MARKET TRENDS: US holiday kills off spot business

10 July 2006 00:00 [Source: ICB]

Aromatics deals were thin on the ground, with the US out for the 4 July holiday. Naphtha hits record highs in Europe and Asia, placing further pressure on olefins prices

European naphtha hit record highs last week (see page 27), but stood at $640–645/tonne CFR NWE last Thursday. Asian highs were also reached, but prices settled at $661–663/tonne CFR Japan.

European ethylene markets are relatively tight, and some producers are holding onto product in light of the Ineos outage in Grangemouth, UK, and other cracker blips. However, low-density polyethylene at Ineos’ Germany unit is out. No deals were heard, and it was unclear what had happened to an earlier Mexican cargo that was on offer. Numbers are slightly firmer at €920–930/tonne. Northeast Asian sellers pushed for a price increase on the back of tight supply and high fob prices, with offers notionally placed at $1200/tonne CFR. Bids were $50/tonne lower.

European propylene is longer than ethylene, with downstream polypropylene demand slow. No deals have been recorded this week, and prices are assessed at €785–810/tonne. Asian bids for spot propylene firmed on the back of tight supply, with Taiwan and Korean buyers placing bids as high as $1100/tonne CFR, but no deals were done.

Benzene spot activity has been fairly lacklustre, with players awaiting the return of their US counterparts from the 4 July holidays. Prices have seen little movement, and are assessed at around $1080–1095/tonne. Trade has been concluded within this range. July contracts settled up €40/tonne at €850/tonne (see page 26). In Asia, bids for the second half of July were cited at $915–930/tonne fob Korea, against offers at $950/tonne fob Korea. Deals were reported done at $945 and $965/tonne fob Korea for August lifting.

Toluene in Europe was very quiet, and no deals were reported. Firm gasoline levels are helping to keep prices high. The netback price to the US was put at $920–940/tonne, but overall prices were seen at $900–945/tonne.

In Asia, a bid was heard at $935/tonne fob Korea for August loading, up from an inter-trade reported at $916/tonne late Wednesday. Prices firmed early in the week, and stayed steady mid-week at $935–950/tonne.

Mixed xylenes numbers were a little stronger at $1040–1060/tonne fob in a firm market. US numbers still held sway over European values and were quoted at $3.63–3.65/gal fob.

Asian prices were also firm at $1140–1160/tonne fob Korea, within a tight supply environment. A parcel of 3000 tonne was sold at $1145/tonne fob, and another at $1130/tonne, both for July loading. Solvent xylenes prices were also firmer at $995/tonne fob Korea.

Paraxylene (PX) remains at a level above $1200/tonne fob NWE, supported by product availability and the continuing strength of mixed xylenes. The bid/offer range is pegged at $1200–1230/tonne fob NWE within a quiet environment, representing a drop on the previous week’s numbers. Polimeri’s Priolo facility has restarted, following a prolonged shutdown which had tightened the PX market in southern Europe.

Asian market prices fell slightly to $1270–1280/tonne CFR China, on the back of weakening sentiment for August cargoes. There are concerns among downstream terephthalic acid producers about covering their costs due to the squeeze from PX prices. The bid/offer range in Taiwan is pegged at $1300–1330/tonne CFR. August deals were done at $1270/tonne and $1280/tonne.

The orthoxylene (OX) spot arena has also been quiet. Product remains hard to come by, and numbers are quoted at $1020–1035/tonne cif NWE. No deals were reported this week.

Asian sellers are offering at $1250/tonne CFR China, but buyers are resisting, holding out for $1200/tonne CFR . The restricted availability of OX in the Asian market has lent support to the current high spot numbers, which are quoted at $1140–1150/tonne CFR NE Asia.

European styrene is extremely quiet, with prices heard at $1270–1290/tonne. Business was done early on Monday at $1300 and $1305/tonne, with an August deal rumoured on Tuesday at $1265/tonne. Contract discussions saw two barge contracts emerge at €1115 and €1128/tonne.The styrene market was absent of any firm bids on Thursday morning. Traders expect prices to firm on the back of higher crude and benzene.

