ROUNDUP Markets

24 October 2005 00:01  [Source: ACN]

LG CHEM restarts its Daesan plants

LG Chem restarted its polyvinyl chloride (PVC) and vinyl chloride monomer (VCM) units on 16 October after a week-long turnaround, a company official said.

He added that only the plants at Daesan had been shut on 8 October for the turnaround. A source close to the company had said that the PVC and VCM units at Yeochun also had been shut for a turnaround at the same time.

The LG Chem official added that there was no specific reason why the turnaround had been delayed from its original start date of 3 October. The 200 000 tonne/year PVC plant and the 190 000 tonne/year VCM plant are operating at full capacity, he added.

He said that the short turnaround had not affected PVC prices in the region.

Record for European oxo-alcohols

The entire European oxo-alcohols chain has notched record gains in October, with plasticisers di-octyl phthalate (DOP) and di-isononyl phthalate posting the biggest rises, industry players said.

‘We have already seen hikes of well over Euro200 (US$239)/tonne on DOP since August,’ said one major DOP producer. ‘We expect prices to continue to rise throughout October, given the current tight situation. We touched variable costs in June and we have to ensure better profitability or the market will see some fundamental changes which will affect supply.’

Q4 SBR contracts are up in Europe

Styrene butadiene rubber (SBR) fourth quarter contracts in Europe have settled at an average increase of Euro20 (US$23.9)/tonne, producers and buyers said.

Prices for 1500 non-oil SBR were quoted last week at Euro1200-1300/tonne free delivered (FD) Northwest Europe (NWE). Oil extended grade prices stood at Euro1090-1190/tonne FD NWE.

Two producers initially posted target increases of Euro100/tonne in September in an attempt to cover rising feedstock costs. Meanwhile, the Q4 butadiene contract was agreed up Euro95/tonne, at Euro815/tonne FD NWE.

US Natgas surges on storm fears

US natural gas futures prices soared 66.8 cents (5%) last Monday to settle at US$13.89/mmbtu amid concerns that Hurricane Wilma would further affect the already damaged Gulf of Mexico oil and natural gas production infrastructure. However, prices eased by 33.6 cents on Wednesday as the fears were quelled.

The Minerals Management Service (MMS) said an additional 149m cubic feet/day of Gulf of Mexico natural gas production returned to service, increasing offshore output to 4.5bn (45% of capacity) compared to 4.3bn on 14 October.

Asahimas set to restart VCM and PVC

Asahimas Chemical’s 400 000 tonne/year vinyl chloride monomer (VCM) and 285 000 tonne/year polyvinyl chloride (PVC) plants at Cilegon, west Java, Indonesia, were expected to restart by the end of last week.

The plants were shut down on October 3 because of technical problems at the VCM unit, a company source said.

The fault with the VCM plant left the company, which is Indonesia’s largest VCM player and second-largest PVC producer, with unsufficient feedstock to keep the PVC unit running.

Asia-US Shipping frenzy has peaked

Bulk liquid chemical shipping rates on the Northeast Asia-US Gulf route appeared to have peaked, as charterers balked at triple-digit rates for open tonnage.

US Gulf Coast production curtailments following hurricanes Katrina and Rita have translated into frenzied demand for vessel space on the route in early October. Space with regular operators was swiftly filled, according to sources.

A significant demand overhang has pushed rates for October and November loading into record territory.

KP chem to shut PX line on high costs

KP Chemical shut its No 1 paraxylene (PX) unit on Friday, and it could extend the production cut to its second unit due to unfavourable economics, said a company source.

The 200 000 tonne/year unit could be shut for about a month due to high feedstock mixed xylene (MX) prices in the US, the source added. KP is reliant on MX supplies from the US, where the October contract price was last week settled at $3.38/gal – surpassing the earlier record of $3/gal in September.

The commercial viability of the No 1 unit, which also produces 60 000 tonne/year benzene and 50 000 tonne/year orthoxylene, was affected by weak prices for these products.

Crude up as Wilma heads for Gulf

Crude prices have soared by US$1.50/bbl last Monday from the previous Friday as news emerged from the US National Hurricane Centre that Hurricane Wilma could move into the Gulf of Mexico.

December Brent crude futures on London’s International Petroleum Exchange (IPE) rose US$1.50/bbl to US$61/bbl.

Prices eased to US$59.25/bbl on Wednesday, despite the upgrading of Wilma to Category 5 status, as the storm was expected to miss major US production sites.

Asahi Kasei hikes November contracts

Asahi Kasei Chemicals proposed a price hike of US$50/tonne to US$1,550/tonne cfr Asia for November acrylonitrile (ACN) contract shipments last week - even though October contracts had not been settled.

This price rise is likely to widen the gap between bids and offers to US$250/tonne, and it also sends a strong signal to the market that ACN producers are determined to achieve a substantial price hike, said traders.

ACN producers have been under mounting pressure to increase prices in light of the spike in feedstock propylene costs. Chemical grade propylene prices jumped up by five cents/lb to 39.50 cents/lb for September contracts in the US, and another possible spike of 10 cents/lb is being considered for October contracts.

Escalating propylene costs have compelled acrylonitrile producers to increase prices in a bid to stem the erosion in margins.

But acrylic fibre producers have been resisting any hikes in acrylonitrile costs. Stiff competition from cheaper substitutes such as polyester and cotton has eroded their market share, causing some of them to sustain losses.

Several have threatened to cut operating rates and some may even shut down if the stand-off continues.

SABIC restarts its repaired GELEEN cracker, but PE output is at 50%

Sabic’s polyethylene (PE) output at Geleen in the Netherlands will remain at reduced levels until cracker output at the site is stable, a source said. The company’s 550 000 tonne/year low density PE and 320 000 tonne/year high density PE plants have been running at 50% of capacity since one of the two crackers at Geleen went down 24 September for mechanical repairs.

The cracker came back on line over the weekend but was not yet running at full capacity. Force majeure on PE is expected to remain in place until inventories get back to workable levels.

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