Ethylene prices fall

19 January 1998 00:00  [Source: ACN]

Benzene prices fall back to US$1.08/gal in first-half January after a short-lived upswing

Ethylene: Contract prices declined by 0.5 cent/lb in October and by another 0.5 cent/lb in November to 24.5-25 cent/lb. December contract prices had not been agreed upon and discussions were dormant at month-end.

Production for December was estimated at about 4.5bn lb (2.04m tonne), up about 422m lb from November. The industry cracker operating rate was estimated at 93.7% for December, about 6.9% higher than November. The startup of Westlake's 1.2bn lb/year cracker at Lake Charles, Texas, US, and the 1.5bn lb/year Exxon unit at Baytown, Texas, increased the average operating rate along with the restart of several plants including Amoco's at Chocolate Bayou, Louisiana, and Dow's LHC-8 at Freeport, Texas.

Production is forecast to be about 4.6bn lb for January. The daily production rate is up about 2.2% from December. Plants continue to operate at 100% effective capacity.

Turnarounds start in March. There will be 1.8bn 1b/year of production shut down in March and 2.25bn 1b/year in April. Only one 1.25bn 1b/year unit is scheduled to be down in May. These planned outages will be offset by the possible restart of Shell's 1.9 bn 1b/year Deer Park unit in February. Inventories should continue to build through this period.

Cash costs for producing ethylene declined for most feedstocks. The rank order was:

gas oil	7.1 cent/lb
natural gasoline	8.5 cent/lb
ethane	9.8 cent/lb
propane	9.8 cent/lb
butane	10.8 cent/lb.

Propylene: Prices dropped by 0.75 cent/lb in November. Contract prices for November for chemical-grade and polymer-grade propylene were 17.25 cent/lb and 18.75 cent/lb, respectively. The refinery-grade propylene contract price was 13.5 cent/lb. As with ethylene, discussions of December contract prices were deferred until January.

Butadiene: The December contract price was a rollover from November at 21 cent/lb. The January contract price is not yet settled. Inventories were down slightly but remained in a comfortable range. Imports were forecast to be lower than usual at year-end due to cracker shutdowns in Europe.

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

MTBE: Weak gasoline markets have steadily pushed prices up following reports of outages earlier this month. Spot prices fell from 77.5 cent/gal in late December to 76 cent/gal in the first two weeks of January.

Production increased to 211 000 bbl/day in November, up by 5000 bbl/day from October. Inventories rose by 500 000 bbl to 7.5m bbl.

Acrylonitrile: Offer prices for export were US$680-$700/tonne cfr Asia.

Vinyl chloride monomer: Demand continued to slow. Formula prices settled at 21.75 cent/lb in September. Settlements were forecast at 21.63 cent/lb for October and 21.5 cent/lb for November. December contracts were expected to roll over from November.

Ethylene glycol: Fibre-grade prices were holding at 34 cent/lb. Antifreeze-grade prices were 30-31cent/lb.

Benzene: Spot prices softened after a short-lived upswing due to reports of production problems. Prices climbed as high as US$1.13/ gal before dropping back to US$1.08-1.09/ gal in the first half of January. Spot prices fell by 5-6 cent/gal during December to US$1.1- US$1.11/gal by the end of the month. Business has been very slow for January. Most market players were concentrating on February cargoes. Spot prices for February are being discussed at US$1/gal.

The January US contract price (USCP) was settled at US$1.15/gal, up 10 cent/gal from December, but not quite the US$1.2/gal which producers had nominated. December contract prices settled at US$1.05/gal, up 5 cent/gal from November. Even though several producers have nominated US$1.2/gal, January contract prices are expected to settle at US$1.1/gal.

Toluene: Weak gasoline markets and declining benzene prices have pulled down spot prices in January. Prices were 79-80 cent/gal, down 1 cent/gal from the first week of January. Prices for February cargoes were discussed at 77-78 cent/gal. Blending values were under pressure and declined for January to 59.5 cent/gal for conventional gasoline and 64 cent/gal for reformulated gasoline.

Spot prices were fairly stable in December at 80-82 cent/gal.

Mixed xylenes: The overall weakness in the paraxylene (PX) market and uncertainty about Asia's currency crisis continues to push down prices. Spot prices were 67-68 cent/gal, down 1 cent/gal from December. The January contract price was settled at 68 cent/gal, down 4 cent/gal from December. The December contract price was a 1 cent/gal decrease from November levels to 72 cent/gal.

Styrene: Producers are still having a difficult time recovering cash costs, despite the weakening benzene market. Spot prices dipped in early January to 21.5-22 cent/lb. December contracts are being finalised at 27-29 cent/lb. Buyers have not fully accepted a 1 cent/lb increase, but market players expect a minimum increase of 0.5 cent/lb. Producers have nominated a 2 cent/lb increase for January.

Paraxylene: The Q1 USCP was settled at 19 cent/lb, down from the Q4 USCP of 21.5 cent/lb. Nominations for Q1 PX prices were 19-20.5 cent/lb.

Orthoxylene: The USCP was partially settled at 17.5 cent/lb, a 0.5 cent/lb decrease. However, some buyers were holding out for a full 1 cent/lb cut. November and December contracts were settled at 18 cent/lb, down 0.5 cent/lb from October.

US bulk chemical prices*

	Contract		Spot
	Nov	Dec	Dec	Jan
Ethylene5	24.5-25	24.5-252	20.5-21	na
Propylene7	18.75	18.752	15.5-16	na
Butadiene	21	21	19-19.5	na
Methanol4	57-61	57-61	54-582	56-602
MTBE4	na	na	75-85	74-75.5
Acrylonitrile8	680-700	680-700	na	na
Ethylene glycol3	34	34	na	na
VCM	21.5	21.5	na	na
Benzene	100	110	111-115	108-109
Toluene4	na	na	80-81	79-80
Xylenes4,6	73	72	69-72	67-68
Styrene	28.5-30.5	27-292	21.75-22	21.5-22
Paraxylene	21.5	21.5	na	na
Orthoxylene	18	18	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.

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