MARKETS TRENDS: Global markets thin but steady

15 May 2006 00:00 [Source: ICB]

Trade is slow for olefins and aromatics; ethylene and benzene prices firm in Europe while styrene takes a sudden plunge. MTBE recovers from record low factors

Open spec spot naphtha cargoes were in the $611-615/tonne cif NWE range at press time, having fallen below $600/tonne midweek and then rising following increases in crude oil. Naphtha prices in Asia moved up by some $9/tonne over the week with values for first-half July open-spec cargoes talked at $634-635/tonne CFR Japan.

The European ethylene spot market remained quiet and is considered balanced to short in a period of many planned maintenance shutdowns. One deal was reported at $1195/tonne cif NWE, stretching the bid/offer range to $1140-1195/tonne. In Asia, ethylene prices softened slightly to $1060-1070/tonne NE Asia although a confirmed deal at $1110/tonne CFR Indonesia between a Japanese trader and a western trader may indicate potential shorter term firming.

Propylene spot prices remain notionally in the $815-830/tonne range in Europe with no reported deals in the past week. Shell Petrochemical has restarted its propylene splitter at Pernis, the Netherlands. The splitter was restarted last week following a month-long scheduled turnaround but the site’s fluid catalytic cracker, which has the capacity to produce about 250 000 tonne/year of refinery grade propylene, is not likely to restart until early June. Asian propylene prices steadied amid thin trade. Tight supplies for May delivery plus weakened derivatives prices narrowed the trading range considerably from last week, with discussions heard in the $1050-1080/tonne CFR NE Asia range.

High butadiene demand from the Far East may lead to product moving there from Europe. Nevertheless, at the talked price of $950/tonne, margins will be tight. Prices remain nominally in the $910-950/tonne fob range. In Asia, butadiene spot offers have risen by $50/tonne to $1400/tonne CFR NE Asia, boosted by tightened deep-sea supply and rises in May contracts in the US. A spate of unplanned production outages and shutdowns at US butadiene extraction units has strained supply, spurring US producers to implement a 2 cent/lb hike to 48 cent/lb for May contracts. It has also curtailed deep-sea spot supply to Asia.

It has been a fairly quiet week for European toluene. Prices are rangebound at $840-870/tonne, up from the previous week’s $850-860/tonne levels, due to gains in the US market. Asia’s toluene prices were broadly stable at $855-865/tonne. A trade for any June was completed at $835/tonne fob Korea, with another rumoured last Thursday at $860/tonne.

Mixed xylene was priced at a higher level of $870-875/tonne fob. The strength of crude and the bullish US mixed xylenes market are still pushing numbers. The $300/tonne mark has been surpassed in the US spot arena. Asian prices were steady. A tender for a 2000 tonne parcel of solvent xylene was agreed at $845/tonne fob Korea, for first-half June lifting. An offer for 3000 tonne isomer xylenes was on the table at $930/tonne fob Korea for second-half June.

Paraxylene (PX) spot discussions were thin, but the market price remained firm. News that Polimeri had declared force majeure on its 200 000 tonne/year PX unit in Priolo, Italy, failed to stir market sentiment, with prices hovering at around $1020-1030/tonne for much of the week. A deal at $1020/tonne fob was reported on Thursday.

The Asian market saw some buying interest for May among Taiwanese consumers, and offers were heard at $1040-1050/tonne CFR. Otherwise, high PX prices were deterring purified terephthalic acid producers from looking at spot opportunities.

Orthoxylene prices are steady at $890-910/tonne, although no deals have been reported and market activity was again very muted. Numbers are high on the back of the strength of feedstocks, as well as a background of tighter supply. A deal was heard done at $950/tonne CFR SE Asia, in an otherwise fairly subdued market.

