Ethylene weakens

02 May 2005 00:01  [Source: ACN]

Mexican C2 cargoes and oversupply in China weaken market sentiment. Propylene, butadiene, and methanol also soften. But MTBE is stable

Ethylene: News of Mexican shipments to Asia further weakened market sentiment. Prices had already been declining owing to poor demand and oversupply from new capacities in China.

A cargo for May arrival was reportedly purchased by a SEA customer at US$860/tonne cfr SEA. But later, a 3000-tonne cargo was sold at US$800/tonne cfr NEA. Suppliers held on to their offers of US$800/tonne cfr NEA even as bids slid below US$800/tonne cfr NEA.

With freight between Mexico and SEA at US$350/tonne, traders selling the Mexican cargoes would incur losses, said one trader. A second trader maintained the arbitrage was viable.

Naphtha: The MoPJ rebounded to US$479.50/tonne cfr Japan from US$453.50-456.50/tonne cfr Japan a week earlier, in line with stronger crude.

The market outlook for naphtha remained bearish, with physical cargoes heard sold in South Korea at a wide US$9-10/tonne discount on MoPJ. The widest discount for naphtha was set at US$12/tonne early in January. High refining rates and strong Indian exports continued to weigh down market sentiment.

Propylene: Markets weakened a little on softening polypropylene demand and in anticipation of huge volumes of deep-sea material coming into Asia in May and June. But the price decline was nowhere near as sharp as that in ethylene markets.

About 30 000 tonne was expected to arrive in Asia in the next two months from the US and Brazil – 20 000 tonne from the US and 10 000 tonne from Brazil, traders said.

Brazilian material is heading towards Asia for the first time in ten years, while US-Asia arbitrage has restarted after a four-five month gap.

A 5000-tonne deal was reported in NEA at US$1060/tonne cfr NEA, and another at US$1100/tonne cfr SEA, down US$20/tonne from the previous week.

Offers had declined further by the middle of the week to US$1000-1060/tonne cfr SEA and bids to US$1040/tonne cfr SEA.

Butadiene: Strong customer resistance, especially from the acrylonitrile butadiene styrene (ABS) segment, caused prices to soften.

A 1000-tonne cargo was bought by a trader at US$1360/tonne fob Korea, but subsequent offers of US$1340/tonne fob Korea faced bids of US$1300/tonne cfr China.

A 1500-tonne cargo from the US for May arrival being offered at US$1420-1440/tonne cfr China found no takers. The price of a European cargo headed for SEA could not be ascertained.

Methanol: Market sentiment weakened a little in NEA as supply was plentiful. Deals were reported at US$270/tonne cfr NEA.

In SEA, prices were at US$280-300/tonne cfr SEA. Sentiment was stronger in SEA owing to shortage of vessel space and to a second outage at Kaltim Methanol’s plant in Bontang, Indonesia.

In NEA, traders had easier access to chartered vessels and could therefore offer lower prices.

MTBE: Prices were stable at US$600/tonne fob SEA on high gasoline values with the start of the driving season in the US.

Ammonia: The gap between US and Asian prices widened, prompting a flow of Middle East cargoes to the US in preference to Asia. Asian prices were at US$260/tonne cfr NEA, compared with US prices of US$305-310/tonne cfr US Gulf Coast.

Indian spot markets, meanwhile, ground to a halt, as Indian Farmers Fertiliser Cooperative stopped buying spot cargoes (see page 23).

BULK CHEMICAL SPOT PRICES, US$/TONNE

	Asia/Pacific spot		US/Euro contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	479.50 cfr Japan	–	na	na
Ethylene	800 cfr NEA	860	915 Mar	750 Q2
Propylene5	1060 cfr NEA	1100	981 Mar	705 Q2
Butadiene	1360	14106	970 Apr	702 Q2
Methanol	270 cfr NEA	280-300	317 Mar	230 Q2
MTBE	440-450 cfr China6	600 fob Singapore	na	na
Ammonia	260 cfr NEA	252-253 cfr India6	305 (cfr) (2H Apr)	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 Platts 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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