Market Trends: Ethylene escalates

26 July 2004 00:01  [Source: ACN]

C2 prices rise by US$55-75/tonne, supported by limited supply. But butadiene falls to US$995/tonne on increased availability of material from Europe

Ethylene: Prices surged for the second consecutive week, led by limited supply and a strengthening in styrene and monoethylene glycol prices. A South Korean producer sold 2300 tonne for loading in mid-August at US$913/tonne fob Korea, while a producer in SEA sold two cargoes, one at US$900/tonne fob SEA and the second at US$920/tonne fob SEA. The deals in SEA were US$55-75/tonne higher than prices reported in the previous week.

A few buyers were said to be looking for material at US$920-930/tonne cfr NEA. One trader predicted that prices would reach US$1000/tonne cfr Asia by the first half of August.

Naphtha: Firm crude-oil prices pushed the MoPJ to US$380.375/tonne cfr Japan in mid-week trading, up from US$358.50/tonne in the previous week.

The strike at LG-Caltex Oil, which resulted in the shutdown of its refinery in Yeochun, South Korea, had not influenced the market last week as crackers had not moved to secure spot cargoes because they had sufficient stocks.

Asian naphtha availability for August and September continued to be comfortable. There were reports of a few September arrival fixtures into South Korea, settled at a discount of US$5/tonne over the MoPJ.

Propylene: Market activity was muted last week owing to lack of spot availability. Aggravating the situation was the decision by LG-Caltex Oil to shut its 180 000 tonne/year C3 unit and its polypropylene plant because of a labour strike. The company usually exports a few C3 cargoes every month.

Interest in securing US material picked up, with a Japanese trader reportedly securing 8000-9000 tonne for loading at end-July or early August at 29-30 cents/lb. A western trader was reportedly offering US product at US$830-840/tonne cfr SEA, but this failed to capture buyers’ interest.

In the previous week, a 1500-tonne cargo was sold at US$760/tonne fob Korea. Sellers had thereafter raised their target to US$780/tonne fob Korea. But Chinese bids were at US$770-780/tonne cfr China.

Butadiene: Prices descended below the US$1000/tonne cfr China/Taiwan mark, with a Chinese buyer concluding a deal for a 3000-tonne European cargo at US$995/tonne cfr China for arrival in mid-September. Prior to that, another European cargo of 4000 tonne for arrival in August was sold to Taiwan at US$999/tonne cfr Taiwan. These deals represented a US$30-35/tonne fall in prices.

Discussions were underway with shipping companies for more material from Europe for loading in August.

Methanol: Markets remained quiet owing to limited buying interest. In SEA, prices were at US$255-260/tonne cfr SEA. Sellers were hoping to push numbers to US$260/tonne cfr SEA, but buyers were said to be looking for US$250/tonne cfr SEA.

Some market players predicted an upward movement in prices in August owing to plant turnarounds in SEA in August. Others were not so sure, given the start-up of the new Iranian plant.

MTBE: Sellers were attempting to push prices to US$400/tonne fob Singapore after deals at US$390/tonne fob Singapore. A 3000-tonne July cargo was sold at US$375/tonne cfr China, while discussions were continung on a second cargo of 4000 tonne to China at US$378/tonne cfr China.

Ammonia: Indian Farmers Fertiliser Coop­erative closed an August import tender at US$293.50/tonne cfr India. Traders said market sentiment was slightly weak, with offers at US$240-245/tonne fob Yuzhnyy and US$270-275/tonne fob Arabian Gulf.

BULK CHEMICAL SPOT PRICES, US$/TONNE

	Asia/Pacific spot		US/Euro contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	380.375 cfr Japan	–	na	na
Ethylene	913	900-920 fob SEA	694 May	635 Q3
Propylene5	760	830	711 May	585 Q3
Butadiene	999 cfr Taiwan	950-960 fob Thailand6	705 June	580 Q3
Methanol	270 cfr China6	255-260	272 June	230 Q3
MTBE	375 cfr China	390 fob SEA	na	na
Ammonia	310 cfr Taiwan6	293.50 cfr India	215(cfr) (2H May)	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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