Asian butadiene bucks US trend

24 October 2005 00:01  [Source: ACN]

Naphtha: Falling crude and excess supply took their toll on naphtha, causing the MoPJ to decline by US$9/tonne overnight, to US$558-560/tonne cfr Japan on Wednesday.

Crude values declined as the projected course of Hurricane Wilma was thought unlikely to threaten oil and gas facilities around the Gulf of Mexico. The price ended at US$62.80/bbl, down 40 cents from the previous day.

Excess supply of naphtha in Asia also dampened sentiment. Supply from the Middle East was abundant, in contrast to earlier months, when they were being diverted to the West.

Propylene: Sentiment strengthened in SEA, on tight supply. The main contributory factor was that National Petrochemical Co has delayed the restart of its 170 000 tonne/year propane dehydrogenation unit at Mab Ta Phut, Thailand, by three to four days because of technical problems. The shutdown, which started on 5 October and ended last Wednesday, caused a loss of 4500 tonne of propylene.

The delay exacerbated the tightness ahead of the mid-November turnaround of Rayong Olefins Co’s cracker, also in Mab Ta Phut.

A trader said it had spurned a bid at US$1130/tonne cfr SEA, and was unwilling to settle any lower than US$1170/tonne cfr SEA. But no deal was reported due to limited supply.

In NEA, on the other hand, trade remained lacklustre with Chinese buyers retreating from the market. Buy-sell indications were said to be at US$920-950/tonne cfr China, although one deal was rumoured at US$1050/tonne cfr China. Most traders dismissed it as unrealistically high.

Butadiene: Prices continued to fall on weakening demand and surplus supply.

An Indian supplier sold an early November cargo at US$1230-1240/tonne cfr China. But an Iranian cargo later fetched just US$1200/tonne cfr China.

A South Korean trader said it had committed its cargoes to contract customers and had no spot supply. A major South Korean producer also said it had no spot cargoes available.

Cargoes from the Middle East and India contributed to a glut in supply. Even shortages in the US would do little to ease the situation, traders said.

Asian spot prices have fallen by about US$100/tonne over the past month, bucking the trend witnessed in the US and Europe.

Prices in Europe and the US have hit record highs this quarter, due to shortages caused by hurricanes Katrina and Rita. In Europe, fourth quarter contracts were settled at Euro815/tonne delivered, up Euro95/tonne on third quarter contracts. US October contracts settled at an unprecedented high of US$0.51/lb fob USGC, three cents higher than September’s record of US$0.48/lb fob USGC.

However, some producers were keeping their fingers crossed that Asian prices would stabilise later this quarter. Prices of styrene butadiene rubber are expected to show an upward trend.

Methanol: With supply tight, prices in SEA edged up by US$5-10/tonne from the previous week, to US$225/tonne cfr SEA. Suppliers pushed up offers to US$230/tonne cfr SEA, but no bids were forthcoming.

MTBE: No deals were heard, but offers and bids declined on poor demand. Offers were at US$660/tonne fob SEA, and bids were at US$640/tonne fob SEA, US$30/tonne and US$60/tonne lower than two weeks earlier.

Ammonia: No deals were reported, but market sentiment continued to be upbeat, on strong US markets. Supply was tight in Asia, as most suppliers had committed their cargoes to contract customers.

WIDE BID-OFFER GAP STALLS ETHYLENE TRADE IN NEA

Ethylene: The bid-offer gap widened to US$100/tonne in NEA, with suppliers holding out for US$950/tonne cfr NEA, while buyers were not willing to settle for anything higher than US$850/tonne cfr NEA. The main reason for the soft sentiment was oversupply in Japan, but traders expected this to ease a ?little as domestic polyethylene markets were beginning to strengthen.?In SEA, however, sentiment was more stable. Offers of US$980-100/tonne faced bids of US$950-960/tonne cfr SEA, but with no deals reported. The last deal, concluded a week earlier, was at US$930-940/tonne fob SEA and US$880/tonne cfr NEA.

BULK CHEMICAL PRICES, US$/tonne

	Asia-Pacific spot NE Asia1	S Asia and SE Asia2	US contracts US3	European contracts NWE4
Naphtha	558-560 cfr Japan	–	na	na
Ethylene	880 cfr NEA	930-940 fob SEA	881 June	825 Q4
Propylene5	1040 cfr China6	10506	794 Aug	810 Q4
Butadiene	1220 cfr China	11106	1058 Sep	810 Q4
Methanol	230-235 cfr China	225	300 Sep	220 Q4
MTBE	610 cfr China6	690-700 fob SEA6	na	na
Ammonia	290 cfr Taiwan6	3666	333 cfr 2H Sep	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.

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