15 January 2007 00:00 [Source: ICB Americas]
Weaker feedstock prices pressured ABS prices downward in early December, says ICIS pricing, with the fourth quarter of 2006 the slowest it has ever been for ABS.
The market was strong through September, as buyers prepared for the most active part of the hurricane season and bought heavily. But the hurricane season passed without incident and buyers were left with extra inventories, which limited buying activity.
Despite the recent weakness, prices remained stable in the US market as it moved into a new year.
In the contract sector, January benzene settled at $3.74/gallon, up 42 cents from December, in line with market expectations. Participants cited a jump in December spot prices as the main reason behind the increase.
The US caustic soda market was tight during the week as demand remained steady but supplies were scarce due to reduced inventories and production problems in the industry, says ICIS pricing.
At least two producers experienced problems in the last week of December, and one trader has said inventories were likely to get tighter by the end of January, as one large producer was sold out for the rest of the month. However, claims have been made that the market was not so tight on the East Coast.
US caustic soda price ideas were notionally higher given current market conditions.
Haggling continues over a proposed $40/dry-short-ton increase on contract prices that had been announced in the fourth quarter, but reports indicate that the full increase looked like it might not pass. But ICIS pricing says that producers appeared confident that a large part of the increase would be implemented based on supply/demand factors.
Producers nominated increases of 2 and 3 cents/lb. for January ethylene contracts. The December settlement was at 41.5 cents/lb., down 3 cents from a month earlier.
But with demand soft, a January increase is unlikely, and some market participants opine that a 2-3 cent decrease may be warranted.
In the spot market, ethylene prices have fallen in line with a weakening energy complex and soft derivatives demand, with January spot ethylene down 3-4 cents/lb. from late December's assesment to 32-33 cents.
US polyethylene terephthalate (PET) prices held steady at 62-67 cents/lb.
According to ICIS pricing, resin producers were also seeking to raise prices for specialty grade resin by 5 cents. A clearer price scenario is expected to emerge after the holidays.
Bottle chip prices were assessed by traders in the low 60 cents/lb. range due to a weak US market.
Producers have proposed two polyethylene increases for January. Postponed from December to Jan. 1, the first increase was 6 cents/lb., and the second was 7 cents, scheduled for January 15.
Major suppliers were standing firm on the proposed increases, says ICIS pricing. The outcome of January's price increase nominations remained elusive, however, as the market was slow to pick up after the year-end holidays.
But producers were optimistic that depleted inventories would drive up polyethylene demand as well as prices in January.
Polyethylene players did confirm a 3 cent/lb. decrease in December, though. The December price decrease was in addition to a 14 cent drop in October and November - bringing the total decline for the fourth quarter 2006 to 17 cents/lb.
A backlog developing at bagging facilities is not expected to clear before February.
Depleted producers' and consumers' inventories may be what pushes through the January 1, 5 cent/lb. price increase for polypropylene.
ICIS pricing says at least one producer was positioning for full implementation of the January hike.
However, buyers are expecting January polypropylene prices to take the same adjustment as feedstock propylene monomer. Some participants suggested that the result of the price hike initiatives would depend to a certain extent on how the US export market played out, and if Asian importers returned to buy additional material.
Higher feedstock benzene costs and low inventories after year-end destocking are driving a Jan. 15, 4 cent/lb. polystyrene increase that is on top of a Jan. 1, 3 cent/lb. price increase.
Generic prime spot material was readily available, as traders took orders in late-December for January delivery, buyers said. Activity, however, remained subdued during the first week of the New Year.
Both buyers and sellers expected ongoing stability for 2007, following satisfaction with a steady 2006 polystyrene market that avoided the volatility of preceding years.
Contracts for January refinery-grade propylene (RGP) settled up 2.5 cents at 37.5 cents/lb., says ICIS pricing.
The increase comes amid a tight supply situation due to a turnaround at Lyondell's fluid catalytic cracker at its Houston refinery.
Producers, meanwhile, note that a switch to lighter feeds in ethylene crackers, which produces less propylene, has tightened supply.
But even as the contract settled higher, spot prices have fallen over the past few days amid falling energy prices.
January RGP traded as high as 39.25 cents/lb. at the beginning of the month.
Buyers and sellers involved in the polymer-grade propylene (PGP) and chemical grade propylene (CGP) settlement have now begun discussing prices, as the RGP settlement typically sets the tone for the PGP and CGP talks. According to ICIS pricing, sellers have asked for a 2.5-3 cent/lb. increase while buyers desire a 2 cent increase.
Talk of January increases came after PGP and CGP contracts shed 13 cents in October and November, followed by a December rollover. Sources said this steep decline was due to weak derivatives markets, particularly polypropylene.
Initial US December styrene contracts have settled at a 3 cent decline, says ICIS pricing, putting prices within a range of 59-62 cents/lb.
Market participants said the decline was due to ample domestic supplies, a thinly traded spot market, and a decline in the December benzene contract.
Meanwhile, a January styrene deal was heard done at 55.5 cents.
November styrene contracts were settled within a range of 62-65 cents/lb., up by an average of 2 cents from October.
In the spot market, January styrene spot prices were talked at 55-56 cents/lb.
Other players said they would wait on further price direction from the benzene sector, before venturing into the market.
Styrene prices have not increased as much as feedstock benzene prices during 2006, due to an oversupplied market, ICIS pricing says.
A slow US housing market forced coatings manufacturers to rein in production in the fourth quarter of 2006. There was below-normal buying interest in the fourth quarter for titanium dioxide (TiO2), negatively impacting prices.
The market price range was lowered 2 cents, to 98 cents to $1.08/lb. for chloride process TiO2.
Price cuts were in the range of 1-3 cents/lb. but sources in the coatings sector expect a return to steady production in January.
The vinyl acetate monomer (VAM) market in the US was balanced, but relatively inactive following the holidays, says ICIS pricing.
The export price range was $1,010-1,060/tonne, down by $20 on the high end because of further softening of contract ethylene prices and discussions of lower export prices.
No VAM production issues were heard in the US, and it remained unclear whether DuPont would supply any merchant VAM to the North American market after its toll manufacturing agreement with Lyondell expired in December. However, some market participants report that DuPont has signed a two-year contract with Helm AG to export 60,000 tonnes/year of VAM out of North America.
|Ethylene glycol||.41-.48 lb.|
|Propylene, c-grade||.39 lb.|
|Propylene, p-grade||.405 lb.|
|HDPE, blow-mold||.49-.52 lb.|
|LDPE, liner-grade||.56-.59 lb.|
|Nylon 66||1.87-2 lb.|
|PET, bottle-grade||.62-.67 lb.|
|PVC, pipe||.525-.555 lb.|
|Other bulk Chemicals|
|Caustic soda||280-320 ton|
|Maleic anhydride||.68-.76 lb.|
|Titanium dioxide||2.12-2.36 lbUnless noted, all prices are $ contracts.|
Weak demand is causing a few large polyvinyl chloride (PVC) buyers to push for 3 cent/lb. decreases for the December contract price, says ICIS pricing, while small to mid-size buyers were pushing for 2-2.5 cent drops. Contracts are expected to settle down around 49.5-54.5 cents/lb.
Resin demand is down below normal seasonal levels due to the slowdown in the housing market. PVC values eroded in the third quarter of 2006, losing 2 cents/lb. in October and 2 cents more in November. Producers report their profit margins have been squeezed by the decline.
For January, buyers are expecting a 2 cent/lb. price decrease while producers were pushing for 3-4 cent/lb. hikes.
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