Commodities remain thinly traded

21 May 2007 00:00  [Source: ICB]

European naphtha cargoes were heard at $683-687/tonne CIF NWE last Thursday, having started the week at $706-712/tonne. June swaps are at $672-673/tonne, with Brent crude at $68.80/bbl for July.

Asian open-spec prices have leapt to $725-727/tonne CFR Japan. Tight gasoline supply in the US prevented surplus naphtha cargoes from flowing to Asia, adding to shortages of naphtha spot volumes.

June-July bi-monthly ethylene contract discussions are soon to get underway in Europe, with talk suggesting an increase because of high naphtha prices. Spot ethylene is still extremely quiet, and no deals have been heard. Prices are $1,220-1,250/tonne CIF.

Asian values are higher at $1,080-1,150/tonne CFR northeast Asia, with the market propped up by limited spot supplies due to cracker turnarounds in South Korea and strong demand from southeast Asia.

Propylene numbers are up to €880-920/tonne in Europe. Little spot material is available because of a lack of imports and ongoing logistical problems in Germany and southern Europe. Polypropylene (PP) demand downstream is good.

Northeast Asian prices are steady at $1,090-1,130/tonne CFR in a thinly traded market. Supply and demand is fairly balanced.

A very quiet butadiene (BD) market has seen no trades. Prices are stable at $1,260-1,290/tonne. Asian spot prices are flat at $970-990/tonne CFR NE Asia, with buyers staying on the sidelines. Firm bids and offers are scant. Players expect a price drop when Formosa Petrochemical Corp's new No 3 cracker and 180,000 tonne/year BD unit in Taiwan come on stream in June.

An illiquid benzene market saw few trades last week in Europe. Prices peaked at $1,210-1,230/tonne on Tuesday, before coming back down to current $1,185-1,210/tonne levels. Some players say the market is a little on the tight side, possibly because improved styrene economics leave less benzene for the spot market.

June prices remain stable at $1,130-1,140/tonne FOB Korea in Asia. On FOB Korea, big-berth loading basis, deals are rumoured at $1,130/tonne for any-June loading and $1,140-1,150/tonne for any July.

The toluene market has seen prices dip again after rallying at the end of the previous week. Numbers were heard at $865-885/tonne at the start of last week, but fell to $840-860/tonne by mid-week. Buying interest is generally lacking, although three deals have been reported.

In Asia, June prices are at $905-910/tonne FOB Korea. Earlier in the week, a deal was reported at $905/tonne for second-half June lifting, and another was concluded for July shipment at $920/tonne.

European mixed xylene activity is still muted, with no deals reported. Numbers are heard in a $980-1,020/tonne range.

In Asia, selling ideas for isomer grade are heard at $1,120/tonne FOB Korea for June shipments. The range is $1,090-1,110/tonne. Solvent grade prices, meanwhile, are notionally quoted at $930-950/tonne.

Spot paraxylene (PX) values have been fairly stable at $1,225-1,245/tonne for May. June numbers are in a $1,240-1,285/tonne range. Supply is reasonable, although there are suggestions that the market could tighten in June. No trades are reported.

The Asian PX market has been quiet ahead of the Asia Petrochemical Industry Conference in Taipei, Taiwan, but deals have been reported at $1,280/tonne CFR Korea. Prices are pegged at $1,270-1,290/tonne.

Orthoxylene (OX) prices in Europe are nominal in a wide $1,100-1,200/tonne range, although some say that indications are closer to $1,135-1,140/tonne. Supply is tight. Market sentiment for Asian OX has strengthened, with selling ideas above $1,230-1,250/tonne CFR NE Asia because of firm xylene prices. No business has been done because of the wide buy-sell gap.

It was another quiet week for European methanol. No trades have been concluded since the end of the previous week, when a €175/tonne deal was done for May delivery. The current range is €180-185/tonne. The Asian spot market is thinly traded. At the time of going to press, numbers were quoted in a $230-240/tonne CFR China range.

MTBE numbers are on the rebound after the previous week's blip, with gasoline trading higher at $768-774/tonne. Five MTBE trades have been reported in an $845-854/tonne range. The factor to gasoline is 1.11-1.13. Robust driving season demand, high gasoline prices and limited spot availability has pushed Asian MTBE values to 11-month highs. The range is $800-810/tonne Singapore, with spot fixtures scarce.

Ammonia prices dropped to $245-247/tonnes FOB Yuzhny with traders buying additional volumes for end-May lifting. The trend remains soft, with further price drops expected for June. South Korean contract prices are in the $340s/tonne CFR. This is exerting pressure on Middle East FOB levels, as there are scheduled shipments from Iran to South Korea. This would reflect netbacks of $275-280/tonne FOB Arab Gulf.

The Markets Trends & Data pages feature 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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The controversial €57/tonne styrene free carrier (FCA) May contract hike has now been largely followed by European buyers despite murmurings of discontent.

The producer involved was initially accused of forcing through the May settlement, but has insisted that the increase was justified, given the current levels of strong demand and the high benzene costs.

A gentleman's agreement typically sees the FCA contract agreed between the producer and at least five consumers. However, on this occasion only one buyer agreed the price at €1,155/tonne FCA Rotterdam. This was greater than the previously agreed €1,130-1,150/tonne FD NWE barge contract.

Most buyers reacted strongly to the FCA hike and suggested that the producer could have made a costly long-term mistake. One suggests that the settlement could have dire consequences when the market becomes better supplied in the third quarter.

Meanwhile, European spot numbers have edged up over the week to $1,510-1,535/tonne, thanks to healthy buying interest and delays to shipments from the US (see page 32). Several trades have been reported.

Asian prices have gained further ground due to the snug supply in the region. Trades were concluded at $1,370/tonne FOB Korea for June shipment, up $5-10/tonne on the previous Friday. The current range is around $1,365-1,375/tonne.

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