Market Trends: Crude hits highs of $1090-1110/tonne

04 October 2004 00:01  [Source: ICB]

Brent crude and WTI topped their highs of $46/bbl and $50/bbl, respectively, with naphtha following on swiftly. Benzene players remain confident that a tight market will lift prices

BULK CHEMICAL PRICES

	European spot			European contract		US contract
	€/tonne	$/tonne	Change on last week	€/tonne	$/tonne	$/tonne
Naphtha	na	440-445 (cif)	+20.5	na	na	na
Ethylene	na	930-950 (cif) (nom)	+15	700 (Q4)	860	694 (Jul) +
Propylene¹	660-680(cif)(nom)	na	+25	620 (Q4)	762	694 (Jul)
Butadiene	na	730-750 (fob) (nom)	-10	627 (Q4)	772	749 (Sep))
Benzene	na	1090-1110 (fob)	+37.5	950 (Sep)	1154	1181 (Sep)
Toluene*	na	770-790 (fob) (nom)	+10	na	675-681	na
Xylenes	na	720-750 (fob) (nom)	nc	na	na	551 (Jul)
Paraxylene	na	850-870 (fob) (nom)	+10	755 (Oct)	929	777 (Jul)
Orthoxylene	na	830-860 (cif)	+10	585 (Q3)	715	694 (Jul)
Styrene²	na	1350-1360 (fob)(nom)	+17.5	1180-1205 (Sep)	1447-1477	1427-1433 (Jul)
Methanol	212-220 (fob) (nom)	na	-4	230 (Q4)	283	281 (Aug)
MTBE	na	480-510 (fob)	+17.5	na	na	na
Ammonia	na	270-275 (CFR) (nom)	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

Naphtha prices jumped to $440-445/tonne cif NWE in the first half of the week, as crude oil futures once again reached record high levels. Brent crude futures topped $46/bbl for the first time to reach $46.28/bbl and WTI in the US broke the $50/bbl mark, also for the first time.

Ethylene spot numbers are quoted in the range of $930-950/tonne cif NWE, with players admitting that quotes are largely being referenced to the last deals done in mid-September. The turnaround at a major UK unit is now fully completed.

Meanwhile, two German crackers have entered their scheduled turnaround programme. Ongoing outages at key derivative units mean molecules are available off the ARG pipeline at €720-750/tonne.

Propylene spot numbers are now in the range of €660-680/tonne cif NWE for polymer-grade material, with chemical grade quoted at €620-630/tonne. Prices are largely nominal and relate to earlier business.

Notional butadiene prices are in the spot market at $730-750/tonne fob NWE, reflecting the recent slip in Asian spot prices due to a Chinese national holiday.

In Europe, supply is still described as snug, despite derivative unit production problems freeing molecules. The European butadiene quarter four (Q4) contract price initially split at €630/tonne and €627/tonne FD, although the lower number is emerging as the referenced contract price. The US September contract is at 34 cent/lb, a rise of 1 cent/lb on August.

Benzene prices stood within a $1090-1110/tonne range, with deals heard at $1090 and $1095/tonne. Talk is bullish as players expect the market to tighten as demand from styrene sellers improves following September shutdowns. Contract prices were expected to settle by the end of the week.

Toluene numbers hovered around $770-790/tonne, with soaring crude numbers bolstering prices despite weaker US values for toluene. The Portuguese unit was expected to be shipping material out last week following its unplanned outage.

After an extremely quiet week, mixed xylene price ideas remain stable at $720-750/tonne fob NWE, with most talk at the higher end of this range. However, players say they expect numbers to start dropping on the back of sharply falling US values.

The paraxylene market has seen little activity with prices hovering around $850-870/ tonne fob NWE levels.

Meanwhile, Reliance has officially declared force majeure at its facility in India, which observers say will be down for six weeks. Several sources warn that a prolonged outage could severely impact the already tight market.

A quiet week saw ortho­xylene values move to around $830-860/tonne fob NWE. The market is still extremely short of molecules and will not be helped by the problems at Reliance.

However, observers say that the Oporto complex in Portugal is finally set to come back onstream after its closure following a pipeline explosion several weeks ago.

The majority of shutdowns are now over on the styrene market. Prices are firm at $1350-1360/tonne for October, with the November range slightly below this at $1320-1340/tonne. The market is balanced, with demand from downstream sectors especially strong, despite high styrene prices.

The methanol market is quiet, with players pegging the bid/offer range at €212-220/tonne. Spot business is limited, with contract volumes sufficient to satisfy demand. Russian scheduled outages are slowly coming to an end, but there have been some start-up delays.

MTBE has strengthened on the back of rising demand, with prices heard at $480-510/tonne fob NWE. Sources say the market has seen a little more buying interest this week, partly because blenders want to benefit from the low 1.10 factor.

Ammonia prices remain in the low to mid-$240s/tonne. Players say that demand is stable. A production line at a Russian plant is down until November and a Ukrainian producer has postponed its shutdown to the beginning of October.

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 29 September 2004. Dollar prices are based on rates of exchange on 28 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=€0.812; $1=£0.552; €1=£0.680.

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