Eyes focus on aromatics contracts

04 June 2007 00:00  [Source: ICB]

Contract talks dominate the week, while spot activity remains quiet. The INEOS outage in the UK could have a major impact on markets. Only European spot styrene increases

Naphtha prices are heard in a $650-655/tonne CIF range, with June swaps at $652-653/tonne. Last Thursday, Brent crude was pegged at $67.83/bbl for July.

Asian prices tracked crude's losses down. The first-half July contract was notionally quoted lower at $707.50-710.50/tonne CFR Japan. Expectations of arbitrage shipments arriving to Asia from west of Suez and Europe also weighed on sentiment.

In Europe, the bimonthly June-July ethylene contract has been agreed at €925/tonne FD NWE, up €40/tonne owing to the high naphtha costs seen over the past two months. Spot news is limited, with no trades reported. Numbers are unchanged at $1,220-1,280/tonne. INEOS Olefins, meanwhile, has closed its Grangemouth, UK, site after its G4 cracker was shut down for three months of unscheduled maintenance (see page 4).

Northeast Asian prices are steady at $1,100-1,150/tonne CFR, with the wide buy/sell gap hampering trade. Prices could succumb to fresh downward pressure after the start-up of Formosa Petrochemical Corp's No 3 cracker in Taiwan.

Propylene remains inactive in Europe, with no spot business concluded over the past week. Prices are still notionally pegged at €890-920/tonne levels. In Asia, values are at $1,070-1,090/tonne CFR NE Asia for July parcels, down $20-30/tonne, because of an anticipated surplus of material from Taiwan.

The butadiene (BD) spot market is quiet, with no trades reported. Numbers are still in a $1,260-1,290/tonne range. Exports to the US now appear to have stopped. Third-quarter contract talks are still some way off, but some buyers are hoping prices will stay below €900/tonne levels (see page 34).

Rising inventories and shrinking demand are weighing on Asian butadiene values. Prices have fallen by $10-20/tonne to $900-930/tonne CFR NE Asia.

A weaker energy complex has pulled benzene prices slightly lower to $1,155-1,165/tonne. The initial June contract was agreed down €2/tonne at €868/tonne.

INEOS' unexpected shutdown at its 295,000 tonne/year plant in the UK could have a major impact on benzene, as some 25,000 tonnes/month of product may have to be sourced from the spot market during the outage.

Asian benzene is down at $1,110-1,120/tonne FOB Korea, with a deal reported at $1,115/tonne for big berth any July loading.

Toluene values softened from $870-890/tonne levels at the start of the week to $860-870/tonne range, because of diminishing demand and weaker gasoline. There were two trades done. Asian prices eased to a nominal $890-910/tonne FOB Korea range. Selling indications are at $895-900/tonne for the second half of June. Any July cargoes are offered at $910-915/tonne, with bids at $900-902/tonne. Business has been limited.

European mixed xylene is stable at $1,000-1,050/tonne on a notional basis. Minor production issues were reported last week at a unit in the UK, although these were quickly resolved.

In Asia, isomer grade buyers remained on the sidelines as offers slid to $1,085/tonne FOB Korea for the first half of July. No deals were done. The range is $1,075-1,085/tonne.

Styrene is quoted in a $1,540-1,560/tonne range in an extremely quiet market. The first barge contract rose €59/tonne from the May average to €1,199/tonne. Asian spot prices are unchanged at $1,380-1,390/tonne FOB Korea because of market uncertainty and a lack of price direction.

Statoil's four-week planned shutdown at its 830,000 tonne/year methanol unit in Norway has contributed to a more balanced market. Spot numbers are still at €170-180/tonne, but players suggest prices have now bottomed out.

In Asia, methanol is stable at $230-240/tonne CFR China, and $235-260/tonne CFR Asia. Chinese domestic prices rose slightly due to limited domestic supply after several local methanol producers shut their plants for maintenance, or reduced operating rates because of the low prices.

Last week proved quiet for European MTBE, with buyers having withdrawn from the market no business has been reported since the previous Thursday. Bids and offers eased to $800-830/tonne as gasoline came off. The factor to gasoline is 1.10-1.11.

High gasoline prices, limited spot availability and high European MTBE prices have kept Asian buy/sell discussions stable to firm at $810-820/tonne FOB Singapore.

No new ammonia business has been confirmed in Yuzhny, but prices remain on a downtrend. With the Ukrainian government setting a new key index price at $233/tonne FOB and the June Tampa contract at $310/tonne CFR, prices above $240/tonne FOB Yuzhny are no longer justified. There are rumours of business in the low $230s/tonne FOB. In Asia, suppliers are said to be targeting prices in the $350s/tonne CFR for June shipments. However, southeast Asian FOB prices have weakened, which would suggest softer prices in Taiwan too.

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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Monthly contract negotiations have punctuated the past week in Europe, leaving aromatics spot markets fairly subdued.

An initial European June orthoxylene (OX) contract was announced mid-week, with numbers climbing €60/tonne from the previous month to €930/tonne FD NWE. Players say this was largely in line with expectations, with the market having experienced strong derivative demand and tight supplies for some weeks.

Spot activity remains non-existent, with all eyes having been on the contract talks. However, some suggest that with discussions now over, the next few weeks could possibly see spot business pick up again. Numbers are still pegged in a $1,180-1,220/tonne FOB Rotterdam range, with no deals done.

Meanwhile, the first June paraxylene (PX) contract emerged last Thursday. Prices were agreed up €68/tonne at €948/tonne, pulled up by the firming spot market and decent demand seen over the past month. Spot values are nominal at $1,230-1,260/tonne.

The PX Asian contract price (ACP) for June was agreed at $1,245/tonne CFR Asia, up $80/tonne. Spot PX is at $1,270-1,290/tonne CFR Taiwan.

Spot OX values have climbed by around $30/tonne to $1,210-1,230/tonne CFR NE Asia levels. A June cargo was reportedly sold to India at $1,260/tonne CFR India, with another deal rumoured at $1,258/tonne.

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