Fair weather trading returns at last

10 October 2005 00:01  [Source: ICB]

Naphtha has drifted down to $540-550/tonne cif NWE on the back of weakening crude oil prices. Supply concerns from North Africa have also diminished. Lower petrochemical demand, due to a spate of production problems, has added to downward price pressure.

Ethylene spot prices rose to $1250-1350/tonne cif NWE, but remain notional as deepsea product is scarce. However, prices off the ARG pipeline are reported done in the range of €1100-1150/tonne FD, with a 2000 tonne parcel sold at the top end of this range. A new force majeure has been declared in Belgium, while production problems and reduced output at plants in the Netherlands and France have also fuelled price hikes.

Propylene spot numbers soared on the back of cracker production problems and strong demand. Sellers say they are unwilling to release material unless offered €900/tonne. Prices are being fuelled by higher than expected demand, including the start-up of two new polypropylene plants in eastern Europe. A lack of imported molecules is also supporting higher prices.

Although butadiene spot prices have risen to $1075-1100/tonne fob NWE, some of the purchasing frenzy has gone from the market. Several US extraction units are off-line after Hurricane Rita, so traders are considering shipping parcels to the US. European players have largely now got behind the fourth quarter (Q4) €810/tonne contract.

Benzene spot business was quiet last week and values softened as sentiment over the US situation post-Rita improved. Prices arearound $825-835/tonne fob NWE. One deal at $815/tonne was heard. The October contract settled at €731/tonne, up €66/tonne and in line with expectations. The force majeure at Total’s Gonfreville refinery is still in place, as production is affected by a workers’ strike. US spot prices came off considerably, from above $3.00/gal to $2.80/gal.

Toluene spot business is quiet and the range is wide. One seller points to ideas around $800/tonne and just below as consistent with the market position. Supply is tight as demand from gasoline is strong. One deal was reported at $795/tonne.

Mixed xylene numbers have firmed to $900-920/tonne fob NWE levels, reflecting the strong US prices, which are heard at around $3.55/gal DDP USG. Trade in Europe has been minimal although a deal was heard at $900/tonne earlier in the week.

Paraxylene spot prices have continued their ascent to $1140-1170/tonne fob NWE. Demand is good and there are plenty of enquiries. Several deals have been done, most recently at $1130 and $1145/tonne.

Asian contracts were agreed at $1000/tonne CFR Asia for October, a $110/tonne increase on September.

There is still no agreement on Q4 orthoxylene contracts (see page 13). Most sellers concur that the initial €730/tonne settlement was far too low and hope a higher figure will follow. Spot prices have leapt above $900/tonne levels and deals have been reported.

Methanol spot business is quiet with business remaining around €200-204/tonne. Despite more players accepting the €220/tonne roll-over for Q4, several producers are holding out for around €245-250/tonne.

MTBE has been fairly active with business done at $865 and $875/tonne. Spot numbers dipped to $830-850/tonne from $900-950/tonne earlier in the week, following a decline in gasoline prices. The factor is 1.30-1.35.

Ammonia spot numbers out of Yuzhnyy remain firm on the back of strong US demand, even though European players were expecting prices to soften a little. Prices are quoted at $300-305/tonne. The market is just in balance, with material from Russia accounted for.

 

BUYING FRENZY ON RUMOUR OF CRACKER SHUTDOWN

Styrene activity was ‘crazy’ and ‘frenzied’ mid-week, as rumours of a shutdown at Shell’s Moerdijk cracker and pygas unit hit the market and traders and producers shipped large volumes of material (over 30 000 tonne by one estimate) to the US east coast and Latin America. This left Europe very tight and, although demand is normal, any production problems are likely to have a big impact.

Spot business for October delivery soared to $1300-1320/tonne from $1200/tonne the week before. November’s bid-offer range is $1270-1320/tonne. Two October barge contracts have been accepted, at €1045/tonne, up €110/tonne, and €1065/tonne. The FCA contract was agreed at €1038/tonne, also up €110/tonne. As ECN went to press, the Moerdijk cracker was confirmed as operating at reduced rates.

 

BULK CHEMICAL PRICES

	European spot		Change on	European contract	US contract
	€/tonne	$/tonne	last issue	€/tonne	$/tonne	$/tonne
Naphtha	na	540-550 cif	? 45	na	na	na
Ethylene	na	1250-1350 cif nom	? 67.5	825 Q4	992	881 June
Propylene¹	875-900 cif	na	? 62.5	810 Q4	986	794 Aug
Butadiene	na	1075-1100 fob nom	? 12.5	810 Q4	974	1058 Sep
Benzene	na	825-835 fob	? 72.5	731 Oct	870	822 Sep
Toluene*	na	790-820 fob	? 5	na	na	na
Xylenes	na	900-920 fob	? 55	na	na	909 Sep
Paraxylene	na	1140-1170 fob	? 70	905 Oct	1089	887 Aug
Orthoxylene	na	900-940cif	? 30	730 Q4+	878	948 Sep
Styrene²	na	1300-1320 fob	? 160	1045/1065Oct	1245/1268	1422-1510 Aug
Methanol	200-204 fob	na	? 0.5	220 Q4+	262	300 Sep
MTBE	na	830-850	? 90	na	na	na
Ammonia	na	300-305 fobYuz	? 2.5	na	na	333 CFR 2H Sep
*TDI grade; ¹Polymer grade; ²Lower figure for fd barge price, higher figure for fd truck price; +initial settlement

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