MARKET TRENDS: Olefins tighten as outages take toll

24 July 2006 00:00  [Source: ICB]

Buyers search for material in European olefins markets as crackers remain down and high temperatures reduce output. The xylenes chain is firmer across the globe.

Naphtha in Europe followed the ups and downs of crude oil. Cargoes were assessed in a $640-644/tonne CIF NWE range, while Brent crude stood at $74.24/bbl. In Asia, naphtha was tracking crude prices down to $658-659/tonne CFR Japan. Prices may rebound if the Middle East crisis worsens.

Ethylene prices have climbed to €950-970/tonne, although no deals have been heard. Prices are up on higher naphtha costs and tight material - although the range is purely notional, with no firm bids or offers heard. Suppliers are holding onto material ahead of the next turnaround season and because of the current spate of outages. BPRP and Ineos are still down (see page 67) and cracker output is cut on high temperatures. Bimonthly contract talks are about to begin.

Asian prices are in a $1180-1220/tonne CFR range amid thin trade in the region because of limited bids and offers.

The European propylene market is catching up with ethylene as supply tightens amid cracker outages and improved demand, now that downstream acrylonitrile plants are back onstream. Prices are seen at €840-850/tonne, with €860/tonne offers turned down by buyers.

In Asia, arbitrage cargoes, totalling more than 40 000 tonne for the end of August/early September arrival are offered at $1200/tonne CFR and above, with few takers heard.

Butadiene remains tight in Europe, and high Asian prices mean that the Asian arb is still open. Traders are looking to put parcels together - but without much luck. Some report slower US demand, although supply there is still well-balanced to tight. Prices are notional at $1030-1050/tonne.

In Asia, spot offers rose sharply to $1500-1550/tonne CFR Asia because of tight to short supply, coupled with robust demand. Buyers scrambled for limited spot cargoes in anticipation of a further tightening in supply as several crackers are scheduled to shut in August to October in Asia and Europe.

Benzene activity has been largely unexceptional, and July prices are stable at $1080-1095/tonne. August is quoted at around $1060-1075/tonne, with September molecules at least $40/tonne lower. Demand is decent and supply is fairly balanced, although one observer notes that pygas is tight and European production has been affected because the soaring temperatures have reduced cracker rates. Asian benzene has been tracking crude closely, with prices falling to $940-950/tonne fob Korea.

Europe's toluene market remains quiet, with one deal heard at $930/tonne. Prices have softened to a range of $910-950/tonne.

Toluene is at $920-925/tonne in Asia. An any-September deal was heard at $921/tonne fob Korea last Thursday, following Wednesday trade at $920 and $925/tonne. A second-half August deal was done at $930/tonne.

Mixed xylenes remain strong in Europe, but there is no evidence of upward movement in this week's price range. Most agree that $1060-1070/tonne represents the current bid/offer level. Asian xylenes were buoyant, with a 3000-tonne isomer deal completed at $1080/tonne fob Korea for August. Solvent grade was trading at $1005-1010/tonne.

Paraxylene has been active, with a number of deals reported. July has traded at $1280/tonne, and later at $1300/tonne, with August up at $1320-1330/tonne. Market observers expect numbers to rise further because of a tight market and good levels of buying interest. The latest bid/offer level for July is pegged at $1310-1330/tonne. The ongoing conflict in the Middle East has affected output at Israel's Gadiv plant, and additionally, at least one NWE producer has had production issues to contend with as a result of soaring temperatures.

Asian prices were pegged at $1370-1450/tonne CFR Taiwan. A first Asian Contract Price for August was done at $1200/tonne CFR Taiwan, up $50/tonne on July. CPC is in force majeure in Taiwan (see page 7).

Styrene is closely following benzene, with spot numbers still hovering just below $1300s/tonne levels. Values are pegged at $1280-1295/tonne. Deals were heard done at $1275 and $1245/tonne for August and September, respectively. Supply is reasonable, but issues still surround ethylene availability. Repsol has started shutting its Tarragona propylene oxide/styrene monomer complex in Spain for a 60-day debottlenecking as planned. In Asia, prices are relatively stable, following tight supply, trading at $1220-1230/tonne fob Korea and $1250-1270/tonne CFR China.

Methanol spot activity has all but dried up, with no new spot deals emerging in Europe. Bids are in evidence at around €223-225/tonne, while offers have been heard at up to €230/tonne, although these are reportedly few and far between. The US market is slightly firmer at 85-86 cent/gal.

Overall sentiment in Asia was weighed down by the seasonal weakness in formaldehyde demand. But prices in southern China rose Yuan50/tonne after heavy rains disrupted rail traffic and curtailed movement of domestic cargoes to the south.

Imported product in the south was selling at Yuan2670-2700/tonne ex-tank - up Yuan50/tonne. Eastern Chinese prices are largely stable at Yuan2550-2580/tonne ex-tank.

A dull European MTBE market saw only a few deals done early last week. Demand was lacking and prices were heard at $900-950/tonne. The factor to gasoline was around 1.20-1.25. The bid-offer range for Asian MTBE dropped to $770-780/tonne fob Singapore on weaker crude and gasoline. A 3000-tonne August cargo was fixed at $780/tonne CFR Singapore. Supply is tight but sentiment has weakened.

Yuzhnay ammonia prices continue to hover at around $205-210/tonne. Plant turnarounds in Russia have tightened the market, and Ventspils is said to be sold out for August. August turnarounds in Algeria may also stretch supplies in Europe. The outlook for ammonia in the Far East is bearish and demand is still weak. Market players in Asia expect the price to dip marginally in the coming weeks, with ample spot cargoes on offer in the Far East. Prices for Taiwan are in the range of $270-275/tonne CFR.

OX HITS ALL-TIME HIGH IN EUROPE ON FEEDSTOCKS

Orthoxylene is firm, with an all-time record-high deal reported at $1130/tonne fob. Some were surprised by the number, while others considered such numbers realistic in the current climate of high feedstock values and very limited availability across the world. Traders reported a good level of enquiries from Asia, especially from India. The rise in OX numbers in the US and Asia also pushed up European prices. Asian numbers rose to $1340-1350/tonne CFR NE Asia after a late-July cargo was sold at $1340/tonne CFR NE Asia. The already tight OX market was restricted further by the Chinese Petroleum Corp outage (see page 7 for further details).


SPOT BULK CHEMICAL PRICES, $/tonne

ASIA

Naphtha -17.5 Ethylene +5 Propylene1 +20 Butadiene +50 Benzene +12.5 Toluene2 -15 Xylenes +75 PX +110 OX +35 Styrene +5 Methanol nc MTBE -15 Ammonia -5
658-659 CFR Japan 1180-1220 CFR NEA nom 1190-1200 CFR NEA nom 1500-1550 CFR NEA 940-950 fob Korea 920-925 fob Korea 1060-1080 fob Korea 1370-1450 CFR Taiwan 1340-1350 CFR NEA 1220-1230 fob Korea 245-255 CFR China nom 770-780 fob Singapore 270-275 CFR Taiwan

 

EUROPE





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Naphtha -20.5 Ethylene +35 Propylene1 +25 Butadiene +15 Benzene -5 Toluene2 -10 Xylenes nc PX +80 OX +55 Styrene -5 Methanol nc MTBE -137.5 Ammonia -5
640-644 cif 1195-1220 cif nom €840-850 cif 1030-1050 fob nom 1080-1095 cif 910-950 fob 1060-1070 fob 1310-1330 fob 1100-1130 cif 1280-1295 fob €222-225 fob nom 900-950 fob 205-210 fob Yuzhnyy
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