Abundant supply depresses olefins

07 November 2005 00:01  [Source: ACN]

Naphtha: The MoPJ slid by US$21-22/tonne to US$542/tonne cfr Japan on Wednesday, as crude values softened. Nymes Access crude fell early in the week to US$59.74/bbl, down US$4.80/bbl from the previous week, as mild weather in the US continued to undermine demand for heating oil.

Abundant supply in Asia also pushed prices down.

Ethylene: Acute oversupply continued to apply downward pressure on Asian ethylene price ideas, exacerbated by the restart of several crackers following turnarounds.

One deal was reported at US$850/tonne cfr Taiwan, US$30/tonne lower than previous business concluded several weeks earlier, but this could not be confirmed.

Exacerbating the surplus supply was the restart of Lotte Daesan’s ethylene plant and Yeochun NCC’s 400 000 tonne/year No 3 cracker last week. Korea Petrochemical Industry Co also restarted production following a 35-day shutdown during which the company raised the cracker’s capacity by 10% to 440 000 tonne/year.

Propylene: Buying interest was subdued, with cargoes few and far between. One deal was rumoured at US$965/tonne fob Korea. However, in SEA a deal was reported at US$1020/tonne cfr SEA.

Market sentiment appeared to be stronger than that for ethylene, despite the restart of three crackers in South Korea following turnarounds. But downward pressure was being exerted by weak derivative markets.

Butadiene: Prices continued to experience downward pressure from weak derivative markets.

No deals were heard as customer inventories were quite comfortable for November and early December. An offer of US$1150-1160/tonne cfr China evoked little interest and no bids were heard.

As the week wore on, Chinese bids were heard at US$1100/tonne cfr China for first-half December arrival Indian cargoes

Methanol: Prices strengthened on tight supply and strengthening natural gas prices in the US.

Deals were concluded US$10/tonne higher than the previous week, at US$240/tonne cfr China and US$235/tonne cfr SEA. A further US$5-10/tonne increase was expected in the coming weeks, traders said.

No offers or bids were heard later in the week, as cargoes were few and far between. A force majeure by Qatar Fuel Additives Co (Qafac) added to the anxiety about further shortages. Qafac was expected to restart operations at its 835 000 tonne/year methanol unit at Mesaieed, Qatar, on Thursday, four days later than scheduled, following a 14-day outage, a source from one of the Taiwanese partner said.

However, sources in Qatar were unavailable for confirmation due to the Muslim Eid holiday on Thursday. The plant was shut on 21 October due to leakage problems following the rupture of a reformer tube. Production loss resulting from the outage is pegged around 37 000 tonne.

The force majeure on Qafac’s methanol supplies, which had been in force since 21 October, was likewise expected to be lifted last Thursday, the source said. ‘Our late October-lifting shipments have been delayed to mid-November loading as we need to rebuild inventories,’ he added.

A third of Qafac’s nameplate methanol capacity is used captively for its downstream 610 000 tonne/year methyl tertiary butyl ether (MTBE) unit at the same site.

MTBE: Markets were very quiet, with very little trade being conducted.

No deals were reported. Not even offers or bids were heard.

AMMONIA PRICES ROCKET ON ROBUST DEMAND IN US

Ammonia: Prices surged on strong demand and rising US prices.

A South Korean customer said it purchased a 20 000 tonne Yuzhnyy cargo for November at US$410/tonne cfr NEA, US$30/tonne higher than October business. However, prices were reported to be far lower in Taiwan. One customer claimed it had procured a consignment from an Indonesian supplier at a little lower than US$350/tonne cfr Taiwan. It said that price was lower because freight between Indonesia and NEA was only US$30-50/tonne, far less than between Yuzhnyy and NEA.

BULK CHEMICAL PRICES, US$/TONNE

	Asia-Pacific spot		US contracts	European contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	542 cfr Japan	–	na	na
Ethylene	850 cfr Taiwan	930-940 fob SEA6	1003 Sep	825 Q4
Propylene5	965	1020	904 Sep	810 Q4
Butadiene	1150-1160 cfr China6	11106	1124 Oct	815 Q4
Methanol	240 cfr China	235	300 Sep	220 Q4
MTBE	610 cfr China6	690-700 fob SEA6	na	na
Ammonia	350-410 cfr Taiwan	3666	360 cfr 1H Oct	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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