Market trends: Propylene moves up on outages

29 March 2004 00:01  [Source: ICB]

Propylene numbers have tightened considerably due to cracker problems, with prices rising to €610-625/tonne cif NWE. Other markets saw a slight increase in prices as benzene firmed

Naphtha prices are largely stable at $320-325/tonne cif NWE. Markets are described as quiet with few arbitrage opportunities.

Ethylene spot prices have firmed to €750-760/tonne cif NWE as availability has tightened as scheduled and unscheduled outages have impacted on the market. Two German cracker operators declared force majeure and a unit in Belgium is also down unexpectedly. The quarter two contract has been settled at €607/tonne FD, up €27/tonne on quarter one (Q1). Certain cracker operators have said they will not follow the settlement, which is seen as too low.

Propylene spot prices have spiked to €610-625/tonne cif NWE. Markets are described as extremely tight as planned and unplanned cracker closures take their toll. Spot deals have been reported at €620/tonne cif NWE, with two parcels sold by traders to industry players. The Q2 contract contract price has been reached at €525/tonne, a rise of €50/tonne on the previous quarter.

Butadiene notional spot numbers have shifted up to $520-540/tonne fob NWE, reflecting perceived tightness in the market, as extraction units undergo maintenance work. Spot molecules are said to be difficult to source

The benzene spot market has tightened pushing prices up to $620-625/tonne fob NWE with one deal reported but unconfirmed midweek at $638/tonne fob NWE for prompt molecules, up from offers at $600/tonne last week.

According to a trader, this significant increase in spot prices may represent major industry players ‘trying to make their own market’ where there remain no ships for prompt loading and no significant deliveries until April. ‘This environment will lead to inevitable spot increases until molecules become more available,’ one trader said.

Toluene has been reported in the $490–500/tonne range, up $20/tonne on last week, but traders say they would be surprised if this is sustained should the benzene market slacken. This slight increase over the week may be due in part to high benzene prices while opportunities to process toluene into benzene remain available in the US, although there is little capacity in Europe.

Mixed xylenes spot business is reported at around $600/tonne, in line with recent weeks although indicating a slight further firming. Production issues at Atofina in Antwerp continue to affect the market.

Paraxylene spot prices have been creeping up recently and continued to do so last week, adding around $5-10/tonne in thin business. Inter-trade business was reported at $669/tonne and $670/tonne, with offers now up to $680/tonne and slightly above.

Last week saw initial settlements of April contracts at €605/tonne, up €15/tonne on the March level. Although regarded as a slightly large increase, the number looks likely to be widely accepted.

Orthoxylene spot business can be described as thin, with price ideas around the $670/tonne level, the higher end of the recently quoted range.

Trading in styrene is reported to be light with the effect of increased crude and benzene prices bringing up spot prices marginally to $800-810/tonne fob in Europe. Traders have seen offers of up to the low $800s/tonne fob but no deals done. One confirmed deal at $855/tonne fob Korea was up $10/tonne over last week.

Continuing tight supply for methanol has led to the market remaining firm. The market is fairly balanced, most volumes are covered by contracts with producers looking for spot deals in the €183-185/tonne range. Planned outages are said to be covered by material in tank.

MTBE spot business has built on the slight increase of the previous week, seeing levels around the mid-$380s/tonne, buoyed by the increase in oil and gasoline values. Demand is brisk, in line with seasonal trends, and offers were heard mid-week as high as $388/tonne, with bids at $382/tonne.

Ammonia prices continue to face downward pressure with Yuzhnny numbers down to $170-175/tonne fob. Demand is described as poor.

BULK CHEMICAL PRICES

	European spot			European contract
	€/tonne	$/tonne	Change on last week	€/tonne	$/tonne	US contract $/tonne
Naphtha	na	320-325 (cif)	- 1.5	na	na	na
Ethylene	na	750-760 (cif)	+ 10	607 (Q2)	747	700 (Jan)
Propylene¹	610-625 (cif)	na	+ 32.5	525 (Q2)	645	656 (Feb)
Butadiene	na	520-540 (fob) (nom)	+ 20	520 (Q1)	640	640 (Mar)
Benzene	na	620-625 (fob)	+ 4	416 (Q1)/450 (Mar)	516/554	592 (Feb)
Toluene*	na	490-500 (fob) (nom)	+ 4	333 (Q4)	392	na
Xylenes	na	590-600 (fob) (nom)	+ 10	na	na	545 (Feb)
Paraxylene	na	670-680 (fob)	+ 7.5	605 (April)	744	716 (Feb)
Orthoxylene	na	660-670 (cif) (nom)	+ 2.5	445 (Q1)	558	650 (Feb)
Styrene²	na	800-810 (fob) (nom)	+ 3	716.5-741.5 (Q1)	915-947	1055-1100(Jan)
Methanol	183-185 (fob)	na	+ 1	190 (Q1)	235	255 (Jan)
MTBE	na	375-385 (fob)	+ 10	na	na	na
Ammonia	na	195-205 (CFR)	nc	na	na	250 (CFR) (1H Mar)?

NOTES *TDI grade; ¹Indicates polymer grade; ²Lower figure for barge price, higher figure for free delivery inland; ³Initial 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 24 March 2004. Dollar prices are based on rates of exchange on 23 March 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=€0.813; $1=£0.541; €1=£0.666.

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