Market Trends: Shipping setbacks affect markets

22 September 2003 00:00  [Source: ICB]

Ethylene and propylene players experienced barge loading problems in the Ruhr area. This had a knock-on effect on cracker operating rates and stocks

European naphtha prices have dropped back to $242-246/tonne cif NWE following crude oil lower, as concerns around availability have eased.

Ethylene spot numbers have firmed to $580-605/tonne cif NWE, with deals said to be concluded at the higher end of the range involving South America material.

A renewal of logistical problems in the Ruhr area, as barge traffic was once again disrupted, has seen a reduction in cracker operating rates. Derivative demand particularly from polyethylene producers continues to be strong.

The spot propylene price range has widened to E410-425/tonne cif NWE, as something of a two-tier market has emerged. Offers at the coast are said to be lower at around E410/tonne, while inland, particularly in the Ruhr area, the bid/offer range is E420-425/ tonne cif NWE.

Problems with loading and accessing barges on the Rhine has left players with high stocks, and has contributed to lower cracker operating rates.

Butadiene spot numbers remain at $510-530/tonne fob NWE. Players talk of improved uptake from key derivative sectors. Reduced cracker operating rates have limited the availability of crude C4 feedstock.

Benzene spot markets were offered some support by higher US spot numbers and by production problems in NWE. A producer stepped into the market and some intertrade activity was also reported. Numbers are in the range of $410-415/tonne fob NWE.

Large consumers report cuts in benzene consumption and turnarounds at derivatives plants for late September into October.

Toluene spot markets are notionally placed in the $410-420/tonne fob NWE range, following weakening gasoline values.

Mixed xylenes prices are notional in the $500-510/tonne fob NWE range, with no new spot conclusions reported. Product is still tight in Europe, but with little new purchasing expected until October. Players await the impact of lower crude numbers.

In the distribution market, sellers in Rotterdam are asking E490/tonne FCA, but buyers are said to be holding out for lower numbers.

Paraxylene spot business has been concluded at $510/tonne fob NWE for prompt delivery, although prices dropped as low as $480/tonne earlier in the week. The European market is long and buying minimal, partly as a result of the ongoing delay in settling a September contract price. Asian derivatives prices are still the determining factor for European PX prices into October.

Orthoxylene spot numbers are notional but steady at $500-530/tonne cif in the run up to quarter four contract settlements. Demand for OX in Asia is understood to be strong. Values in Europe will be derived from the economies of selling into this market, players say.

Styrene spot markets remain slow and activity was reported at around $650/tonne fob. There are more sellers than buyers in the market at present with some players still concentrating on resolving ongoing outages.

One online spot methanol deal was reported slightly above $176/tonne fob last week, but details could not be confirmed.

A producer confirmed buying two lots of September product at $178/tonne fob. Quarter four negotiations have started pointing to a reduction of the current contract number of E225/tonne (see page 11).

MTBE parcels for prompt delivery have sold in the $410-415/tonne fob NWE range. Available transatlantic arbitrage has helped keep European supplies tight through September, with another large cargo heading for the US mid-month.

European MTBE demand for blending is withering, with the factor to gasoline now at 1.45. Players talk of October deals at around $380/tonne based on lower demand and energy numbers.

Ammonia business was concluded at above $200/tonne fob Yuzhnyy based on a 35 000 tonne cargo for late October loading for the US market. This pushed Tampa numbers to the high $240s/ tonne CFR, well above current contract prices.

Bulk chemical prices

	European spot E/tonne	$/tonne	Changeon last week	European contract E/tonne	$/tonne	US contract $/tonne
Naphtha	na	242-246 (cif)	-17	na	na	na
Ethylene	na	580-605 (cif)	nc	445 (Q3)	516	606 (June)
Propylene@	410-425 (cif)	na	-12.5	430 (Q3)	499	462 (July)
Butadiene	na	510-530 (fob) (nom)	nc	520 (Q3)	603	639 (Sept)
Benzene	na	410-415 (fob)	-7.5	316 (Q3)/420 (Sept)	363/402	478 (Sept) (nom)
Toluene*	na	410-420 (fob) (nom)	-10	288 (Q3)	326	na
Xylenes	na	500-510 (fob)	+10	na	na	433 (Aug)
Paraxylene	na	500-510 (fob)	-10	585 (Sept)	586	611 (Aug)
Orthoxylene	na	500-530 (cif) (nom)	nc	418 (Q3)	485	540 (Sept)
Styrenea	na	650-660 (fob)	-5	583-608(Q3)	660-688	890 (Aug)
Methanol	176-180 (fob) (nom)	na	+1.5	225 (Q3)	259	255 (Aug)
MTBE	na	410-415 (fob)	-5	na	na	na
Ammonia	na	230-240 (CFR) (nom)	nc	na	na	234 (CFR) (1H Sept)
NOTES *TDI grade; @ Indicates polymer grade ; a Lower figure for barge price, higher figure for free delivery inland; +Initial contract settlement

Abbreviations and currency notes

Prices contained in this magazine are obtained by ECN through consultation with producers, consumers and merchants across Europe. They are intended as a guide to price levels of recent business in Europe and reflect medium to large tonnage sales.

Spot prices are quoted fob (free-on-board) NW European port, cif (cost, insurance and freight), FCA (free carrier), CFR (cost and freight). T2 = EC material, not dutiable, bld = blending grade, com = commercial grade, nit = nitration grade. European contract prices are quoted on a free delivered basis (FD) unless otherwise stated; initial but unfixed negotiating range is indicated (nom), na = not applicable, m = monthly contracts. Methanol T1 will no longer be quoted, as it now represents negligible spot business.

Spot prices in this issue are based on information available on 17 September 2003.

Dollar prices are based on rates of exchange on 16 September 2003. The dollar equivalent range is based on exchange rates prevalent at the time of contract closure if available, or an average rate for the quarter. $1=E0.919; $1=£0.637; E1=£0.693.

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