Downwards drift for bulk chemicals

23 May 2005 00:01  [Source: ICB]

Naphtha numbers are quoted at $420-430/tonne cif NWE, in a relatively quiet market. Some relief has been provided nevertheless by product moving to South America, but the arbitrage to Asia remains closed. Petrochemical demand is said to be lower than expected.

Notional ethylene spot prices have drifted down to $830-850/tonne cif NWE, with few deals reported in the market. ARG pipeline numbers have also slipped down to €650-680/tonne. There is increased market talk around European cracker operators cutting back operating rates, in order to balance their inventories in the light of less take-up from derivatives. Derivative production plant problems have also contributed to lengthening European ethylene markets.

Propylene spot prices continue to fall, with the bid/offer range now down to €660-680/tonne cif NWE for polymer grade material. Players say that with so many offers in the market, a determined purchaser could probably push spot numbers lower. Outages at propylene-consuming units have increased availability. With the arbitrage from the US to Asia now closed, players are looking at opportunities to move more spot product from the US to Europe.

Butadiene numbers continue to be quoted at $950-980/tonne fob NWE, but spot product is even more difficult to source as reduced cracker operations have reduced the availability of crude C4 feedstock. Higher freight rates have also contributed to curtailing spot activity.

Benzene numbers fell to $725-745/tonne for June, with deals at $730/tonne, $731/tonne and $740/tonne for June and slightly higher at $745/tonne for May. Numbers were believed to have eased mid-week on the back of lower crude. In terms of supply, the market is balanced and one player suggested that prices have bottomed out.

Toluene markets are quiet, with supply believed to be relatively long. A deal was rumoured at $580/tonne, with the range pegged at $560-580/tonne.

Europe’s mixed xylene market remains quiet with numbers hovering around $630-640/tonne fob NWE. Supplies are snug and one producer says that players are tending to work with smaller parcels due to price volatility and to avoid building inventories. US values continue to fluctuate along with the energy complex, and are heard at $1.80-$1.84/gal FOB USG.

Styrene business was completed at $790/tonne and $795/tonne for June, putting June prices at $790-800/tonne and May prices around $15-20/tonne below this. European markets are long due to slow downstream demand, with Asian activity still muted. US prices are above those in Europe, which prompted some export activity.

Methanol prices stand at $209-211/tonne following a deal at $210/tonne. Around 12 000/tonne of contaminated methanol entered a Rotterdam tank after arriving on a vessel from Venezuela. The material is thought to have been contaminated through the pump system – the loss of supply is thought to have prompted the spot deal.

MTBE prices have dropped back to $595-610/tonne after their recent ascent. The factor to gasoline remains high at 1.26-1.31, although earlier in the week sellers say bids had risen to 1.33, and offers were reported at 1.34. One producer points out that these high levels ‘are starting to hurt demand’ and larger blenders are unwilling to pay inflated prices.

Ammonia numbers are seen within a range of $240-245/tone fob Yuzhnyy, with deals recorded at this level, down slightly due to softer US demand, increased supply and lower ship availability. Demand into Asia is stronger due to outages in the region. A 45-day shutdown has started at a Russian facility.

PX prices are ‘under pressure’ but OX is active at last

Paraxylene (PX) fell to $650-665/tonne fob NWE, although one source says selling ideas may be closer to $700/tonne. Few bids and offers are heard but deals have been done at $655 and $665/tonne for June and July respectively. Asian contract nominations for a rollover in June at $850/tonne CFR Asia are ‘unrealistic’, with spot prices lagging at mid-$700s/tonne levels.

With PX prices under pressure, orthoxylene (OX) spot markets have ‘finally’ seen some activity, with business done in the current $730-740/tonne range. Downstream, Nitrokemia’s phthalic anhydride facility in Fuzfogyartelep, Hungary, recently closed for maintenance but has not restarted as planned. The delay is blamed on disruption to the plant’s OX supply.

BULK CHEMICAL PRICES

	European spot		Change on last issue	European contract		US contract
	€/tonne	$/tonne		€/tonne	$/tonne	$/tonne
Naphtha	na	420-430 cif	+10	na	na	na
Ethylene	na	830-850 cif nom	-30	750 Q2	968	915 Mar
Propylene¹	660-680 cif nom	na	-20	705 Q2	929	948 Apr
Butadiene	na	950-980 fob nom	nc	702 Q2	906	992 May
Benzene	na	725-745 fob	-80	695 May	897	897 May
Toluene*	na	560-580 fob	-25	na	na	na
Xylenes	na	630-640 fob	-2.5	na	na	561 May
Paraxylene	na	650-665 fob	-47.5	674 May	869	882 May
Orthoxylene	na	730-740 cif	+10	650 Q2	848	771 May
Styrene²	na	790-800 fob	-115	962-987 May	1240-1272	1565-1675 Apr
Methanol	209-211 fob	na	+1	230 Q2	306	317 Apr
MTBE	na	595-610 fob	-20	na	na	na
Ammonia	na	240-245 fob Yuz	-5	na	na	305 CFR 1H May
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 19 May 2005. Dollar prices are based on rates of exchange on 17 May 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=€0.776; $1=£0.530; €1=£0.683.

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