Market trends: Paraxylene standoff

12 May 2003 00:00  [Source: ACN]

Activity is expected to pick up for benzene and toluene while prices fall for orthoxylene and phenol

Paraxylene: A standoff between sellers and buyers over May contract prices continued for the third consecutive week. Traders said sellers had scaled down their contract offers last week to US$500-520/tonne cfr Asia, from last month's nomination of US$500-540/tonne cfr Asia. But customers continued to resist these offers, with buying ideas of US$480-500/tonne cfr Asia.

Spot markets were quiet, with no deals reported. Seller ideas were at US$450/tonne fob Korea, but buying intentions were only US$400/tonne fob Korea.

Buyers were adopting a wait-and-see approach, with purified terephthalic acid producers lowering operating rates on reduced demand from Chinese textile producers, due mainly to the impact of Sars (severe acute respiratory syndrome), traders said.

Opinion was divided on whether prices would fall further with additional supply hitting the market after Reliance Industries restarts its paraxylene plant this week. The Indian producer said it restarted its other aromatics plants at its complex in Jamnagar, Gujarat, on 28 April.

Benzene: The reported sale of 6000 tonne at US$285/tonne fob Taiwan through a tender raised hopes that prices might be on an upward turn.

Toluene: There were no spot deals in India and SEA with inventory levels in India reported to be high as a result of the production problems at Reliance Industries. Activity was expected to pick up over the following two weeks.

Buying ideas were at US$300-320/tonne cfr SEA with selling ideas at US$340-350/tonne cfr SEA. A South Korean trader reported a sale to a Chinese trader for May lifting at US$285/tonne fob Korea.

Mixed xylenes: Bids for isomer grade were at US$300-305/tonne fob Korea while offers were at US$320/tonne fob Korea with a trader selling a distressed cargo at US$300/tonne cfr Korea for prompt lifting.

In SEA, no deals were reported. Buying ideas were US$305-310/tonne cfr SEA with selling ideas at US$320-330/tonne cfr SEA.

A South Korean trader reported the sale of a solvent-grade cargo to China at US$305/tonne fob Korea for May lifting.

Styrene: Producers were asking for US$480-490/tonne fob NEA with the few end-users in the market eager for US$480-490/tonne cfr China. The producers were hoping production cutbacks would reap dividends (see p24).

Orthoxylene: Prices continued to fall, on the back of falling phthalic anhydride (PA) prices. PA prices had fallen by US$20/tonne to US$550/tonne cfr SEA last week from the previous week.

An OX deal was reported settled early last week at US$400/tonne cfr SEA, US$25-35/tonne lower than the last SEA deal concluded last December.

The gap between buyer and seller ideas was wide late last week, with buyers responding with ideas of US$310-320/tonne cfr China to South Korean offers of US$400/tonne cfr China.

In India, seller ideas of US$380-385/tonne cfr India were met with buying intentions of US$370-375/tonne cfr India. The last confirmed deal in India, concluded in February, was at US$600/tonne cfr India.

One consumer said it anticipated a fall in prices after Reliance restarts its PX/OX plant in Jamnagar, Gujarat, this week.

Phenol: A deal was confirmed in SEA at US$730-760/tonne cfr SEA for a 1000-tonne May cargo, US$60-70/tonne lower than previous business.

In China, the market was very quiet, with no deals concluded. Customers countered offers of US$690-700/tonne cfr China with buying ideas of US$650/tonne cfr China.

BULK CHEMICAL SPOT PRICES - US$/TONNE

	Asia/Pacific spot		US/Euro contracts
	NE Asia 1	S Asia and SE Asia 2	US 3	NWE 4
Benzene	285 fob Taiwan	547 fob India 6	568 Apr	525 Q2/548 Apr
Toluene	285	505 fob SEA 6	na	368 Q2
Xylenes 5	300 cfr Korea	320 fob Thailand 6	412/424 Apr	na
Styrene	500 6	630-640 cfr India West Coast 6	892 Mar	775-800 Q2
Paraxylene	465 6	800 6	799 Apr	580 Q1/740 Apr
Orthoxylene	455 fob Taiwan 6	400	584 Apr	555 Q2
Phenol	730-740 cfr China6	730-760	1212.54-1311.75 Q1	955-1005 Apr

Tight supply in SEA eases price fall caused by the arrival of 30kt of deep-sea cargoes from Europe and the US. Benzene plunges by $40 due to weak styrene markets

Phenol:  News of Shell Chemicals beginning to sell US cargoes to Asia (see p32) and the arrival of 30 000 tonne of deep-sea cargoes from Europe and the US, excluding Shell's cargoes, depressed prices in NEA. But tight supply in SEA cushioned the price fall.

