Market Trends Olefins: Weak demand pushes olefins down

28 November 2005 00:01 [Source: ACN]

Naphtha: The MoPJ strengthened by US$13/tonne from the previous week to US$507-508/tonne cfr Japan, on higher crude values and balanced supply.

Crude rose by 90 cents/bbl to US$57.85/bbl as winter set in with a vengeance in the US, Europe, and Japan.

But the crack spread (the spread between crude and naphtha values) seemed to be relatively weak, according to traders. They said that naphtha might not keep pace with crude gains in the coming weeks, as supply was quite plentiful.

However, the start-up of crackers which had been on turnarounds in recent months would help redress the balance, a trader said.

Ethylene: No further cargoes were heard heading for the US from Asia, and the first Asia-US cargo which was shipped earlier this month looks set to be the last.

Asian prices continued on their downward trend. A deal was rumoued at US$730/tonne cfr Taiwan, US$120/tonne lower than the previous deal, on weak demand. The last confirmed deal was at US$750/tonne fob NEA.

A trader said it expected prices to fall further, to below US$700/tonne cfr NEA, as buying sentiment from the polyethylene (PE) and monoethylene glycol segments was extremely lacklustre. PE prices have been falling steadily on weak Chinese demand (see page 22).

Propylene: Weak demand from the polypropylene and phenol segments pushed prices down, despite relatively balanced supply and fairly strong demand from the acrylonitrile and propylene oxide sectors.

A deal was reported at US$920/tonne cfr NEA, US$45/tonne lower than a previous deal transacted two weeks earlier. However, offers of US$900/tonne cfr China for December met with bids of US$850/tonne.

Butadiene: There was no evidence last week that markets had bottomed out.

Prices fell to US$1050/tonne cfr NEA, down US$30/tonne from the previous week.

Buying indications dived by the middle of the week to US$1000/tonne cfr NEA. But no supplier appeared willing to negotiate at such a low level.

The most recent trigger for the plunge was the start-up of Amir Kabir Petrochemical Co’s 50 000 tonne/year butadiene-extraction unit. The company is a subsidiary of Iran’s National Petrochemical Co.

Asian markets were perceived to be in oversupply. There was plenty of material available from Shanghai Secco Petrochemical Co’s 90 000 tonne/year unit, which came onstream in April, and Reliance Industries’ 140 000 tonne/year facility, which started up in June.

Methanol: Sentiment among suppliers was upbeat as supply was relatively tight and demand was robust.

Prices strengthened by US$5-15/tonne from the earlier week in NEA, to US$235/tonne cfr Taiwan, and US$240-245/tonne cfr China.

In SEA, prices rose even more sharply. They soared by US$18-25/tonne, to US$245-248/tonne cfr Thailand.

Later in the week, offers rose to US$245-250/tonne cfr China, but encountered bids at US$230-235/tonne cfr China.

MTBE: Trade was thin, owing to limited availability, as Bangkok Synthetics had shut down its 55 000 tonne/year plant in Thailand for 20 days from 18 November.

No deals were heard, the last deal having been transacted at US$585-600/tonne fob Singapore.

But buying sentiment was not very strong, as the use of MTBE in gasoline blending has become increasingly unpopular in Asia.

CHINA BUYS SPOT AMMONIA AFTER ONE-YEAR GAP

Ammonia: China entered the spot market after a year, with a customer from the acrylonitrile segment purchasing a cargo for US$440/tonne cfr China. The customer was forced to procure the 15 000-tonne cargo from a Middle Eastern supplier at a high price because its one-year contract had expired and there were no consignments available in NEA.?Yuzhnyy prices were stable at US$290-295/tonne fob Yuzhnyy, and prices in the US at US$42/tonne cfr USGC. Prices were expected to remain high in Asia in the coming weeks on strong demand.

BULK CHEMICAL PRICES, US$/tonne

	Asia-Pacific spot		US contracts	European contracts
	NE Asia¹	S Asia and SE Asia²	US³	NWE⁴
Naphtha	507-508 cfr Japan	–	na	na
Ethylene	7506	930-940 fob SEA6	1003 Sep	825 Q4
Propylene⁵	9206	10206	904 Sep	810 Q4
Butadiene	1050 cfr China	11106	1125 Nov	815 Q4
Methanol	240-245 cfr China	245-248	314 Oct	220 Q4
MTBE	610 cfr China⁶	585-600 fob SEA⁶	na	na
Ammonia	440 cfr China	3666	399 cfr 2H Nov	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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