Market Trends: Butadiene escalates in dull market

11 April 2005 00:01  [Source: ICB]

Butadiene prices continue to soar due to strong global demand, but the rest of the market remains quiet, particularly paraxylene, which has been described as ‘comatose’ due to a lack of players

Naphtha prices drifted down to $502-518/tonne cif NWE, after reaching a record high of $526/tonne cif NWE earlier in the week. Prices soared on the back of much firmer crude oil numbers, as markets ignored Opec’s plans to raise output by a further 500 000 bbl/day. Brent crude oil prices briefly touched $58/bbl. European naphtha prices have also been limited by supply restrictions.

Ethylene spot numbers remain at $900-950/tonne cif NWE in an extremely quiet market. Players continue to rely on contract liftings or co-producer swaps. Supplies remain plentiful despite the start of the turnaround season. A force majeure has been declared at the 350 000 tonne/year cracker at Sines, Portugal, and an unplanned outage at the 610 000 tonne/year unit at Stenungsund, Sweden. The higher crude oil and naphtha prices means dissent around the €750/tonne initial quarter-two (Q2) ethylene contract looks set to diminish.

Propylene polymer grade spot prices have shifted up to €750-785/tonne cif NWE, on the back on unconfirmed business between a producer and a consumer. South American material is being offered into the market but at prices above the current quoted price range. There remains some unhappiness in the market regarding the Q2 contract settlement of €705/tonne FD.

Butadiene prices continue to soar, reaching $1000-1050/tonne fob NWE, due to very strong global demand. A deal between an industry seller and a butadiene user, priced at the top end of the quoted price range, could not be confirmed. Benzene numbers remain firm on the back of high energy costs although they have come off slightly since the previous week at $1155-1180/tonne for April. The market is backwardated in to May. The April benzene contract settled up €45/tonne at €881/tonne (see page 10).

Toluene prices are pegged at $660-680/tonne. Numbers are notional, however, with little activity taking place. Prices have firmed on the back of firmer crude oil and gasoline values. Players say that due to logistics issues, there are few opportunities to take advantage of an open arbitrage to Asia.

With many producers attending industry events in the US, mixed xylene business has been extremely muted. Numbers have softened from last week’s levels to around $685/tonne fob NWE.

Paraxylene (PX) spot prices have slipped to a range of $935-945/tonne fob NWE and one producer says the market has been almost comatose with so many players absent. One deal has been reported at $940/tonne. Sellers add that there are several PX shutdowns planned in Asia during Q2, which are likely to have some effect on European pricing.

Producers expect orthoxylene Q2 contracts to be concluded soon, but are unsure whether they will change significantly from Q1’s €650/tonne settlement. The spot market still remains entirely notional at $800-820/tonne.

Styrene numbers were hovering in a similar spread to benzene, with deals done in a $1180-1200/tonne range. Unlike benzene, styrene levels are in contango into May. Asian prices, meanwhile, were around $1225/tonne fob Korea. There has been an outage at Total’s Carling plant, which has put some benzene back into the market. An initial styrene April contract price has been settled.

Methanol markets remain extremely quiet with all requirements being met under contract. Numbers are pegged either side of €215/tonne. There was a minor unplanned supply disruption at BP’s Gelsenkirchen, Germany, plant, but the facility is back onstream.

After soaring to mid-$600s/tonne levels, weaker gasoline has seen MTBE prices soften to its current $620-640/tonne range. Several deals have been reported over the past week. The factor to gasoline has risen to 1.14-1.15.

Ammonia prices firmed once again this week by around $5/tonne to $230-235/tonne. The demand pull from the US remains strong as a result of the ongoing high natural gas prices. BP’s ammonia plant in Gelsenkirchen suffered an outage at the same time as the methanol plant.

BULK CHEMICAL PRICES

	European spot			European contract		US contract
	€/tonne	$/tonne	Change on last issue	€/tonne	$/tonne	$/tonne
Naphtha	na	502-518 (cif)	+30	na	na	na
Ethylene	na	900-950 (cif) (nom)	nc	750 (Q2)+	968	915 (Feb)
Propylene¹	750-785 (cif) (nom)	na	+22.5	705 (Q2)+	929	981 (Mar)
Butadiene	na	1000-1050(fob)(nom)	+50	702 (Q2)+	906	904 (Mar)
Benzene	na	1155-1180 (fob)	nc	881 (Apr)	1140	1127 (Mar)
Toluene*	na	660-680 (fob)	nc	na	na	na
Xylenes	na	680-690 (fob) (nom)	-5	na	na	639 (Mar)
Paraxylene	na	935-945 (fob)	-35	750 (Apr)+	968	981 (Mar)
Orthoxylene	na	800-820 (cif)(nom)	+5	650 (Q1)	855	849 (Mar)
Styrene²	na	1180-1200 (fob)(nom)	-20	1145-1170 (Apr)+	1470-1502	1416-1527 (Feb)
Methanol	214-216 (fob)(nom)	na	-1.5	230 (Q2)	306	317 (Mar)
MTBE	na	620-640 (fob)	+74	na	na	na
Ammonia	na	230-235 (fob Yuz)	+5	na	na	283(CFR)(2H Mar)?
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 6 April 2005. Dollar prices are based on rates of exchange on 5 April 2005. 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=€0.779; $1=£0.533; €1=£0.684.

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