Olefins prices decline

16 February 1998 00:00  [Source: ACN]

US prices are eroded across the board and inventories are rising

Ethylene: Contract prices fell by 0.75 cent/lb in December to 23.75-24.25 cent/lb. January contract prices had not been agreed and discussions had stalled as ACN went to press. Buyers had wanted a two-month settlement with price cuts for December and January. Spot prices dropped about 1 cent/lb by the beginning of February to about 18-19 cent/lb. Shell's Deer Park unit in Texas was expected to restart in the first week of February. The Union Carbide Seadrift plant is scheduled to operate at 50% for two weeks starting mid-February. Inventories are likely to continue building until mid-year. Production is forecast to be about 4.5bn lb (2.04m tonne) in February, as operating rates increase 9.4% from January levels. Most plants are scheduled to operate at 100% effective capacity. January production is estimated at 4.547bn lb, up about 50m lb from December. The industry cracker operating rate is estimated to have been 94.4%, about 0.7% higher than December's. There were no scheduled shutdowns in January other than Shell's Deer Park OP-3 unit, which has been down since June. However, five units operated at reduced rates due to minor technical problems.

Changes in cash costs for producing ethylene from various feedstocks were mixed. The rank order was:
gas oil 5.8 cent/lb
propane 8.5 cent/lb
natural gasoline 8.7 cent/lb
ethane 10.9 cent/lb
butane 11.8 cent/lb.

Propylene: Contract prices fell by 0.75 cent/lb in December and January. January contract prices for chemical-grade and polymer-grade propylene were 15.7 cent/lb and 17.25 cent/lb respectively. Refinery-grade propylene contract prices were 11.75 cent/lb in January. Spot prices were 13.75-14.25 cent/lb for polymer grade and 11.25 cent/lb for refinery grade. Fluid catalytic cracker turnarounds have tightened the supply of refinery-grade material.

NPRA statistics showed demand has not declined over the past quarter. However, prices have declined more than for the other olefins, as both propylene and PP have moved into oversupply. The market was unable to absorb the capacity increases from mid-1997. Prices have been further pressured by weak acrylonitrile prices in Asia and low propylene export prices. Butadiene: The February contract price dropped by 3 cent/lb to 18 cent/lb from January. The January contract price rolled over from December at 21 cent/lb. Inventories rose towards uncomfortable levels. Imports were twice the normal monthly level and co-production from crackers was higher. Imports are expected to decline in February.

Methanol: Supplies were adequate. Large buyers were paying 52-56 cent/gal. Spot prices were about 58-60 cent/gal.

MTBE: Production increased to 205 000 bbl/ day in December, up by 2000 bbl/day from November. Inventories increased by 100 000 bbl to 7.6m bbl. During January, prices were about 73-76 cent/gal.

Acrylonitrile: Export prices were US$630- 650/tonne cfr Asia.

Vinyl chloride monomer: PVC prices were flat and ethylene prices have slipped. VCM formula prices fell by 0.7 cent/lb to 20.55 cent/lb in January. EDC export prices softened to US$210-220/tonne fob US Gulf.

Ethylene glycol: Fibre-grade prices settled to 32 cent/lb January. Antifreeze prices fell to about 26 cent/lb.

Benzene: February contract prices have been settled at 85 cent/gal, a 30 cent/gal drop from January contract prices. Spot prices softened by nearly 30 cent/gal to 81-85 cent/gal in January. Markets were very quiet in early February. Prices edged down with weaker crude futures. Spot prices were talked at 77-79 cent/ gal. Buyers were reportedly asking for adjustments in the February contract price.

Toluene: Weak gasoline markets and little support from chemical demand drove down spot prices. Prices were in the 60-61 cent/gal range in early February, but trading was thin. The calculated gasoline blending value for toluene was 55 cent/gal for conventional gasoline and 59 cent/gal for reformulated gasoline, a slight increase from late January.

Mixed xylenes: Spot prices were talked at 61-62 cent/gal in early February, recovering from January lows. The spot price was 58 cent/gal in late January. Chemical demand remained weak, but buying interest from gasoline blenders has reportedly increased. The February contract price was settled at 63 cent/gal, a 5 cent/gal drop from January. The January contract price at 68 cent/gal was a 4 cent/gal drop from December.

Styrene: Talk of more cargoes from South Korea moving into the US Gulf continue to weaken domestic spot prices. Prices were talked at 18-19.25 cent/lb, although the low end of the range is barely enough to cover material costs. Raw-material costs are estimated at 17 cent/lb at current benzene and ethylene prices. Contract prices rolled over from December at 28.5-30.5 cent/lb. The January spot price was around 19.5-22 cent/lb. The contract price was around 27-29 cent/lb.

Paraxylene: Contract settlements at 19 cent/ lb have held up. Nominations for Q1 prices were around 19-20.5 cent/lb.

Orthoxylene: The contract price settled at 17.5 cent/lb for January, down 0.5 cent/lb from December. February contract prices were nominated at 16.5 cent/lb, a fall of 1 cent/lb. However, buyers are pushing for a 2 cent/lb decrease. Market players believe the price will be settled somewhere in the middle.

US bulk chemical prices*

	Contract		Spot
	Dec	Jan	Jan	Feb
Ethylene5	23.75-24.25	na	19-20	18-19
Propylene7	18.752	17.25	15.25-15.5	13.75-14.25
Butadiene	21	21	19-19.5	18.5-19
Methanol4	57-61	52-56	56-60	58-60
MTBE4	na	na	74-75.5	69.5-70.75
Acrylonitrile8	680-700	630-650	na	na
Ethylene glycol3	34	32	na	na
VCM	21.5	20.55	na	na
Benzene	110	115	108-109	77-79
Toluene4	na	na	79-80	60-61
Xylenes4,6	72	68	58-68	61-62
Styrene	27-292	27-29	21.5-22	17.5-18
Paraxylene	21.5	19	na	na
Orthoxylene	18	17.5	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.



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