Market Trends: Ethylene plunges to $900-950/tonne

27 September 2004 00:01  [Source: ICB]

Benzene prices are surprisingly firm at $1055-1070 tonne, despite styrene outages. Ethylene, meanwhile, heads down due to Asian demand and European polyethylene outages

Naphtha prices have edged up to $417-427/tonne cif NWE. Reduced requirements from Asia and the US have increased the likelihood of greater quantities of Middle Eastern product moving into Europe, where demand is not particularly strong. However, naphtha prices are supported by firming crude oil numbers, reflecting lower US stocks.

Ethylene prices have slumped, with a bid/offer range talked at $900-950/tonne cif NWE. However, players stress that numbers are extremely notional, with no new deals reported. The recent dip in Asian prices has meant extreme spot demand pull into the region has ceased. Production problems at polyethylene plants have also improved availability in NWE. Logistical strains, due to a lack of available storage facilities, see prices off the ARG pipeline quoted at €700-750/tonne.

A flurry of purchasing has supported propylene spot numbers, which are now around €620-670/tonne cif NWE. However, players are believed to be covered and consumers say they are largely drawing on contract volumes. The drop in Asian prices has yet to be felt in Europe, although there is growing speculation that imported molecules from the Americas could soon drop in price.

In a quiet trading week butadiene remained static at $740-760/tonne fob NWE. Again, there is talk of downward pressure on prices, reflecting the slide in Asian values. Players say talks on a fourth quarter (Q4) contract are close to conclusion, although a new number had not emerged as ECN went to press.

Benzene prices are hovering at $1055-1070/tonne, with the market quiet as players prepare for the EPCA meeting in Monaco. Players say prices are surprisingly firm given the current outage. Demand from other sectors remains strong.

Toluene prices are firm at $760-780/tonne, with rumours of offers at $800/tonne. Prices are notional, but are firm on the back of Asian and US numbers.

As US mixed xylene values have fallen sharply, the European market has started to suffer. Spot numbers are down at $720-750/tonne fob NWE. A $730/tonne cif deal has been reported, as well as one at $750/tonne fob. Supply/demand is said to be balanced.

Paraxylene (PX) spot prices have faltered, having peaked at $880/tonne earlier in the week. Sources say numbers have softened and are heard at $840-860/tonne fob NWE. The shutdown continues at Gonfreville in France, while the Oporto facility, Portugal, was expected to come back onstream from 25 September. Observers say that Reliance still appears to be having problems. Reports of the Asian PX contract settling at $880/tonne cfr mean players are expecting a higher European settlement for October.

Orthoxylene remains short globally and, as a result, prices continue to rise. Observers say that while there are a lot of spot enquiries, sourcing material is becoming increasingly difficult. Prices are heard at $820-850/tonne fob NWE. Deals have also been reported at $825/tonne and $830/tonne. Sources say there is still no news on the Q4 contract, but a hike is expected.

Styrene markets are tight as a result of planned outages, with around a fifth of capacity down. US prices are strong and consequently cargoes are heading in this direction. Spot offers are at $1340/tonne, but buyers are absent from the market.

Methanol spot material is offered at €220/tonne but is attracting little buying interest, with most players covered by contract business. Contracts rolled over for Q4 at €230/tonne.

MTBE values continue to weaken due to the lack of demand. Prices have fallen to between $470-485/tonne fob NWE, with only a few deals heard. The factor to gasoline has fallen considerably from the 1.25 reported a few weeks ago. Sources say the current figure is closer to 1.09-1.10. One source adds that the lower factor may create more demand for blending.

Ammonia numbers are steady in the low $240s/tonne fob Yuzhnyy, although some players say there could be a slight downward pressure on prices. US facilities have been affected by the recent hurricanes and output is reduced as a result.

BULK CHEMICAL PRICES

	European spot			European contract		US contract
	€/tonne	$/tonne	Change on last week	€/tonne	$/tonne	$/tonne
Naphtha	na	417-427 (cif)	+2	na	na	na
Ethylene	na	900-950 (cif) (nom)	-80	700 (Q4)	860	694 (Jul) +
Propylene¹	620-670(cif)	na	+20	620 (Q4)	762	694 (Jul)
Butadiene	na	740-760 (fob) (nom)	nc	580 (Q3)	703	727 (Aug)
Benzene	na	1055-1070 (fob)	-55	950 (Sep)	1154	1181 (Sep)
Toluene*	na	760-780 (fob) (nom)	-5	na	675-681	na
Xylenes	na	720-750 (fob)	-32.5	na	na	551 (Jul)
Paraxylene	na	840-860 (fob)	-25	715 (Sep)	869	777 (Jul)
Orthoxylene	na	820-850 (cif)	+25	585 (Q3)	715	694 (Jul)
Styrene²	na	1335-1340 (fob)(nom)	+12.5	1180-1205 (Sep)	1447-1477	1427-1433 (Jul)
Methanol	218-222 (fob) (nom)	na	-5	230 (Q4)	283	281 (Aug)
MTBE	na	470-485 (fob)	-30	na	na	na
Ammonia	na	270-275 (CFR)	nc	na	na	290 (CFR) (1H Aug)
NOTES *TDI grade; ¹Polymer grade; ²Lower figure for barge price, higher figure for free delivery inland price, ; + initial 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 22 September 2004. Dollar prices are based on rates of exchange on 21 September 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=€0.816; $1=£0.558; €1=£0.684.

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