07 May 2007 00:00 [Source: ICB]
Olefins spot activity remains minimal in Europe. Ethylene values are notionally unchanged at $1,220-1,270/tonne. The two INEOS and Borealis crackers remain down for scheduled maintenance, but elsewhere there have been no unexpected issues.
Asian ethylene prices are steady amid thin trade, holding at around $980-1,000/tonne CFR NE Asia. Spot supplies from South Korea have dried up because of cracker shutdowns and the slightly better margins achieved by producing polymers. Meanwhile, Indonesian prices remain above $1,150/tonne CFR due to the impending shutdown of Chandra Asri's cracker for three weeks in June.
Propylene numbers are €870-900/tonne in a quiet market. The arbitrage to the US is still closed and traders are said to be looking at other options, such as Asia and the Middle East for imported material. Asian prices are stable at $1,090-1,130/tonne CFR NE Asia.
European butadiene (BD) spot numbers are unchanged at $1,260-1,290/tonne. The market is balanced, with little buying interest and limited supply. Asian spot prices edged $20/tonne higher to $980-990/tonne CFR NE Asia following a spot deal done at $985/tonne CFR NE Asia for a second-half May shipment. Spot trades have slowed, with China and Japan closed for the Labour Day and Golden Week holidays.
Weakening sentiment took spot benzene from $1,180-1,200/tonne on Monday to $1,120-1,150/tonne by mid-week. Prices then rebounded to $1,165-1,175/tonne by Thursday, as crude values rose and buying interest picked up with players returning from national holidays. The May contract settled at €870/tonne, up €54/tonne on April.
Asian values are in a $1,085-1,095/tonne FOB Korea range. Bearish sentiment prompted a big-berth June benzene offer at $1,090/tonne against bids at $1,075-1,085/tonne. There were two June big-berth deals at $1,090/tonne.
Despite firming gasoline, the toluene range in Europe is down on the previous week at $860-890/tonne, easing on a lack of buying interest. No deals are reported.
Spot Asian prices are notionally pegged at $870-885/tonne FOB Korea, up $5-25/tonne from Monday. Trade is thin because of holidays in the key China market. June offers at $885-890/tonne have encountered bids at $865-870/tonne.
Mixed xylene numbers are up a little at $930-940/tonne levels following firmer gasoline prices and decent demand. Some say xylene numbers are in the high $900s/tonne. Isomer grade in Asia is at $1,090-1,115 FOB Korea. There have been five deals confirmed around the $1,100-1,115 mark.
Europe's paraxylene (PX) May contract has emerged, delayed slightly by holidays and issues surrounding the Asian Contract Price (see page 28). Spot business is lacking. Numbers are $1,215-1,235/tonne. Asian prices meanwhile, are heard at $1,250-1,300/tonne CFR Taiwan, with no trades.
Another subdued week for orthoxylene (OX) in Europe has seen no spot business. Nevertheless, sustained tightness and extremely strong demand from the downstream phthalic anhydride (PA) sector has seen prices notionally climb to $1,050-1,120/tonne. The May contract settled up €30/tonne at €870/tonne. Asian OX sellers are bullish about pricing due to surges in PX prices. Deals were done at $1,120-1,130/tonne CFR China Main Port last week. OX selling ideas are above $1,200/tonne CFR NE Asia versus buying ideas at $1,150/tonne.
Spot styrene is relatively stable, hovering in the low $1,400s/tonne. A single May deal has been concluded with two reported for June. At the time of going to press, prices were in a $1,390-1,420/tonne range. The barge contract settled at €1,130-1,150/tonne.
In Asia, styrene is heard at $1,290-1,300/tonne FOB Korea on a notional basis. On a CFR China basis, selling indications for June cargoes are heard at $1,330-1,355/tonne.
European methanol is still at €175-190/tonne. An unplanned outage at a plant in Iran a few weeks ago looks set to be down for a further two months. Week-long holidays meant no change to Asian prices at $230-240/tonne CFR China.
Soaring gasoline and naphtha values saw European MTBE trade twice at $904/tonne on Tuesday, the highest deals since July 2006. By mid-week, numbers had eased to $855-895/tonne. The factor to gasoline is 1.10-1.14. Tight availability and strong demand because of the driving season pushed Asian MTBE values up last week. The range is around $770-790/tonne FOB Korea.
Weaker prices in Yuzhny and the Middle East saw Asian CFR ammonia prices fall. In South Korea, prices are likely to fall into the $350s/tonne CFR for next contract deliveries, while Taiwanese buyers are claiming to be paying below $340/tonne. On a positive note, the agreement reached in India about phosphoric acid prices should maintain ammonia demand for diammonium phosphate (DAP).
Yuzhny prices have dropped to $248-250/tonne FOB. Further price reductions are expected unless producers in the former Soviet Union and Europe curtail supply.
The Markets Trends & Data pages features prices compiled using information from our sister service ICIS pricing. Data for all Monitors are also based on information from ICIS pricing.
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SOARING NAPHTHA PRICES ARE IMPACTING OLEFINS
The record high naphtha costs seen in Europe are putting a severe dent in olefins producers' margins. Last Tuesday, spot naphtha cargoes soared to highs not seen since the early 1990s, with a trade at $704/tonne CIF NWE, prompting one major cracker operator to suggest that further hikes of $30-40/tonne could mean negative margins for olefins producers.
Several manufacturers have already opted to switch from using naphtha to liquefied petroleum gas (LPG) as a feedstock, but say that this has done little to offset the impact of high naphtha costs.
Naphtha spot prices have risen around $100/tonne since second-quarter ethylene and propylene contract prices were agreed at €890/tonne and €850/tonne FD NWE respectively in mid-March.
With the bi-monthly June/July ethylene contract looming and set to be agreed towards the end of the month, one supplier says an increase is likely based on current upstream costs.
By mid-week however, open-spec naphtha spot prices had fallen $21/tonne with a cargo sold at $683/tonne for 12-16 May loading. The hefty price drop was attributed |to a sharp fall in crude oil futures. At the time of going to press, naphtha prices were heard at $670-680/tonne, with May swaps at $670-671/tonne.
In Asia, open-spec naphtha for the second half of June delivery was notionally heard at $692-695/tonne CFR Japan.ds
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