Market Trends: Industry buyers lift ethylene

16 February 2004 00:01  [Source: ICB]

Ethylene spot prices climbed to $863-888/tonne cif NWE as industry players covered shortfalls, although production problems have eased in recent days

Bulk chemical prices

	European spot €/tonne	$/tonne	Change on last week	European contract €/tonne	$/tonne	US contract $/tonne
Naphtha	na	296-303 (cif)	-10.5	na	na	na
Ethylene	na	863-888 (cif)	+110.5	580 (Q1)	742	667 (Dec)
Propylene¹	580-600 (cif)	na	+15	475 (Q1)	608	557 (Jan)
Butadiene	na	500-520 (fob) (nom)	-22.5	520 (Q1)	640	640 (Jan)
Benzene	na	570-576 (fob)	-7	416 (Q1)/465 (Feb)	516/580	592 (Feb)
Toluene*	na	500-515(fob) (nom)	-15	333 (Q4)	392	na
Xylenes	na	580-600 (fob)	+25	na	na	473-479 (Jan)
Paraxylene	na	670-685 (fob)	-27.5	575 (Feb)	722	634 (Jan)
Orthoxylene	na	670-680 (cif) (nom)	nc	445 (Q1)	558	562 (Jan)
Styrene²	na	790-800 (fob) (nom)	-30	716.5-741.5 (Q1)	915-947	1055-1100(Jan)
Methanol	180-185 (fob)	na	+9	190 (Q1)	235	255 (Jan)
MTBE	na	341-349 (fob)	-5	na	na	na
Ammonia	na	280-290(CFR) (nom)	-5	na	na	320 (CFR) (1H Feb)
NOTES *TDI grade; ¹Indicates polymer grade; ²Lower figure for barge price, higher figure for free delivery inland; ³Initial contract settlement

Naphtha prices dipped below $300/tonne after statistics showing higher then expected US reserves lowered crude oil prices. However, OPEC’s surprise decision to cut output boosted crude oil prices, pulling naphtha numbers up to $296-303/tonne by midweek. The unscheduled Taiwanese cracker outage could lead to lower price sentiment.

Ethylene prices continued to rise, despite a decrease in production problems. A parcel is said to have been fixed at €700/tonne, delivered off the ARG. Shell has lifted its force majeure on ethylene out of Moerdjik. The troubled Wesseling cracker is expected to move towards full production in the second-half of February. Deals were also done at €650/tonne, €675/tonne and €680/tonne delivered off the pipeline.

European spot propylene prices have moved up to €580-600/tonne cif NWE. Small parcels are believed to have been fixed at the upper end of the quoted range. Availability has improved as crackers overcome production problems.

Improved availability has seen butadiene spot numbers drift down to $500-520/tonne fob NWE. However, prices remain largely notional with no new deals reported. US and Asian competition for spot molecules could support numbers, say players.

Benzene spot prices rebounded from $540-550/tonne fob NWE early in the week to $570-576/tonne at midweek on the back of higher US values and a spike in oil prices. US values were back up to $1.98/gal fob USG by midweek for February material. NWE supplies were described as balanced, with no major outages reported. A fire in the Taiwanese cracker had no major impact on the spot market as ECN went to press.

Toluene spot values were notionally placed at $500-515/tonne fob NWE and had not yet reacted to the increases in the US market at midweek. This moved up from $1.70/gal fob USG to $1.76/gal fob for February material on the back of higher benzene values.

Mixed xylenes prices increased again this week to $580-600/tonne fob. Stronger US numbers are supporting the European market. The outage at the Taiwanese cracker is also helping to keep sentiment firm. The European market is still considered tight. The Porto Torres plant is still out of operation.

Paraxylene (PX) numbers crashed to $650/tonne at the end of last week following highs of $710/tonne fob. Disappointing Asian demand following the Lunar New Year resulted in longer supply, making the market nervous and forcing offers down. Numbers picked up again this week, climbing to $670-685/tonne fob for February.

Orthoxylene (OX) levels remain firm at $670-680/tonne cif, with offers heard up to $685/tonne cif. Demand is steady and material is said to be tight for a number of reasons. Manufacturers comment that OX production has been cut in favour of higher priced PX product over the last few weeks, thus lowering OX stocks

Styrene spot price ideas softened following the disappointing levels of Chinese demand. Players place numbers notionally at around $800/tonne fob NWE. Most NWE plants are running well but some capacity has been adjusted to demand.

Methanol spot markets saw some producer buying activity last week. A parcel of around 8000 tonne was bought a touch above €180/tonne fob NWE last week. Offers are moving upwards as the maintenance season in NWE approaches. Prompt deliveries will command a premium, producers say.

MTBE players describe a lacklustre market, lacking in direction due to the difficulties in forecasting volatility upstream. Prices during the week ranged from the high $330s/tonne fob to the high $340s/tonne, with the latest bid/offer range standing at $346-349/tonne fob.

Ammonia prices in Yuzhnyy are assessed at $260-265/tonne fob for February tonnage. Lacklustre spot demand from NWE and longer supplies in the Black Sea are putting downward pressure on pricing although players expect to see fresh US enquiries in March and think these will support prices at current levels into next month.

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 11 February 2004. Dollar prices are based on rates of exchange on 10 February 2004. 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=€0.788; $1=£0.536; €1=£0.681.

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