Mixed sentiment in a quiet market

12 December 2005 00:01  [Source: ACN]

Continuing cold weather in the US brings cheer for naphtha and MTBE, but sellers struggle to push up ethylene prices, and butadiene continues to slide on slow demand

Naphtha: A naphtha cargo was bought for January at US$3 below MoPJ, which was US$508/tonne last Monday. By Tuesday the MoPJ had risen to US$511.75 and a cargo was sold from Japan to Singapore for US$512.50/tonne.

The Asian market is said to be well-balanced but the European market is oversupplied with an arbitrage of around 100 000-150 000 tonne going to Asia. Two Korean firms each bought 25 000 tonne cargoes for MoPJ plus 25 cent mid-week.

Crude oil prices climbed back above the US$60/bbl mark last Wednesday. This was mainly a result of the cold snap in the US. With the cold weather expected to continue, players said that prices could rise further. The front-month January contract was up 32 cent at US$60.26/bbl.

Ethylene: There were no fresh ethylene deals reported, but sentiment on the market firmed mid-week on the back of renewed buying interest for January product, bringing price ideas to around US$780-800/tonne cfr NEA.

Ethylene derivative demand is still weak in China however and downstream inventories are still long after derivatives were imported when prices were low at the end of last quarter. Some Southeast Asian sellers are trying to lift prices but are encountering resistance from buyers.

Propylene: One deal was done from Japan to Korea in the low US$800/tonne cfr NEA range for 800 tonne of material. This was below the market average of US$850/tonne according to a Korean trader.

The supply balance is unusually slack, with supplies in surplus partly due to weak derivative prices on phenol and polypropylene. It is difficult to expect a rebound in propylene pricing until the lunar New Year as new capacity is set to come onstream from KPIC, CNOOC and Nippon Petrochemical.

A Singapore trader said that buyers were asking for prices below US$900 but sellers would not drop below US$900/tonne SEA. Sellers are bullish that prices will stabilise in the New Year. There is a scarcity of cargoes in Thailand, but they are available in Japan and Korea – at around US$820/tonne.

Butadiene: Prices continued to slide last week on the back of slow demand and plentiful supply. A 2000 tonne cargo was purchased at US$960 cfr China, with bids and offers at US$940-960/tonne cfr China. A deal was heard completed at US$975/tonne cfr Taiwan, but bids are now closer to US$950/tonne according to a Japanese producer (see page 20).

MTBE: A number of bids have been heard but there were no offers in a quiet market last week. Prices are notional at around US$500-510/tonne fob Singapore, although numbers may firm – with gasoline and naphtha prices starting to pick up as ACN went to press.

According to a trader, a 3000 tonne MTBE parcel from Southeast Asia was reported at US$530/tonne cfr China for December loading. A 3000 tonne cargo was fixed at US$530/tonne cfr China. One producer comments that after a period of oversupply, Chinese players are only now starting to come back into the market.

Ammonia: Ammonia markets were relatively quiet, with prices pegged notionally at US$350-390/tonne cfr NEA. Demand into China is quite healthy, with the agricultural season holding up demand for fertiliser products. US demand is also a little firmer. In Europe, sellers were bullish and expected prices to begin climbing on the back of plant closures resulting from high gas prices. Fob Yuzhnyy numbers were around US$290-300/tonne.

TIGHT GLOBAL SITUATION PUSHES UP METHANOL

Methanol: Business was thin last week, with prices at US$248-260/tonne cfr China. Producers were looking to increase prices further, although the last deal was at US$248/tonne cfr NEA over a week ago. Methanol spot prices for Southeast Asia were at US$245-250/tonne cfr, up a couple of dollars on the previous week. Methanex has increased its Asian Posted Contract Price (APCP) for December by US$15/tonne to US$295/tonne cfr Asia, although buyers had been hoping for a rollover. The price reflects the tight global situation and higher numbers in the US.

BULK CHEMICAL PRICES, US$/TONNE

	Asia-Pacific spot		US contracts	European contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	516.5-517.5 cfr Japan	–	na	na
Ethylene	780-8006	800-8206	1246 Nov	825 Q4
Propylene5	820-880	890-9506	1125 Nov	810 Q4
Butadiene	940-960 cfr China	940-9706	1102 Dec	815 Q4
Methanol	248-260 cfr China	245-2506	313-320 Nov	220 Q4
MTBE	520-540 cfr China	500-510 fob Singapore	na	na
Ammonia	350-3906	3666	399 1H Dec	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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