Trader activity saw May styrene numbers soften from around $1200/tonne at the start of the week to $1130/tonne by Wednesday. By press time, prices had picked up again to $1140-1160/tonne. June values meanwhile, had plummeted to $1100/tonne mid-week before recovering to $1130-1140/tonne. In Asia, styrene monomer spot offers moved up to $1120/tonne fob Korea by press time on rising crude. Several deals were heard done earlier at $1080 and $1095/tonne for 2000 tonne any June lifting.

There have been no reported Methanol deals, and offers are pegged at around €247/tonne, although no buying interest has been stirred. Some outages are underway although no effect has as yet been seen on the market. Production at Iran Petrochemical’s 660 000 tonne/year plant at Kharg Island went down on 9 May, while Ampco’s 850 000 tonne/year faciltiy in Equatorial Guinea is down for debottlenecking from early May for 42 days. In Europe, Mider Helm’s Leuna plant will go down from 8 June for 20 days.

The Chinese market failed to show much of a pickup in activity and numbers were said to be unchanged at $248-252/tonne CFR, while India was much busier with a number of deals done at $320-330/tonne CFR West Coast India.

MTBE prices are now back above gasoline after weeks of record low factors. However, little trade has been reported in Europe. A deal was heard at $787.50/tonne, at a factor of 1.05. Prices are currently around $770-800/tonne, up from $715-730/tonne a week earlier. In Asia, a supplier of Thai MTBE sold cargoes for 2H May lifting to Singapore at $660/tonne fob Mab Ta Phut.

Ammonia prices have seen a downtrend with demand lower than expected and plenty of product available. Spot numbers have reacted to a cargo fixed from Yuzhnny to Tampa in the US at $295/tonne CFR Tampa, and are now notionally heard at $235-250/tonne. In Asia, as in the west, the trend is down and ammonia prices are softening. Taiwanese buyers are probably paying in the $340s/tonne CFR for May. While Indian demand is slow, additional enquiries are reported from Japan and China.

Note: Asian prices will now be quoted as CFR Taiwan in the table below.

EUROPEAN BENZENE FIRMS AS ENERGY FLUCTUATES

After a fairly active start to the week with several cargoes moving, Europe’s benzene market slowed before firming again along with crude and gasoline. Spot prices are heard around $890-910/tonne for May, with June product slightly cheaper. Demand is reasonable and supply relatively balanced. At press time, a benzene deal was heard done at $895/tonne cif, followed by rumours of trade at $900, $905 and $910/tonne. Polimeri meanwhile, has declared force majeure on benzene and paraxylene at its Priolo facility in Italy after a fire at the nearby refinery forced it to shut its cracker complex.

Asian benzene continues to hover around $840-850/tonne fob Korea with an inter-trade deal for 2H June rumoured at $850/tonne.

SPOT BULK CHEMICAL PRICES, $/TONNE

ASIA

Naphtha +9 Ethylene -10 Propylene1 -10 Butadiene +10 Benzene nc Toluene2 +25 Xylenes -5 PX +5 OX nc Styrene +5 Methanol nc MTBE nc Ammonia -22.5

634-635 CFR Japan 1060-1070 CFR NEA 1050-1080 CFR NEA nom 1350-1400 CFR NEA nom 840-850 fob Korea 855-865 fob Korea 845-855 fob Korea 1050-1070 CFR ?Taiwan nom 875-880 CFR NEA 1085-1095 fob Korea 248–252 CFR ?China nom 650-670 fob?Singapore 340-350 CFR ?Taiwan nom

EUROPE

Naphtha -22 Ethylene +47.5 Propylene1 nc Butadiene +5 Benzene +35 Toluene2 nc Xylenes nc PX +5 OX nc Styrene -50 Methanol -1.5 MTBE +62.5 Ammonia -33

611–615 cif 1140-1195 cif €815-830 cif nom 900-950 fob nom 890-910 cif 840-870 fob 860-870 fob nom 1020-1030 fob 890-910 cif nom 1140-1160 fob €245-247 fob nom 770-800 fob 235-250 fob Yuzhnyy nom

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