Sentiment upbeat on short supply

12 September 2005 00:01  [Source: ACN]

Naphtha: The MoPJ fell by US$26.75/tonne on Wednesday from a week earlier, and US$31/tonne from its record level of 2 September, to US$585/tonne cfr Japan.

The fall, which occurred despite strong demand from China and Japan, was triggered by a decline in crude values, on news that emergency oil supplies were being released by the US government and other industrialised countries to ease supply shortfalls created by Hurricane Katrina.

West Texas Intermediate crude declined to US$64.65/bbl, from the previous week’s record US$70.85/bbl.

The premium on 2H November cargoes narrowed to US$5.50/tonne, down from US$6.50/tonne earlier in the week and US$7/tonne at the end of the previous week.

Propylene: No deals were heard. But prices were expected to climb by US$40/tonne in the next few weeks from the last deal of US$1010/tonne cfr NEA, traders said, on the back of tight supply and higher US prices triggered by Hurricane Katrina. Also helping push up price ideas were rising prices of polypropylene (see page 22) and acrylonitrile (see page 24).

Some traders even expected prices to climb to US$1100/tonne cfr China in Q4, as cargoes from the US were expected to dwindle and even stop because of shortages caused by Katrina.

Low inventories among Chinese customers also strengthened market sentiment last week, but some buyers continued to adopt a wait-and-see attitude.

Offers climbed by US$20/tonne from the previous week to US$1070/tonne cfr NEA, but drew bids of only US$980/tonne cfr NEA. Offers of US$1100/tonne cfr SEA also evoked no response from customers.

Butadiene: A tug-of-war between suppliers and customers continued to stall trade, but the overall sentiment was stable. One South Korean trader reported selling a cargo purchased from a producer at US$1330/tonne fob Korea to a customer at US$1390/tonne cfr Korea. However, the sale was atypical and was not representative of the market, the trader admitted.

Supply constraints in the US caused by Katrina and rising acrylonitrile butadiene prices (see page 22) did hold up sentiment. But dipping prices of styrene butadiene rubber offset that.

A 2500-tonne Brazilian cargo is heading towards Asia. But a second cargo from Brazil originally intended for Asia could end up in the US to meet shortfalls there, traders said.

Methanol: Markets were quiet, with no enquiries owing to poor demand.

A wide gap between contract and spot offers also had a dampening effect on trade. Methanex announced its September contract price at US$260/tonne cfr Asia, but spot prices were way below, at US$225/tonne cfr NEA. Offers of US$230/tonne cfr NEA evoked bids of US$220/tonne cfr NEA.

In SEA, the bid-offer range was at US$222-230/tonne cfr SEA, following a deal at US$222/tonne cfr SEA.

MTBE: High gasoline values post-Katrina pushed up prices to US$700/tonne fob SEA, a US$20/tonne increase from the previous week. In China, however, prices remained unchanged at US$590-610/tonne cfr China

Ammonia: Prices rose on the back of high natural-gas prices in the US and strong demand.

An Arabian Gulf (AG) supplier sold a cargo at US$285/tonne fob AG, but was planning to raise offers to US$300/tonne fob AG.

Yuzhnyy prices also rose by US$35-40/tonne from the previous week, to US$290/tonne fob Yuzhnyy.

C2 UP ON KATRINA OUTAGES AND CHINA TIGHTNESS

Ethylene: Sentiment was bullish although there was little trading. One deal was reported at US$988/tonne cfr China, up US$38/tonne from the previous week. Offers rose to US$1000/tonne cfr NEA, but met with bids in the mid-US$900s. The improvement in sentiment was triggered by tight supply, ?rising polyethylene prices, and the psychological impact of US cracker shutdowns in the wake of ?Hurricane Katrina. Reduced cracker operating rates in China owing to limited availability of naphtha feedstock also lifted prices.

BULK CHEMICAL PRICES, US$/tonne

	Asia-Pacific spot		US contracts	European contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	585 cfr Japan	–	na	na
Ethylene	988 cfr China	8906	881 June	640 Q3
Propylene5	1010 cfr China6	1000 fob SEA6	749 July	640 Q3
Butadiene	13306	11106	1014 Aug	720 Q3
Methanol	225 cfr NEA6	2206	300-307 Aug	220 Q3
MTBE	610 cfr China	700 fob SEA	na	na
Ammonia	280-295 cfr NEA6	2666	278 cfr 2H Aug	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 contract 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. Spot prices are based on information available mid-week prior to the date of issue. Dollar prices are based on prevailing rates of exchange.

By: Prema Viswanathan
+65 6780 4359

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