Market Trends: Olefins firm in snug market

27 February 2006 00:00 [Source: ICB]

Naphtha prices in Europe were around $518-526/tonne cif NWE. Discussion was thin but traders said values were slightly firmer on small gasoline gains.

In Asia, naphtha prices for second-half April cargoes were at $533-534/tonne CFR Japan. Separate from the trading window, an open-spec deal for a second-half April cargo was concluded at $534/tonne CFR Japan.

European propylene prices were little changed at €815-830/tonne and no deals were reported. The market was not as tight as for ethylene due to downstream outages, and an increase in material available at the coast due to logistical problems resulting from low Rhine water levels in Germany.

Asian propylene was quiet with players adopting a wait-and-see stance. Buy-sell indications are notionally at $1000-1050/tonne CFR SEA and $930-960/tonne CFR NEA.

The European butadiene market was assessed at $810-865/tonne and was described as quiet. Supply was balanced. Prices in Asia were on the rise and some expected this would help support Europe, with trades to Asia heard at $850 and $865/tonne fob ARA. A deal to the US was heard at $850/tonne fob.

Butadiene prices in Asia jumped to $1250-1300/tonne CFR NEA for March shipments, also boosting Chinese prices. Tight supply and support from downstream styrene butadiene rubber boosted numbers.

European benzene was on a downtrend, with spot numbers steadily dropping from $840/tonne on Monday to $790-810/tonne by press time. The market has not been too liquid, although several deals have been reported. March was done at $804/tonne, with April trade completed at $795/tonne. A fire forced Shell to shut its benzene and toluene units at Wesseling, Germany. Although repairs are under way, it is unclear when they will restart. Asian prices eased from mid- to high $700s/tonne early in the week to $730-745/tonne on weaker crude. A deal was done at $730/tonne, for any April lifting.

Despite their recent dip, gasoline numbers are up on last week and have pushed toluene values higher. Spot prices firmed following problems at the Wesseling, Germany, plant. They are currently around $650-680/tonne fob Rotterdam levels.

Asian toluene leapt to $725-735/tonne fob Korea, before succumbing to buyers’ resistance and weaker crude, which saw deals fixed at $712-720/tonne.

Mixed xylenes are looking steady at a nominal $780-790/tonne fob NWE. In the absence of reported business, the spot range is unchanged. Asian numbers followed the US market downwards, moving to $750-760/tonne fob Korea. Buyers nervously watched the weakening numbers and remained on the sidelines.

Paraxylene (PX) spot prices have rebounded to $870-890/tonne fob NWE, following the previous week’s heavy losses. March spot prices are a little higher at $880-910/tonne fob NWE. European players are looking to the outcome of Asian contract discussions to set the scene for March.

In Asia, spot PX lost some ground, with both upstream and downstream markets weaker. Numbers were talked at $955-965/tonne CFR Taiwan. No fresh news emerged on the contract front.

Orthoxylene (OX) has seen no pick up in activity, and numbers are nominally still unchanged at $750-780/tonne cif NWE. Producers say that the uptake under contract could be better, but hope to see an improvement in March. OX in Asia fell, with $800/tonne CFR NEA heard done, and plentiful material available. With downstream sectors experiencing a lull in demand, buying interest for OX was very muted.

Styrene trade has been decent although numbers have declined throughout the week, along with benzene. Sellers put current figures at $1000-1030/tonne, having reached $1060/tonne levels on Monday. BASF chief executive Jürgen Hambrecht last week said that the 510 000 tonne/year Ludwigshafen, Germany, unit has not yet restarted due to overcapacity. Weakening spot prices saw Japan’s Nihon Oxirane Co nominate its March styrene monomer contract price at $1060/tonne CFR Asia, with 30 days credit terms – $30/tonne lower than February’s settlement. Spot values have slipped to $990-1000/tonne CFR NEA. Business was done at $993 and $1000/tonne fob Korea, for 2000 tonne parcels loading March and April respectively.

Methanol has moved to a bid/offer range of €272-275/tonne fob NWE after a couple of deals were done for both February and March lifting at €272/tonne fob. Demand under contract has been steady, but discussion has yet to commence regarding quarter two contracts. The US market has lost some ground as the imminent reduction of demand into MTBE begins to make its presence felt. Recent spot numbers have been heard at 93.50-95.50 cent/gal.

Asian market demand has been flat, with numbers also stagnant at $248-253/tonne CFR China. Kaltim’s 660 000 tonne/year plant in Indonesia has restarted after a four-week shutdown.

Lacklustre demand means MTBE markets remain extremely quiet, although sellers expect this to improve over the coming weeks. Prices are pegged at $550-565/tonne, with deals done at $562/tonne. Earlier, MTBE had traded at $577 and $580/tonne. The factor to gasoline is 1.07-1.10.

Asian selling ideas for March cargoes are higher at $540-550/tonne fob Singapore on the back of higher crude and gasoline and market tightness. Chinese MTBE prices are stable at RMB5400-5450/tonne ex-tank ($671-677/tonne) in the eastern region.

Bad weather has delayed ammonia vessels, with ships held up in Yuzhnny, the Black Sea, Mediterranean and Bosphorus Straits. Supplies are still extremely snug in NWE, forcing prices notionally higher to $265-270/tonne. Kemira GrowHow’s 400 000 tonne/year plant at Ince, UK, has restarted.

Suppliers continue to seek opportunities to send Yuzhnyy ammonia to Asia and a new freight enquiry is reported for March shipment to Korea. Unless freight rates drop considerably, Korean buyers will continue to face prices in the $390s/tonne CFR.

TIGHTNESS SHOULD EASE AS CRACKERS GO BACK UP

Ethylene prices in Europe remain firm in a tight market. One cargo was sold to a producer at $1210/tonne cif NWE for a 4500 tonne parcel. Buyers say this price is too high for derivative production. The Dow Tarragona cracker in Spain was due to restart last Friday but this has been delayed until the middle of this week. Sabic’s Geleen cracker in the Netherlands was running again last week. The 575 000 tonne/year unit went down at the end of the previous week after it was struck by lightening. Force majeure was declared on ethylene and propylene.

Ethylene trades into China were lacklustre due to weak downstream polyethylene markets. Bids and offers were notionally pegged at $1020-1070/tonne CFR NE Asia.

SPOT BULK CHEMICAL PRICES, $/tonne

ASIA

Naphtha +15.5 Ethylene +30 Propylene1 +20 Butadiene +135 Benzene +10 Toluene2 +23.5 Xylenes -50 PX -5 OX -40 Styrene +10 Methanol +0.5 MTBE +15 Ammonia +3.5

533-534 CFR Japan 1020-1070 CFR NE Asia 930-960 CFR NE Asia nom 1250-1300 CFR NEA 730-745 fob Korea 712-720 fob Korea 750-760 fob Korea nom 955-965 CFR Taiwan nom 800-820 CFR NEA 990-1000 fob Korea 248-253 CFR China nom 525-540 fob?Singapore nom 370-397 CFR NEA nom

EUROPE

Naphtha +24.5

Ethylene +5

Propylene1 -7.5

Butadiene +17.5

Benzene +32.5

Toluene2 +27.5

Xylenes nc

PX +65

OX nc

Styrene +10

Methanol +8.5

MTBE +12.5

Ammonia +5

518-526 cif

1190-1210 cif

€815-830 cif nom

810-865 fob

790-810 fob

650-680 fob nom

780-790 fob nom

880-910 fob nom

750-780 cif nom

1000-1030 fob

€272-275 fob

550-565 fob

265-270 fob Yuz nom

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