A long wait before prices hit bottom

05 December 2005 00:01  [Source: ACN]

Butadiene continues to fall, with some traders predicting it may touch US$900/tonne cfr before stabilising. C2, C3, naphtha and MTBE also decline. But methanol is upbeat

Naphtha: The MoPJ fell by US$25-26/tonne to US$482-484/tonne cfr Japan from a week earlier, on softening crude values.

January Light Sweet Crude futures were assessed at US$56.16/bbl, down US$1.59/bbl from the previous week’s level. The main reason for the decline in crude prices was low demand levels for heating oil as a result of a warmer-than-usual winter in North America.

However, naphtha supply was fairly balanced, traders said, as no major cracker turnarounds were expected until next year. All the crackers that had been on maintenance shutdowns in early Q4 had restarted, levelling off the naphtha oversupply seen in Q3.

Ethylene: A deal was reported at US$750/tonne cfr NEA early in the week.

Later in the week, a 3500-tonne cargo was sold at US$780/tonne fob SEA.

By the middle of the week, offers had climbed to US$770/tonne cfr NEA. However, buyers showed little interest, responding with bids at US$730/tonne cfr NEA.

Traders said buying interest was likely to remain lacklustre in the coming weeks, as derivative markets were extremely weak ahead of the holiday season.

Butadiene: Prices continued to slide, with traders and buyers concurring that the bottom had not yet been hit. According to some traders, prices were likely to stabilise only after hitting the US$900/tonne cfr China level.

A Chinese customer said it had purchased a 1000-tonne cargo at US$1000/tonne cfr China.

However, a second customer said it was holding off an offer at US$1000/tonne cfr China for a 4500-tonne cargo from a European supplier in the hope that prices would fall in the coming weeks on surplus supply.

Plenty of material was reported to be available in Asian markets due to export cargoes from National Petrochemical Co in Iran and Reliance Industries and Haldia Petrochemicals in India.

About 5000 tonne of material was reported to be on offer from Reliance and 2000 tonne from Haldia.

Poor demand from the styrene buta­diene rubber, butadiene rubber and acrylonitrile butadiene styrene segments also exerted downward pressure on prices.

Methanol: Prices continued to climb, defying the declining trend seen in most other olefins markets.

The main factors behind the upbeat sentiment in methanol markets were tight supply and relatively robust demand.

A deal was reported in NEA at US$254/tonne cfr Taiwan, US$5/tonne up from a week earlier. In China, prices were at US$240-250/tonne cfr China, also up US$5/tonne. In the Chinese domestic market, prices rose by Rmb100/tonne to Rmb2700/tonne delivered.

No deals were heard in SEA. The bid-offer range was at US$245-250/tonne cfr SEA.

MTBE: No deals were heard, but price ideas plunged, even as business continued to be dull.

Bids declined to US$500/tonne fob SEA, in response to offers at US$520/tonne fob SEA. The bid-offer range was substantially lower than the last deal, which was transacted two weeks earlier at US$585-600/tonne fob SEA.

Ammonia: Trade slowed down in Asia, with most producers maintaining that their stocks were sold out until mid-December.

But sentiment continued to be quite bullish, with demand picking up in the US and Chinese markets. Yuzhnyy prices remained stable at US$290-295/tonne fob Yuzhnyy.

PROPYLENE SLIDES BY $50/TONNE ON WEAK DEMAND

Propylene: A South Korean trader sold a cargo at US$870/tonne cfr China, US$50/tonne down from a previous deal reported two weeks earlier. The bid-offer range was at US$850-890/tonne cfr NEA.

Prices were likely to fall further, traders said, as demand was weakening among all derivative segments, especially polypropylene (PP). PP producers slashed their December offers by more than 10% from November prices owing to weak demand and high inventories, suppliers said. PP offers were US$100-130/tonne lower than in the previous week at US$1050/tonne cfr NEA but no bids were heard.

BULK CHEMICAL PRICES, US$/TONNE

	Asia-Pacific spot		US contracts	European contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	482-484 cfr Japan	–	na	na
Ethylene	750	780 fob SEA	1201 Oct	825 Q4
Propylene5	870 cfr China	10206	1125/1146 Nov	810 Q4
Butadiene	1000 cfr China	11106	1125 Nov	815 Q4
Methanol	240-250 cfr China	245-2486	313-320 Oct	220 Q4
MTBE	610 cfr China6	585-600 fob SEA6	na	na
Ammonia	440 cfr China6	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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