looking for further cuts in October.

Spot prices for polymer grade were 18-18.5 cent/lb and 15.25 cent/lb for refinery grade.

The increased use of ethane as a feedstock has decreased propylene production, but it has had little effect on supplies. Inventories were rising. High PP inventories were cutting into sales of the monomer.

However, production is expected to increase in the coming months because of a 5% increase in the supply of propane in the US mid-west.

Butadiene: Contract prices remained at 22 cent/lb for September. Inventories continued to climb. Imports were also available in large quantities. However, the trend is expected to stop sometime in Q4 and a rollover of the contract price is anticipated for October. There are two major turnarounds in Europe which will cut C4 supplies.

Methanol: Supplies were good. Large buyers were paying 57-61 cent/gal. Spot prices were 59-63 cent/gal.

MTBE: Tight supplies because of turnarounds and outages in the US Gulf kept steady upward pressure on prices despite the end of the driving season. Prices were 81-86 cent/gal during September. Production decreased to 201 000 bbl/day in July, down by 8000 bbl/day from June. Stocks increased by 300 000 bbl to 7.4m bbl at end-July.

Acrylonitrile: Prices for export were US$770-790/tonne cfr Asia. Export demand was weakening with US domestic contract prices estimated at 40-42 cent/lb for September.

Ethylene glycol: Fibre-grade prices were holding at 34 cent/lb for September. Spot antifreeze grade prices were down to 32-34 cent/lb. Antifreeze blenders resisted buying for most of August, lowering prices. Prices are not expected to rise for the rest of the year.

US bulk chemical prices*
	Contract		Spot
	Aug	Sept	Sept	Oct
Ethylene5	25.5-26	25.5-26	20-21	20-21
Propylene7	21.25	20.75	na	18-18.5
Butadiene	22	22	21-22	21-22
Methanol4	66-702	59-63	58-64	57-61
MTBE4	87.5-119	80.5-119	86-87	86-86.5
Acrylonitrile8	780-800	770-790	na	na
Ethylene glycol3	34	34	na	na
VCM	22.25	21.12	na	na
Benzene	90	100	97-104	95-96
Toluene4	na	na	89-91	82-84
Xylenes4,6	90	91	91-93	81-82
Styrene	27-292	28.5-30	23-23.5	22-22.5
Paraxylene	22.5	22.5	na	na
Orthoxylene	19.5	19.5	na	na
1actual 2estimate 3fibre grade 4cent/gal 5list contract 6fob Gulf Coast 7polymer grade 8US 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 7801, Fax: +1 713 661 8476.

Vinyl chloride monomer: Demand continues to fall. Estimates are that formula prices were at 21.12 cent/lb in September, a drop of 2.13 cent/lb from June.

Prices have been sliding for the last few months because of weakening PVC and ethylene prices. Announced chlorine price hikes have also had little effect.

Benzene: The October contract price settled at 95 cent/gal, down 5 cent/gal from September. Spot prices climbed back to 95-96 cent/gal from a low of 88 cent/gal, because of buying from Europe and higher crude oil futures.

Toluene: Weaker demand because of lower requirements for gasoline use has driven spot prices to 82-84 cent/gal over the course of the month of September. The calculated gasoline blending value in early October was 78 cent/gal for conventional gasoline and 81.5 cent/gal for reformulated gasoline.

Mixed xylenes: Spot prices continue to weaken because of poor global paraxylene markets. Prices were 81-82 cent/gal in early October. The October contract price was settled at 82 cent/gal, down 9 cent/gal from September.

Styrene: Spot prices decreased in September to 21 cent/lb. However, demand was improving in October, bringing prices up to 22-22.5 cent/lb.

The September contract price was settled at 28.5-30 cent/lb, a rollover from August. Plant outages and scheduled turnarounds have kept supplies snug.

Paraxylene: US contract settlements were agreed at 21.5 cent/lb, down 1 cent/lb from Q3. The decrease came despite some producers' initial attempts to raise the price by 3 cent/lb for Q4.

Producers decided to accept the decrease after contract settlements in Asia at US$470/tonne cfr Asia, a decrease of US$25/tonne from Q3.

Orthoxylene: The October contract price settled at US$19 cent/lb, down 0.5 cent/lb from September.

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