Market trends: Ethylene tightens

19 April 2004 00:01  [Source: ACN]

Price rises US$30/tonne for ethylene as Middle East outage rumour spreads. Naphtha climbs, but propylene and MTBE markets are quiet

Ethylene: Market sentiment strengthened on tightening supply and rising naphtha costs. Two cargoes of 3000-3500 tonne each were sold at US$770/tonne fob SEA, US$30/tonne higher than previous business.

Also pushing up prices were rumours of a possible outage in a 520 000 tonne/year plant in the Middle East. The rumours could not be confirmed as ACN went to press.

Selling ideas had risen to US$830/tonne cfr SEA, but buyers were unwilling to indicate more than US$770-790/tonne cfr SEA.

However, some traders said there was a slight weakness in market sentiment, and prices were likely to soften in the coming weeks due to expected resistance from polyethylene (PE) players who were facing margins pressure. Prices of high-density PE and linear low-density PE were declining last week.

Naphtha: The MoPJ climbed by US$22.75/tonne from the previous week, to US$352.75/tonne cfr Japan, on the back of surging crude values. West Texas Intermediate crude rose to US$37.21/bbl, a US$2.9/bbl increase from a week earlier.

A first-half June cargo was purchased by a Japanese cracker operator at a premium of US$4/tonne over MoPJ.

However, traders were doubtful whether the surge in crude could be sustained, as demand from the motor gasoline segment was weakening in the US.

Propylene: Markets were relatively quiet due to short supply. A 1500-tonne cargo was sold at US$750/tonne cfr SEA, US$15-20/tonne higher than the previous week.

Firming polypropylene prices could also strengthen propylene markets further, traders said (see page 26).

Butadiene: No deal was reported due to shortage of material. Strong demand from derivatives caused offers to rise by US$10-20/tonne from the previous week, to US$880-900/tonne cfr China for May cargoes, but no buying ideas were forthcoming. The last confirmed deal, concluded several weeks earlier, was at US$810/tonne cfr Taiwan.

Zeon Corp is planning to shut down its 150 000 tonne/year plant at Tokuyama, Japan, for a month in May for maintenance. The company was planning to restart its second 150 000 tonne/year plant, at Mizushima, on 18 April, after a month-long turnaround.

Methanol: Prices slipped by US$5-15/tonne in SEA on ample supply. A trader confirmed selling a 3000-4000 tonne cargo early last week at US$265/tonne cfr SEA. Prior to this fixture another deal for 2000 tonne was settled in the low US$270s/tonne cfr SEA.

In contrast, prices in China remained firm at US$260-265/tonne cfr China due to limited spot availability. Local prices were reported at Rmb2700 ex-tank although suppliers were said to be targeting Rmb2800/tonne ex-tank.

MTBE: Markets remained quiet with sellers looking to conclude business at over US$340/tonne fob Singapore, the price at which cargoes had been sold in the previous week. Enquiries from China were rising but buying ideas of US$335/tonne cfr China were dismissed as too low.

A NEA producer was reported to have three cargoes available but price ideas were not forthcoming.

Ammonia: Indian Farmers Fertiliser Cooperative had reportedly secured 15 000 –20 000 for early May arrival at around US$169.50/tonne cfr India, US$12.50/tonne lower than their last tender for a mid-April shipment. But the business could not be confirmed at press time.

No other deals were heard, with most buyers preferring to cover their requirements through contracts.

Bulk chemical spot prices, US$/TONNE

	Asia/Pacific spot	US/Euro contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	352. 75 cfr Japan	–	na	na
Ethylene	750-760 cfr Taiwan6	770 fob SEA	700 Jan	607 Q2
Propylene5	6706	750	710 Apr	525 Q2
Butadiene	810 cfr Taiwan6	680-7006	640 Mar	520 Q2
Methanol	260-265 cfr China	265	255 Jan	200 Q2
MTBE	340 cfr China6	340 fob SEA6	na	na
Ammonia	200 cfr Taiwan6	169.50 cfr India	250 (cfr) (1H Mar)	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 ontract prices in Euro/tonne unless otherwise stated

⁵ Polymer grade

⁶ 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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