2005 set to finish on a steady note

19 December 2005 00:01  [Source: ACN]

In face of a seasonal lack of product availability, most prices were assessed as stable or slowly improving, though propylene remains soft. Asian spot business is limited

Naphtha: Prices are steadily improving. A Japanese buyer bought two 25 000 tonne naphtha cargoes last week: the first on Monday at US$529/tonne from Singapore and another on Tuesday for US$532.75/tonne from Japan. The market in the West is tightening so there is less product coming by arbitrage, with the price differential to the East now only US$15/tonne.

A Japanese producer says that a further two deals were made with the first at MoPJ -2 and the second at MoPJ +0.25. It says that there were no cargoes coming from Europe despite there being no spot material left in Japan or South Korea. It adds that it is still too early to buy supplies for February.

Propylene: The market remains soft with prices for Southeast Asia at around US$900-910/tonne and prices for Northeast Asia lower at US$800/tonne cfr, down from a minimum US$840/tonne four weeks ago.

A polypropylene producer in South Korea and Taiwan, who had been supplied on contract, felt the propylene price was too high and stopped production. This freed a lot of propylene into the market.

Southeast Asia is more dependent on imports and the supply situation is tight, meaning it can maintain its margins over Northeast Asia. One trader says prices are bottoming out and improvements are expected in first half February.

A South Korean producer has completed a deal for US$830/tonne fob Korea for delivery at the end of December. It said that there would be no more spot available this year and that producers were adopting a ‘wait and see’ stance to see if prices improved in January.

Butadiene: A Chinese buyer has purchased a 5000 tonne cargo for US$945/tonne cfr China from a European trader for delivery in the second half of January. A 3000 tonne parcel will also go to South Korea and a 2000 tonne one to China. Prices were a little lower than the previous week. Several other producers are reporting that there are no longer cargos available in Asia for delivery in January.

MTBE: No deals are reported but prices have picked up on the back of high naphtha and gasoline values. Buying ideas are below US$520/tonne cfr China, with several suppliers in Taiwan, Singapore and the Middle East withholding offers due to tight supply. Fob Singapore spot is assessed at around US$510-520/tonne with no buying interest.

Thai MTBE producer Bangkok Synthetics (BST) has restarted its 55 000 tonne/year plant at Mab Ta Phut, in Rayong province. The facility closed for a 21-day scheduled turnaround but operating rates have now returned to 75-90%.

Methanol: Prices rose to US$250-265/tonne cfr China, with SE Asian bid and offers also at this level. Demand into China is healthy due to stronger domestic demand and a lack of immediate local producer supply. In China, imported material is quoted as high as Rmb2700/tonne ex tank. The first Q1 European methanol contract settled at Euro268/tonne fob Rotterdam, up Euro48/tonne. However, this has yet to be fully accepted as some sellers seek a higher number.

Ammonia: Prices were stable last week. Business was completed at US$350-360/tonne cfr Taiwan, and most requirements are now filled for the rest of the year. But ammonia prices in Yuzhnyy have fallen US$5-10/tonne, which could lead to a reduction in Asian numbers.

State-owned Indonesian fertiliser producer PT Pupuk Kujang may stop ammonia production in January if it does not get sufficient natural gas feedstock. The plant, which produces 1000 tonne/day of ammonia, has been operating at 60% capacity since 4 December.

ASIAN ETHYLENE IN SHORT SUPPLY UNTIL YEAR END

Ethylene: Trade was slow this week but producers say they are sold out for the rest of the year. There was an unconfirmed deal in Taiwan at US$800-810/tonne and one Japanese producer sold a 2000 tonne cargo to Taiwan for US$840/tonne cfr. One Japanese trader says it was desperately trying to source material to sell at the higher prices.?Another trader completed two deals at US$807/tonne cfr Taiwan and another at US$840/tonne. The Chinese price was US$770-780/tonne cfr.

BULK CHEMICAL PRICES, US$/tonne

	Asia-Pacific spot		US contracts	European contracts
	NE Asia1	S Asia and SE Asia2	US3	NWE4
Naphtha	533-534 cfr Japan	–	na	na
Ethylene	800-840	820-8506	1246 Nov	825 Q4
Propylene5	800-850 cfr China	900-9106	1125 Nov	810 Q4
Butadiene	935-950 cfr China	935-9606	1102 Dec	815 Q4
Methanol	250-265 cfr China	250-2656	313-320 Nov	220 Q4
MTBE	515-540 cfr China6	510-520 fob Sing6	na	na
Ammonia	350-390 cfr China	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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