Market Trends: Strong crude pushes aromatics up

11 July 2005 00:01  [Source: ICB]

Naphtha prices drifted down to $440-445/tonne cif NWE by mid-week, after reaching a high of $470/tonne cif NWE earlier in the week, pulled up by strong crude oil future prices. However, players say demand remains poor, with limited arbitrage opportunities.

Although ethylene spot prices for deepsea material remain unchanged at $600-610/tonne cif NWE, with no new deals reported, price sentiment is firming. Players are convinced spot numbers will not go lower in the short-term. Business off the ARG pipeline has been confirmed higher at €520/tonne and sellers say their offers are at €550/tonne and above.

Sabic’s 350 000 tonne/year linear low density polyethylene unit in Gelsenkirchen, Germany, was out of action for a few days due to technical problems.

Propylene spot prices have shifted up to €540-560/tonne cif NWE, although prices are notional with no confirmed spot business last week. Sellers talk of improved take-up from key derivatives, such as polypropylene, which has taken some length out of the market. Turnarounds at catalytic crackers have also removed product from the market.

Butadiene spot numbers continue to be quoted at $900-910/tonne fob NWE, in a quiet market where prices remain notional. The third quarter contract price of €720/tonne, a rise of €18/tonne on Q2 has largely been accepted by the market.

Benzene prices for last week stood within a range of $895-960/tonne for July and August business. Deals were completed at $957/tonne and $960/tonne for August, while July business was reported at $945/tonne. Prices are firmer in the US and Asia. They have also been pulled up by strong feedstocks and supported by a firmer styrene sector. As ECN went to press, the range hovered at $940-960/tonne.

Toluene prices are centred around a wide range of $630-670/tonne after two deals were completed at $650/tonne. There is less material around, with exports going to Asia having picked up.

Mixed xylenes spot activity is still minimal, with only one deal heard at $685/tonne. Numbers have moved up to $670-690/tonne fob NWE following higher prices in the US due to rising crude. The US bid/offer range is heard at $2.23-2.28/gal FOB USG.

Paraxylene (PX) spot prices have continued their upward trend, rising to $810-830/tonne fob NWE, with a $10/tonne premium for August molecules. Several deals have been reported, including $800/tonne for July, and $815 and $830/tonne for August.

Demand is good and the market has returned to a more balanced position following last month’s PTA outages.

The 135 000 tonne/year PX facility in Gonfreville, France, is due to come out of its maintenance shutdown by mid-July.

Styrene prices have firmed to $1100-1110/tonne, with some sources reporting that the market is quite tight due to production outages. A deal was reported at $1105/tonne for August. Traders say demand has improved in Europe and in Asia, with polystyrene and expandable polystyrene recovering somewhat. The FCA styrene contract increased by €155/tonne to €925/tonne for July.

Methanol prices are pegged at €206-208/tonne, but now that contracts have been agreed, there seems to be little incentive to do business. Material is longer than some players had expected.

Ammonia numbers are unchanged this week at $200-205/tonne fob Yuzhnyy. Business out to the US appears to be improving and the July programme seems to be filling up out of Yuzhnyy. Nevertheless, players still felt there was some room for a slight drop in numbers over the next few weeks.

MTBE PRICES CONTINUE TO ROCKET ON TIGHT SUPPLY

MTBE prices continue to soar to unprecedented highs, with bids for prompt barrels now quoted above $1000/tonne. Inventories are extremely stretched and demand remains strong. Product is coming in from Arab Gulf and the US, but this will not arrive until the end of July.

Third quarter orthoxylene contracts, meanwhile, have settled down €40/tonne at €610/tonne, just short of buyers’ targets. Low demand is one of the reasons for the contract decrease and the spot market remains stagnant with no business heard. Numbers are unchanged at $700-730/tonne, although one observer says prices should be somewhat higher as mixed xylene and paraxylene are getting stronger.

BULK CHEMICAL PRICES

	European spot		Change on	European contract		US contract
	€/tonne	$/tonne	last issue	€/tonne	$/tonne	$/tonne
Naphtha	na	440-445 cif	-0.5	na	na	na
Ethylene	na	600-610 cif nom	nc	640 Q3	776	838 May
Propylene¹	540-560 cif nom	na	+42.5	640 Q3	776	771 May
Butadiene	na	900-910 fob nom	nc	702 Q2	906	992 May
Benzene	na	940-960 fob	+50	730 July	880	688 Jun
Toluene*	na	630-670 fob nom	+20	na	na	na
Xylenes	na	670-690 fob	+35	na	na	582 Jun
Paraxylene	na	810-830 fob	+40	705 July	857	821 Jun
Orthoxylene	na	700-730 cif nom	nc	610 Q3	728	727 Jun
Styrene²	na	1100-1110 fob	+45	927-952 July	1127-1158	1394-1499 May
Methanol	206-208 fob	na	+1.5	220 Q3+	266	317 Jun
MTBE	na	1000-1060	+250	na	na	na
Ammonia	na	200-250 fobYuz	nc	na	na	295 CFR 2H Jun
*TDI grade; ¹Polymer grade; ²Lower figure for fd barge price, higher figure for fd truck 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 7 July 2005. Dollar prices are based on rates of exchange on 5 July 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=€0.841; $1=£0.570; €1=£0.689.

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