In Asia, styrene firmed as the week progressed, with deals reported at $1215/tonne fob Korea early in the week, rising to $1230 and $1240 by Thursday for 2H July/August lifting. Downstream demand from polystyrene and acrylonitrile butadiene styrene is still slow, but the next few weeks should see a pick-up in preparation for the busy third quarter.

Methanol spot prices have reached a level of €225/tonne fob NWE, and this number has traded a few times. Players do not expect levels to drop much further than this, particularly in light of some outages in Russia and Romania, which are reportedly taking some length out of the eastern European market. Mider Helm has increased the length of its maintenance shutdown until the 8–9 July, instead of the scheduled 28 June.

In Asia, methanol looks steady, with pockets of weakness. In the southeast, the market is balanced, but spot numbers softened on news that Methanex had dropped its Asian posted contract price by $5/tonne to $305/tonne. Chinese numbers were softer on weaker demand.

MTBE spot prices in Europe continued to rise last week, with one active buyer driving up values. Monday saw the week open sharply up at $1075/tonne, with $1089 and $1090/tonne done mid-week before levels softened slightly to around the mid-$1070s/tonne on Thursday. This leaves the factor to gasoline around 1.42 for July. Demand is expected to remain firm into August, but the high prices may slip as market fundamentals reassert themselves.

High crude and gasoline values, snug supplies, and strong European prices have pushed up Asian MTBE. Sporadic offers were heard at $760–800/tonne fob Singapore, and buying ideas were at $730–740/tonne fob Singapore.

Ammonia spot business out of Yuzhnyy is still busy, with prices largely unchanged at $210–215/tonne. Plant outages and closures in northwest Europe are keeping buying demand up, even though it is not peak season. Production in Russia and the Ukraine is running well and ships are easily available. Asian prices are assessed around $292–300/tonne CFR Taiwan. Middle East fob levels are holding as Indian buying has resurfaced.

BUTADIENE STAYS FIRM ON TIGHT GLOBAL SUPPLY

European butadiene traders are still looking to put parcels together to send to the US, which remains tight on production outages, but are having no luck given healthy European demand. The third quarter contract settled up ¤35/tonne at ¤820/tonne, and has been accepted by the market, despite some suggesting it is a low price given US numbers and the current naphtha level. A downstream elastomer unit is to close, removing around 50 000 tonne/year of butadiene demand from the market (see page 7).

Asian prices are up on tight supply. European deep-sea supply is short, and there are some Taiwanese/Korean production problems. There are no firm bids or offers, but traders say prices could hit $1450–1500/tonne CFR China. But the market is likely to settle for 1350–1380/tonne CFR China.

SPOT BULK CHEMICAL PRICES, $/TONNE

ASIA

Naphtha +5 Ethylene -30 Propylene1 -15 Butadiene +25 Benzene +35 Toluene2 +60 Xylenes +65 PX +20 OX +55 Styrene +50 Methanol -1.5 MTBE +35 Ammonia -14

661-663 CFR Japan 1150-1200 CFR NEA nom 1080-1100 CFR NEA nom 1350-1380 CFR NEA 920-950 fob Korea 935-950 fob Korea 1140-1160 fob Korea 1300-1330 CFR Taiwan 1140-1150 CFR NEA 1230–1240 fob Korea 245-255 CFR ?China nom 740-770 fob ?Singapore 292-300 CFR ?Taiwan

EUROPE

Naphtha +12 Ethylene +26.5 Propylene1 +2.5 Butadiene +5 Benzene +27.5 Toluene2 -17.5 Xylenes nc PX -30 OX nc Styrene +15 Methanol -0.5 MTBE +167.5 Ammonia nc

640-645 cif 1170-1183 cif nom €785-810 cif nom 1000-1030 fob nom 1080-1095 cif 900-945 fob nom 1040-1045 fob 1200-1230 fob 1020-1035 cif 1270–1290 fob €222-225 fob nom 1070-1080 fob 210-215 fob Yuzhnyy

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