22 November 2004 00:01 [Source: ICB Americas]
The November benzene contract rose 3c. to $3.77 per gallon. Meanwhile, spot pricing has vacillated wildly from near contract levels to below $3 per gallon before rebounding to its current level of roughly $3.15 per gallon. Toluene prices have reacted to the wildness in benzene pricing and have come off to the $2.10 per gallon level. Mixed xylene prices are also off, with prices recently coming in at $1.75 per gallon. The November mixed xylene contract was completed at $1.97 per gallon, a 12c. increase over October’s $1.85 per gallon.
Strong demand and high feedstock costs continue to conspire against butadiene consumers as November saw a 2c. increase to already historic high prices. The November increase boosted contracts to 37c. per pound.
November cumene contracts jumped 2c. per pound to 53.25c. thanks to continued high feedstock costs.
October contracts were settled at 36.5c. per pound, a 2c. increase over September. Ethylene contract prices had been flat for almost all of 2004 until a 1c. increase in August and another 2c. jump in September. The run-up in ethylene pricing can be attributed to healthy downstream demand and higher feedstock costs. Ethylene producers are seeking a 5c. increase for November contracts, but consumers are sure to point to the recent fall-off in crude oil and other raw material prices.
All major ethylene glycol suppliers rolled over their November Asian contract prices for December, leaving the price at $1,180 per ton, the highest since the record highs of 1988 and 1989. Demand for glycol remains strong and supplies continue to be constrained despite the start-up of significant new capacity in Saudi Arabia.
Methanex raised its non-discounted US reference price by 6c. per gallon, bringing November pricing to 90c. per gallon. Spot prices have slid recently from the low-90c. per gallon range to roughly 88c. to 90c. per gallon.
November contracts settled up 1.5c. per pound to 40c. per pound.
November contracts saw a 3.25c. increase to 45.5c. per pound.
October chemical- and polymer-grade contracts settled up 2.5c. per pound to 35c. and 36.5c. per pound, respectively. The November refinery-grade contract price was recently concluded at 35c. per pound, a 4c. increase over October. Producers are seeking a similar increase for chemical- and polymer-grade propylene in November, but negotiations are still underway. Producers point to the tight supply situation and healthy demand as main factors driving the increase, but buyers have resisted, owing to an expected fall off in demand in December.
Healthy demand from Asia is helping to hold up the US styrene market, which is expected to see increases in the 3c. per pound range for November, after experiencing small declines in October. Producers continue to cope with high feedstock costs. Even as benzene prices moderate somewhat, albeit at the $3.20 level, ethylene prices have increased 5c. in the past 3 months and are expected to rise again in November.
Demand continues to grow twice as fast as GDP despite the run-up in energy and feedstock costs. Prices climbed another 2c. to 3c. in October and are projected to rise by a similar amount in November. Average contract homopolymer prices in October were 50c. to 51c. per pound with a 2c. to 3c. premium for copolymer resin.
Pricing continues to strengthen in conjunction with robust economic growth in North America and Asia, as well as high energy and raw material costs. Price increases are being pushed through on a global basis. “Traditionally, [European] pricing levels moved between the psychological barriers of €500 [$640] to €1,000 [$1,280] per metric ton,” says a producer. “This band-width, however, was based on oil prices between $15 and $25 per barrel. Those days are over. Subsequently polyethylene pricing levels must rise. In our expectation, we haven’t reached the top end of the new price levels yet.” An analyst notes that producers have nominated a total of 24c. per pound in increases this year and reported that 13c. to 14c. has been fully implemented. Benchmark pricing is roughly 60c. to 65c. per pound.
Prices are rising because of energy and feedstock costs. Producers are raising their prices for MDI (diphenylmethane diisocyanate) and polyols by around 10c. per pound. “Demand has increased substantially over the past year, up about 20 percent for MDI and 10 percent for polyols, while capacities remain tight,” a producer notes. Pricing for MDI varies according to volume and contract terms. List pricing for bulk material is $1.30 per pound.
Nylon is seeing stronger-than-expected demand in most end markets, but prolonged high energy and raw material costs continue to force price increases. One producer has announced increases of at least 9c. per pound for all grades of nylon 6 and 6/6. Another is raising its nylon prices by a minimum of 12c. per pound. A third producer announced a 10 percent increase for all grades of nylon 6/6, a fourth has announced an 8 percent increase for nylon 6 extrusion-grade and neat resins, and a fifth has raised prices for molten caprolactam by 10 percent and nylon 6 prices by 6c. Nylon pricing varies widely according to volumes, contract terms, product grade and end markets. Ballpark pricing is $1 to $1.50 per pound.
Demand for polycarbonate is robust. High energy and raw material costs have crimped margins and forced producers to raise prices, but competing materials such as steel face a greater run-up in production costs. At least one company has launched a price increase in September and instituted a surcharge to counter the run-up in benzene pricing. Because of the disparity in end markets and applications, no true benchmark price is available. A benchmark pricing range is estimated at $1.55 to $1.85 per pound.
Prices for epoxy resins are on the march. Citing pressure from energy and raw material costs, producers have announced mid-November increases of 15c. per pound in the US, C42c. per kilogram in Canada, €350 per metric ton in Europe, $300 per metric ton in Asia Pacific, and $200 per metric ton in Latin America for epoxy vinyl ester resins. Liquid and solid epoxy resins are to go up by 10c. per pound in the US. Benchmark pricing for these products is unavailable.
Strong demand for chlorine and caustic soda coupled with a tight supply situation has sent prices for both products skyrocketing. Following themost recent round of price hikes, which were widely accepted, chlorine prices are up to $350 per ton, while caustic soda prices are approaching $300 per ton. Producers now have another $50 to $60 increase on the table for caustic soda. Despite near record high prices, Vulcan Materials, the parent of chloralkali producer Vulcan Chemicals, has seen enough and is selling the business to OxyChem, thesecond-largest North American producer. The Vulcan acquisition will boost OxyChem’s nameplate capacity to more than 2.6 million metric tons, giving it roughly 24 percent of the North American market.
Pricing is under pressure because of energy, raw material and transportation costs. “We have not announced any price increases for sulfuric acid this year,” a producer explains. “However, we continue to adjust prices upward on a case-by-case basis and as contracts allow. In addition, we are applying a fuel surcharge to delivered-price customers.” Pricing for sulfuric acid varies widely according to grade, volume and contract terms. Ballpark pricing for virgin acid is $80 to $95 per ton.
Pricing is strong because of robust end-use demand, especially for replacement fluorocarbons, and high energy and raw material costs. Producers decline to state prices, which vary according to contract terms. Prices for acid-grade fluorspar, a major raw material for hydrofluoric acid, went from $128 to $135 per ton, c.i.f. the Gulf of Mexico, at the end of 2002 to $165 to $170 per ton at the end of 2003, and they stabilized at $195 to $205 per ton in March 2004.
Market conditions for fatty alcohols in the US remained firm owing to continued strong demand, the high raw material price situation and skyrocketing energy costs. High ethylene feedstock prices have put synthetic alcohol producers in a tight spot which could create more demand for natural alcohols, according to some industry sources. Major producers have hinted further price increases in the first quarter because of the ongoing supply and demand pressures. One market observer placed current mid-cut alcohols prices, in bulk, between 69 cents to 74 cents per pound and long chain alcohols between 85 cents and 90 cents per pound.
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