MTBE buoyant

18 May 1998 00:00  [Source: ACN]

Ethylene inventories build up once more as supply continues to outstrip demand

Ethylene: The contract price for April was settled at 20-20.5 cent/lb, down 1 cent/lb from March. Contract price negotiations for May have not been completed.

However, ethylene supplies outstripped consumption leading to a further build up of inventories.

The rise in inventories is expected to continue for the rest of the year, barring any major unscheduled outages.

Producers report that many contract buyers are taking at minimum contract volumes.

The reduced offtake may be due to producers attempts to control their polymer inventories. Lower demand for ethylene dichloride (EDC) and vinyl chloride monomer (VCM) may also be affecting offtake.

However, demand may improve in Q2. End-users have allowed PE inventories to dwindle as prices fell.

Production is estimated at 4415m lb (2m tonne) for April, about 147m lb/day. Daily production decreased by 2.3% compared to March. Average operating rate was 94.7% of nameplate capacity.

The average rate of production is expected to remain near 100% of effective capacity in May.

Cash costs for producing ethylene for the various feedstocks increased. The rank was:

Gas oil	7.2 cent/lb
Natural gasoline	7.6 cent/lb
Propane	9.2 cent/lb
Butane	9.7 cent/lb
Ethane	12.1 cent/lb.

Propylene: Contract prices for April for chemical and polymer grade were 13.32 cent/lb and 14.75 cent/lb respectively. Refinery grade propylene contract prices were 9 cent/lb in April. Co-product production increased by 9% in Q1. However, inventories fell. Daily production in May is expected to increase because of a heavier feedstock slate and higher operating rate.

Butadiene: The April contract price was 17 cent/lb, unchanged from March. Inventories were down by about 20m lb, returning to comfortable levels; coproduction was lower from crackers even though the feedstock slate became heavier.

Overall, cracker operating rates were lower. The May contract price is 17 cent/lb.

Methanol: Supplies were more than ample due to increased imports. Large buyers were paying 36-38 cent/gal. Spot prices were 29-31 cent/gal. Some domestic units are considering production cuts.

MTBE: Strong octane values, buoyed by record high gasoline-grade differentials, and the start of a six-week turnaround on the Gulf Coast, helped boost spot prices.

Prices at end-April were talked at 68.5- 69.5 cent/gal, up 3 cent/gal from mid-April.

However, gasoline-blending values were 65.5 cent/gal for conventional gasoline and 68 cent/gal for reformulated gasoline.

Production increased to 201 000 bbl/day during March, up by 25 000 bbl/day from February. Stock increased by 250 000 bbl to 8.976m bbl.

Acrylonitrile: Prices for export were 480- 500/tonne cfr Asia.

Vinyl chloride monomer: Demand for EDC and VCM continued to slide. PVC prices, after declining in February, March and April, may improve by about 1 cent/lb in May.

VCM formula prices were projected to be 18.5 cent/lb in April, down 0.5 cent/lb from March. Prices may improve in April.

EDC export prices were US$135- 155/ tonne fob US Gulf in April. Ethylene prices have slipped.

Ethylene glycol: Fibre-grade prices for Q2 are 27 cent/lb, with net prices lower after discounts. Antifreeze-grade prices were 21-22 cent/lb.

Benzene: The May contract price is 77 cent/gal, a rollover of the March and April contract prices, despite the efforts of at least two producers to increase the price.

Spot prices were 78-79 cent/gal in late April.

Prices have softened slightly on reports of large volumes of imports from South Korea and South America. About 130 000 tonne was reportedly arriving in May and June.

The increase in toluene prices has made hydrodealkylation economics unprofitable, forcing many producers to shut down.

Toluene: Spot prices continue to track gasoline markets with little support from chemical demand. Spot prices were 70-72 cent/gal in late April.

The calculated gasoline blending value in late April was 65.5 cent/gal for conventional gasoline and 68.5 cent/gal for reformulated gasoline.

Mixed xylenes: The May contract price settled at 68 cent/gal, up 8 cent/gal from April. The April contract price was a rollover from March.

Spot prices were 67-68 cent/gal in late April. Spot prices climbed with increased octane demand.

Their high value as octane boosters resulted in many refiners leaving mixed zylenes in the gasoline pool, tightening supplies.

Styrene: Spot prices were 16.5-18.5 cent/lb in April. The April contract price rolled over at 24.5-26.5 cent/lb. Buyers had called for a 0.5 cent/lb decrease because of lower ethylene prices.

May supplies are expected to tighten because of turnarounds by Dow Chemical and Amoco in the US Gulf.

Paraxylene: The Q2 contract price was settled at 15.75 cent/lb, a decrease of 3.25 cent/lb from Q1.

The price was a compromise after initial talks at 15.5-16 cent/lb, equivalent to initial settlements of Asian contract prices at US$4350/tonne cfr Asia.

Orthoxylene: The April contract price was settled at 14 cent/lb, down 0.5 cent/lb from March because of poor phthalic anhydride demand.

US bulk chemical prices*

	Contract		Spot
	Mar	Apr	Apr	May
Ethylene5	21-21.5	20-20.5	na	14-14.5
Propylene7	15.5	14.75	na	11-11.5
Butadiene	17	17	na	14.5-15
Methanol4	36-38	36-38	25-26	29-31
MTBE4	na	na	62-63	68-68.5
Acrylonitrile8	520-540	480-500	na	na
Ethylene glycol3	27	27	na	na
VCM	19	18.5	na	na
Benzene	77	77	77-78	75-76
Toluene4	na	na	63-64	69
Xylenes4,6	63	60	61-62	68
Styrene	24.5-26.5	24.5-26.5	16.5-18	17-18.5
Paraxylene	19	15.75	na	na
Orthoxylene	14.5	14	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. na=not available
*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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