Confusion engulfs aromatics market

05 December 2005 00:01  [Source: ACN]

The lack of direction in benzene values makes toluene and mixed xylenes flounder as buyers resist high offers. Unrealistically high PX contract nominations stall spot buying

Benzene: Asian markets were at a standstill, waiting for some direction to emerge from US markets or from styrene buyers.

A deal was heard for January at US$620/tonne fob Korea, more or less unchanged from the previous week. But later in the week, the bid-offer range was at US$605-635/tonne fob Korea, indicating the disparity in buying and selling intentions.

Sentiment was weak owing to lacklustre demand from styrene players and sliding crude values (see page 26). However, US benzene values stabilised overnight on Tuesday from Monday, adding to the confusion in Asian markets.

Toluene: Several deals were reported for January and February at US$630/tonne fob Korea early in the week. But price ideas had softened by the middle of the week, and offers of US$635/tonne fob Korea met bids of US$615/tonne fob Korea. The bid-offer range for end-January was even lower, at US$610-620/tonne fob Korea.

Mixed xylenes: A Taiwanese paraxylene producer said it had purchased an isomer-grade MX cargo from a European supplier at US$648/tonne cfr Taiwan. This was US$28/tonne higher than buying indications the previous week, but US$2-22/tonne lower than the previous confirmed transaction.

One trader reported that a Japanese supplier was looking to sell an isomer-grade cargo at US$670-680/tonne cfr China, but no buyer had come forward.

And a South Korean supplier was offering cargoes to China at US$670-680/tonne cfr China, but buyers were unwilling to pay more than US$650-660/tonne cfr China.

Styrene: Poor buying interest caused prices to soften. Selling indications for January were heard around US$905/tonne fob Korea. Bids were at US$880/tonne fob Korea.

However, a trader said prompt cargoesfor December were being offered at US$970/tonne cfr NEA, with buying ideas at US$950/tonne cfr NEA.

The lack of market direction or benzene, and poor derivative markets, especially in the polystyrene and acrylonitrile butadiene styrene segments, also dampened market sentiment.

Traders said that if styrene prices continued to fall, stand-alone producers might have to resort to operating rate cuts.

Paraxylene: Markets were rife with rumours that a Japanese producer had revised its Asian contract price nomination for December to US$850/tonne cfr Asia, down from the US$970/tonne cfr Asia it had announced a week earlier. However, this could not be confirmed as ACN went to press. According to traders, the producer resorted to this downward revision owing to pressure from buyers, who were looking at buying ideas of US$760-780/tonne cfr Asia.

No deals were reported in the spot market, as suppliers and buyers waited with bated breath for contract price settlements to provide a sense of direction.

Orthoxylene: Poor phthalic anhydride markets exerted downward pressure on OX prices in NEA, resulting in a stand-off between producers and buyers.

Thirumalai Chemicals in Tamil Nadu, India, said it had halved production to 50% of capacity owing to shrinking margins.

The company shut down its plant for maintenance at the end of last week, causing a shrinkage in demand for OX in India.

Prices of OX in India were at US$800/tonne cfr India, while PA was at US$770/tonne cfr India.

PHENOL STAND-OFF NOT SET TO END IN NEAR FUTURE

Phenol: Producers and traders expressed extreme frustration at the prolonged tug-of-war with buyers that has brought trade to a standstill in NEA for several weeks.?Suppliers were offering cargoes at US$850/tonne cfr China, but customers showed little interest in buying, with notional bids at US$820/tonne cfr China.

However, the scenario was a little more promising in SEA, where one 800-1000 tonne parcel was reported sold at US$890-900/tonne cfr SEA. But small, 300-400 tonne cargoes were being sold at much higher prices of US$970-980/tonne cfr SEA. In India, suppliers were offering material at US$900/tonne cfr India, with customers bidding at US$850/tonne cfr India.

BULK CHEMICAL PRICES, US$/TONNE

	Asia-Pacific spot		US contracts	European contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Benzene	620	630-635 fob SEA6	707 Nov	577 Nov
Toluene	630	640-655 fob SEA6	na	na
Xylenes5	648 cfr Taiwan	715 fob SEA6	621 Nov	na
Styrene	960-9756	680-6906	1630-1780 Oct	947/972 Nov
Paraxylene	830 cfr China6	9906	1135 Nov	865 Nov
Orthoxylene	830 cfr China6	860-8806	838 Nov	770 Q4
Phenol	900-910 cfr China6	890-900	1240.10-1372 Sep	1155-1195 Oct
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 Solvent–grade; 6 No recent confirmed deals; 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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