Chinese domestic prices fell to Rmb6700-6900/tonne, down about Rmb100/tonne from a week ago. Rumours were rife that deep-sea cargoes were being offered at US$680- 720/tonne cfr China, with an unconfirmed deal reported at US$650/tonne cfr China. Buying ideas for May cargoes were heard at US$630-640/tonne cfr China, but selling ideas were much higher at US$700-720/tonne cfr China. Deals were also reported at US$790-830/tonne cfr SEA, US$10-20/tonne lower than the previous week.

Benzene: Prices plunged by US$40/tonne on weak styrene markets. An inter-trader benzene deal was closed at US$320/tonne fob Korea. Other deals were heard at US$320- 330/tonne fob Korea for May lifting. Volumes were, however, unknown.

Buying ideas were at US$320- 325/tonne fob Korea, with selling ideas at US$330- 335/tonne fob Korea. Derivative markets were feeling the impact of Sars (severe acute respiratory syndrome), and benzene buyers and sellers were playing a waiting game.

Toluene: No deals were done. Producers insisted on selling at US$310/tonne fob Korea, but buyers would pay no more than US$290/tonne fob Korea. With users' inventory levels comfortable and producers in no hurry to sell, trade was scant.

Mixed xylenes: Solvent-grade markets were quiet. Notional buying intentions were at US$310/tonne fob Korea while notional selling intentions were at US$330/tonne fob Korea. But no trade took place on the absence of spot material.

Isomer-grade trade was almost stagnant on poor downstream markets. Buying and selling ideas were at US$315/tonne fob Korea and US$325/tonne fob Korea respectively.

Styrene: No deals took place in a quiet market. Most buyers who were still digesting their inventories said they would not purchase until end-May at the earliest. Meanwhile, poor downstream markets were exerting a downward pressure on prices.

Notional buying ideas were quoted at US$540/tonne fob Korea, against notional selling ideas of US$560/tonne fob Korea. Buying ideas improved as traders believed prices had hit the bottom. Chinese domestic prices were quoted at Rmb5100/tonne ex-tank, with no deals reported.

Paraxylene: Aggressive cuts in operating rates by purified terephthalic acid producers dampened paraxylene (PX) buying interest.

Even a decision by several PX producers to extend shutdowns or trim operating rates to 80% (see p7) failed to support markets.

Buying ideas improved, touching US$490- 510/tonne fob Korea. Most producers refused to quote selling ideas, with some describing the current buying ideas as 'ridiculous'.

Some traders said market attention last week was focused on the settlement of the Asian contract price for May. Nominations were heard at US$500-520/tonne cfr Asia. Buyers were asking for US$480-500/tonne.

Orthoxylene: An export tender by Chinese Petroleum Corp for 3000 tonne of material for May lifting was settled at US$455/tonne fob Taiwan, US$80-85/tonne lower than previous business.

However, details of the buyer were not available at press time.

No other deals were reported, with most users saying that poor phthalic anhydride markets were preventing purchases at current prices. Some Chinese traders said local buying ideas were at US$400/tonne cfr China, US$20/tonne lower than selling ideas.

BULK CHEMCIAL SPOT PRICES - US$/TONNE

	Asia/Pacific spot		US/Euro contracts
	NE Asia 1	S Asia and SE Asia2	US 3	NWE 4
Benzene	320-330	547 fob India 6	568 Apr	525 Q2/548 Apr
Toluene	360-3756	505 fob SEA 6	na	355 Q1
Xylenes 5	320	325 fob Thailand 6	412/424 Apr	na
Styrene	540-5506	630-640 cfr India West Coast 6	892 Mar	750-775 Q1
Paraxylene	770 cfr Korea 6	800 cfr SEA 6	799 Apr	580 Q1/740 Apr
Orthoxylene	455 fob Taiwan	600 cfr India West Coast 6	584 Apr	555 Q2
Phenol	730-740 cfr China 6	790-830	1212.54-1311.75 Q1	955-1005 Apr

¹ prices are fob Korea unless otherwise indicated
² prices are cfr SEA unless otherwise indicated
³ US prices are contract levels in US$/tonne on an fob basis, courtesy of ECN, unless otherwise stated
⁴ European free-delivered Q4 contract prices in Euro/tonne unless otherwise stated
⁵ isomer grade
⁶ no recent confirmed deals
na = not available

Prices contained in this report are obtained by the ACN team through consultation with producers, consumers and merchants in the regions indicated. They are a guide to price levels of recent business and reflect medium to large tonnage sales. Spot prices are quoted as indicated: cfr - cost and freight; fob - free on board; cif - cost, insurance and freight; FD - free delivered. Spot prices are based on information available mid-week prior to the date of issue. Dollar prices are based on prevailing rates of exchange

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