Benzene import fears

15 June 1998 00:00  [Source: ACN]

Outages, production cuts and the use of heavier feedstocks have reduced ethylene output

Ethylene: The contract price for ethylene for April was settled at 20-20.5 cent/lb. Contract price negotiations for May had not been completed. However, contract prices are expected to continue declining. Spot prices were 13.5-14 cent/lb in early June, down about 0.5 cent/lb from May.

May production was 4441m lb (2m tonne), down about 2% on a daily basis compared to the month before. The operating rate in May was 92.2% of nameplate capacity and a little more than 96% of effective capacity. Lower operating rates were due to outages, production cuts and the use of heavier feedstocks.

Consumption in Q1 1998 was 141.6m lb/ day, 2% higher than Q4 1997. However, production was more than 1% lower than the 1997 average. Consumption is expected to be higher in Q2.

In May, propane usage dropped 18.5% and was completely replaced by heavier feedstocks. Propane use in June is also expected to decrease, but lower propane costs could change this. Cash costs for producing ethylene decreased for the various feedstocks. The rank order was:

Gas oil	6.0 cent/lb
Natural gasoline	6.7 cent/lb
Propane	8.2 cent/lb
Butane	8.5 cent/lb
Ethane (spot)	10.2 cent/lb.

Propylene: Contract prices for May for chemical and polymer grades were 12.7 cent/ lb and 14.25 cent/lb respectively. Refinery- grade propylene contract prices were 8.5 cent/lb in May.

Production was down about 2% in May due to lower operating rates. A heavier feed slate kept production from falling any lower. Alkylation values at 9.1 cent/lb - 0.6 cent/lb higher than refinery-grade contract prices - were keeping some material out of the chemical market.

Butadiene: The May contract price was 17 cent/lb, unchanged from the previous month. Inventories remained at comfortable levels. Co-production was lower because of lower overall cracker operating rates, even though the feedstock slate became heavier.

Imports declined in May, but supply and demand were balanced. June imports are expected to be about 28m lb higher than in May. However, imports should not upset the balance because of reduced production in the US Gulf.

The Equistar Channelview No1 unit will be shut for a turnaround in mid-June and Huntsman's extraction unit will operate at 50% for two weeks in June.

Inventories dipped to 201m lb on 1 May, after climbing to 253m lb at the beginning of March. The average over the last four months has been about 230m lb.

Methanol: Supplies were more than ample due to increased imports. Spot prices were 25.5-26 cent/gal in early June. May spot prices were 26-29 cent/gal. Large buyers were paying 35-38 cent/gal.

MTBE: Spot prices were discussed at 68.75- 69.25 cent/gal in early June, up slightly from the last week of May. During May spot prices were 66-68 cent/gal. Price gains were attributed to higher gasoline prices as well as tight availability of prompt cargoes because of an outage at the end of May. Octane values were 61.5 cent/gal for conventional gasoline and 63 cent/gal for reformulated gasoline.

Production increased to 209 000 bbl/day in April, up 8000 bbl/day from March. Stocks increased by 50 000 bbl to 9.025m bbl.

Acrylonitrile: Prices for export were in the US$490-510/tonne fob US Gulf range.

Vinyl chloride monomer: Attempts to raise PVC prices in April and May were unsuccessful. Vinyl chloride monomer (VCM) formula prices were projected at 17.2 cent/lb in April. May prices have not yet been calculated. Export prices were US$270/tonne fob US Gulf for May lifting. Ethylene dichloride export prices were US$140/tonne fob US Gulf.

Monoethylene glycol: Fibre-grade prices for Q2 are 27 cent/lb. Net prices will be lower after discounts. Antifreeze-grade prices were around 18-20 cent/lb. Producers are trying to increase antifreeze-grade prices by 2 cent/lb because of the start of the canning season.

Benzene: June contract prices settled at 75 cent/gal, down by 2 cent/gal from May. Contract prices rolled over in May at 77 cent/gal from March and April. Spot prices have dropped in line with contract prices to 74-75 cent/gal in early June. Spot prices in late May were 78-79 cent/gal. There are fears the market will not be able to absorb imports still arriving from South Korea and Brazil.

Toluene: Spot prices continue to track gasoline markets with little support from chemical demand. Lower derivatives demand and weaker gasoline prices have put downward pressure on spot prices. Prices were 65-65.5 cent/gal in late May, down about 7 cent/gal from the beginning of the month. The calculated gasoline blending values were 62.3 cent/gal for conventional gasoline and 64 cent/gal for reformulated gasoline.

Mixed xylenes: Lack of chemical and blending demand was putting pressure on prices. The June contract price was settled at 66 cent/gal, down 2 cent/gal from May. The contract price increased to 68 cent/gal in May, up by 8 cent/gal from April. Spot prices were 64-65 cent/gal in late May. Prices in early June were discussed at 65-66 cent/gal.

Styrene: Spot prices were in a narrow range in May. Prices were around 16.5-18 cent/lb. The contract price was 24.5-26.5 cent/lb.

Paraxylene: Q3 contract prices were being discussed. Producer nominations were 17.5- 18.6 cent/lb. Spot prices have steadily increased since early April because of turnarounds. The Q2 contract price is 15.75 cent/lb, a decrease of 3.2 cent/lb from Q1.

Orthoxylene: The contract price settled at 14.5 cent/lb for May, up by 0.5 cent/lb from April. Discussions for June contracts have just started.

US bulk chemical prices*

	Contract		Spot
	Apr	May	May	June
Ethylene5	20-20.5	na	14-14.5	13.5-14
Propylene7	14.75	14.25	11-11.5	11-11.5
Butadiene	17	17	14.5-15	14-14.5
Methanol4	36-38	35-38	29-31	25.5-26
MTBE4	na	na	68-68.5	69-69.5
Acrylonitrile8	480-500	na	na	na
Ethylene glycol3	27	27	na	na
VCM	17.2	na	na	na
Benzene	77	77	75-76	74-75
Toluene4	na	na	69	64.5-65.5
Xylenes4,6	60	68	68	65-66
Styrene	24.5-26.5	24.5-26.5	17-18.5	18.5-19
Paraxylene	15.75	15.75	na	na
Orthoxylene	14	14.5	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 fob US Gulf

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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