Market trends: Olefins in decline

29 September 2003 00:00 [Source: ACN]

The only exceptions are MTBE and ammonia. Also, naphtha prices are set to rise following Opec's announcement on cutting crude production

Ethylene: Market sentiment remained weak despite two fixtures to Europe. A 4000-tonne Thai cargo was settled at around US$500/tonne fob Thailand while another cargo was concluded at US$480/tonne fob Singapore. A Thai producer with 3000 tonne available was eyeing US$500/tonne fob Thailand but buying expectations were at US$480-500/tonne cfr SEA. The last deal to Indonesia was at US$480/tonne cfr Indonesia.

Talk of shipping product from NEA to Europe was also heard but traders said business might not materialise given the difficulty in loading large cargoes from South Korean and Japanese ports. A South Korean producer was expecting US$430/tonne fob Korea for a first-half October cargo but buying interest was at US$410-420/tonne fob Korea.

Naphtha: Prices were expected to increase following the sharp rise in crude oil prices on 24 September when Opec (Organisation of Petroleum Exporting Countries) announced plans to cut crude-oil production.

Brent crude rose by US$1.60/bbl immediately after the announcement to US$26.68bbl. One naphtha trader was expecting the MoPJ to touch US$265/tonne cfr Japan on 25 September, up from US$255/tonne cfr Japan on 24 September.

Propylene: Markets continued to weaken with Taiwanese buying ideas slipping to US$490-500/tonne cfr Taiwan while Chinese buying ideas were US$510/tonne cfr China, US$10/tonne lower than the previous week. The last deal in China was at US$515-519/tonne cfr China.

A Taiwanese buyer said it had bought 4500 tonne for end-September or early- October arrival at US$490-500/tonne cfr Taiwan. The cargo was said to be in distress because of a disruption in plant operations in South Korea following Typhoon Maemi (ACN 22 Sep p8).

But some market players were doubtful that a deal could have taken place at this number as most sellers were insisting on US$510-520/tonne cfr NEA. In SEA, sellers found it tough to meet buying ideas of US$510-520/tonne cfr SEA.

Butadiene: A South Korean producer claimed it was under no pressure to lower its offer of US$720/tonne fob Korea despite very low Chinese and Taiwanese buying ideas at US$670-710/tonne cfr China/Taiwan.

A 1700-tonne cargo for arrival at end-September was heard sold at US$695- 705/tonne cfr China. A 4000-tonne European cargo was heard settled for November arrival at US$690/tonne cfr NEA.

Methanol: Price ideas continued to soften on weak demand.

In SEA, offers of US$200/tonne cfr SEA, US$10/tonne lower than the previous week, were facing buying ideas of US$185/tonne cfr SEA. In NEA, offers of US$200-210/ tonne cfr NEA found no takers.

MTBE: Prices remained stable on tight supply and robust demand.

No deals were reported in NEA. But in SEA, a second-half October cargo was sold by a trader at US$360/tonne fob Singapore, the same as the previous week's price.

Ammonia: No deals were reported in an extremely tight market. Traders said they were receiving several enquiries but had no October cargo available for sale.

Buyers in India were last week resisting offers of US$220-225/tonne fob Arabian Gulf for November cargoes. However, traders said the shortage may force buyers to submit to supplier price demands.

Bulk chemical spot prices - US$/tonne

	Asia/Pacific spot		US/Euro contracts
	NE Asia¹	S Asia and SE Asia²	US³	NWE⁴
Naphtha	255	-	na	na
Ethylene	490 cfr Taiwan⁵	500 fob Thailand	606 July	445 Q3
Propylene	490-500 cfr Taiwan	530-540	462 July	430 Q3
Butadiene	695-705 cfr China	790-800⁵	639 July	520 Q3
Methanol	240 cfr China⁵	225	255 Aug	225 Q3
MTBE	385 cfr China⁵	360 fob Singapore	na	na
Ammonia	227.85 cfr Korea	228 cfr India⁵	234 cfr US Gulf 1st half Sept	na

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 no recent confirmed deals
MoPJ = Mean of Platt's Japan
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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