Market Trends:- Outages make for twitchy markets

07 November 2005 00:01  [Source: ICB]

Naphtha slipped to $505-510/tonne cif NWE. Supply continues to outstrip demand, which coupled with aggressive selling has contributed to the fall. Prices have also been brought down by the drop in crude oil future numbers, which have responded to healthy inventory statistics.

Propylene spot deals were reported at €850/tonne, early in the week. However, new supply restrictions in the Netherlands and Italy have firmed up price ideas for prompt material. Polymer grade material is at €850-875/tonne cif NWE. Players say that prompt product is now difficult to source.

Butadiene dipped to $890-910/tonne fob NWE but prices are notional. Players note that buying interest is minimal, due in part to outages at derivative units; the market is described as balanced to long. Falling Asian prices are also contributing to the slide in European price ideas.

Benzene was very quiet mid-week with offers for November based on a previous deal at $700/tonne and bids at $690/tonne. Prices had dropped to $680/tonne earlier in the week. December was in contango at $700-710/tonne along with crude prices. Demand was sluggish and there was plenty of material around, with players waiting to see the effect the Moerdijk strike would have on styrene-producer demand for benzene.

Toluene numbers were heard at $565-580/tonne, although activity was thin mid-week. Earlier deals were reported at $570/tonne and $585/tonne. Supplies have increased as production issues have been resolved at the Oporto, Portugal, refinery where 170 000 tonne/year of toluene is produced.

Mixed xylene activity was muted. Prices have dropped off with falling energy costs to a notional $750-780/tonne range. US numbers slumped to $2.10-2.15/gal fob USG from around $3/gal the week before. November contracts, meanwhile, settled almost 40% down on October at $2.05/gal fob.

Paraxylene pricing came off early in the week but recovered after a $865/tonne deal, eventually reaching $880-910/tonne. The market is still tight but stocks should soon be replenished now production issues have been rectified. Nevertheless, the first half of November is still likely to be short.

Orthoxylene spot numbers were talked lower at around $900/tonne levels, with no trade reported. The supply situation appears to have eased now that Total and Petrogal have resumed production in Gonfreville, France, and Oporto, Portugal, respectively.

Styrene is tight, with force majeure reimposed on supplies out of the Shell Moerdijk facility (see page 13). Deals were completed at $1065/tonne for November and $985/tonne for December. By mid-week the bid/offer range was at $1100-1170/tonne, with an offer even heard at $1200/tonne. Heavy nominations for 1H November were said to be causing logistics problems. December prices were below November.

A methanol deal was reported at €216/tonne with the range consequently seen around €215-217/tonne. Activity was thin. The 300 000 tonne/year methanol line at Novomoskovsk Azot in Russia has begun a 40-day shutdown.

Numbers dwindled in a quiet and oversupplied MTBE market. Spot was heard at $590-615/tonne, with the factor to gasoline pegged at 1.12-1.14. Demand floundered but producers hope the low factor will create more interest. The arbitrage to the US has closed and less MTBE is being shipped.

Ammonia values are unchanged, with high logistics costs keeping a lid on buying. US demand for European material remains strong, given that gas prices stand at $11-12/ m Btu. While some players expect European ammonia to fall, others believe prices will remain at these levels for the rest of 2005.

MOERDIJK STRIKE ACTION PUSHES ETHYLENE PRICE UP

Ethylene spot prices have fallen to $1050-1150/tonne cif NWE, but are notional with prompt material difficult to find. At the end of the previous week, the market saw a deal of €850/tonne for November. Although this was well below the accepted market price, the seller says this was the only sale option available. Since then, Shell has declared force majeure from its 900 000 tonne/year cracker at Moerdijk, following strike action. Polimeri’s 740 000 tonne/year Priolo cracker is running at 50% capacity. Other European units also have on-going production issues, and in this climate notional spot price ideas have moved back above €900/tonne. Meanwhile, Innovene has announced a November monthly contract price of €880/tonne, a €60/tonne rise on the previous month.

BULK CHEMICAL PRICES

	European spot		Change on	European contract	US contract
	€/tonne	$/tonne	last issue	€/tonne	$/tonne	$/tonne
Naphtha	na	505-510 cif	? 37.5	na	na	na
Ethylene	na	1050-1150 cif nom	? 107.5	825 Q4	992	1003 Sep
Propylene¹	850-875 cif nom	na	? 12.5	810 Q4	986	904 Sep
Butadiene	na	890-910 fob nom	? 70	815 Q4	980	1124 Oct
Benzene	na	690-700 fob	? nc	577 Nov	700	927 Oct
Toluene*	na	565-580 fob	? 12.5	na	na	na
Xylenes	na	750-780 fob nom	? 115	na	na	621 Nov
Paraxylene	na	880-910 fob	? 45	905 Oct	1089	1322 Sep
Orthoxylene	na	890-910 cif nom	? 40	770 Q4	919	1058-1102 Oct
Styrene²	na	1100-1170 fob	? 95	947/972 Nov	1146/1176	1466-1614 Sep
Methanol	215-217 fob	na	? 3	220 Q4	262	314 Oct
MTBE	na	590-615	? 32.5	na	na	na
Ammonia	na	295-300 fobYuz	? nc	na	na	382 CFR 1H Nov
*TDI grade; ¹Polymer grade; ²Lower figure for fd barge price, higher figure for fd truck price; +initial settlement

Prices contained in this magazine are obtained by ECN through consultation with producers, consumers and merchants across Europe. They are intended as a guide to price levels of recent business in Europe and reflect medium to large tonnage sales.

Spot prices are quoted fob (free-on-board) NW European port, cif (cost, insurance and freight), FCA (free carrier), CFR (cost and freight). T2 = EC material, not dutiable, bld = blending grade, com = commercial grade, nit = nitration grade. European contract prices are quoted on a free delivered basis (FD) unless otherwise stated; initial but unfixed negotiating range is indicated (nom), na = not applicable, m = monthly contracts. Methanol T1 will no longer be quoted, as it now represents negligible spot business.

Spot prices in this issue are based on information available on 3 November 2005. Dollar prices are based on rates of exchange on 1 November 2005. The dollar equivalent range is based on exchange rates prevalent at the time of contract closure if available, or an average rate for the quarter. $1=€0.834; $1=£0.568; €1=£0.681.

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