Contract discussions are rumbling on

02 July 2007 00:00  [Source: ICB]

Europe's butadiene settlement lags behind the other olefins, while players prepare for aromatics contracts. European PX sees a hefty drop, as do benzene and Asian xylene

Open-spec naphtha spot cargoes in Europe are up at $677-681/tonne CIF NWE. July swaps are pegged at $679-680/tonne. Brent crude, meanwhile, is pegged at $70.60/bbl.

Asian prices have notionally eased to $673-675/tonne CFR Japan. High volumes of Indian naphtha and weak demand from Taiwan are said to have dented sentiment.

Most players have followed the initial third-quarter (Q3) ethylene contract settlement of €925/tonne, marking an increase of €35/tonne. Sustained pressure from naphtha was predominantly behind the hike. Spot business is still lacking, and prices are down slightly with plenty of material available. The range is $1,200-1,250/tonne. A deal was reported on the pipeline at €910/tonne at the end of the previous week.

Northeast Asian prices are notional at $1,000-1,030/tonne CFR because of lower-priced offers and weaker imports. The restart of YNCC's No 2 cracker, combined with cargoes from Iran, and Formosa Petrochemical Corporation (FPCC) expecting to reach full capacity at its Taiwan cracker, are having a bearish impact on the market.

Spot numbers have fallen in Europe's butadiene (BD) market, following a deal the previous week - the only trade seen for a while. The current range is notional, at $1,180-1,220/tonne. Contract discussions are ongoing, but both buyers and sellers are keen to complete talks soon to avoid a repeat of the drawn-out Q2 settlement. A rollover at €895/tonne is looking increasingly likely.

Asian prices are stable at $850-860/tonne CFR NE Asia in a well-supplied market.

Benzene prices are down on the previous week with the market looking slightly better supplied and energy costs continuing to fluctuate. Easing US prices also had a downward impact on European pricing. The range is $1,050-1,060/tonne. Numerous deals have been done. Monday and Wednesday were particularly active.

The Asian market is quiet, with values pegged at $1,030-1,040/tonne. An offer for an August parcel has been heard at $1,040/tonne FOB Korea, while a deal was done at $1,020/tonne for September.

Toluene numbers are more or less unchanged from the week before last, with no trades reported. European prices are nominal at $855-870/tonne. In Asia, values edged lower, with a deal for any August heard at $855/tonne FOB Korea. An offer for the second half of July was cited at $845-850/tonne against a bid of $835/tonne.

The mixed xylene (MX) market is still subdued. European prices remain at $920-960/tonne levels. Solvent and isomer grades are down in Asia because of oversupply and a drop in US values. Isomer grade is notional at $930-940/tonne, with solvent xylene at $900-910/tonne. Traders suggest the downtrend will continue for the foreseeable future.

Paraxylene (PX) prices have slumped in Europe from a lack of demand. Numbers are down at $1,080-1,100/tonne. A few deals have been rumoured but could not be confirmed. Contract talks continue. In Asia, PX deals were done at $1,135/tonne CFR Taiwan but prices were falling on the back of a purified terephthalic acid (PTA) price slide. The PX range is $1,120-1,140/CFR Taiwan.

Europe's orthoxylene (OX) market is quiet, with players awaiting the outcome of contract talks. It rolled over on Thursday at €930/tonne. Spot prices are $1,180-1,220/tonne.

OX in Asia is pegged at $1,070-1,090/tonne CFR NE Asia. Falling MX prices and weak buying interest have fuelled the price drop. Ex-tank deals in China were heard at $1,090/tonne in east China.

A $1,340-1,350/tonne range is reported for styrene in Europe, down a little on the week before because of weaker benzene. Few trades have been done but demand is said to be decent. The market is quiet, with players waiting for the benzene contract to settle.

Asian numbers are at $1,300-1,310/tonne FOB Korea with no deals done. Buy/sell indications for August parcels are heard at $1,295-1,305/tonne. In east China, offers are stable at yuan (CNY)12,000/tonne ($1,576, €1,171/tonne) ex-tank, with deals fixed at CNY11,950/tonne.

European methanol prices are quoted within a €177-188/tonne range following business at the end of the week before last. Asian prices are stable with no deals done. The range is $240-250/tonne.

After a quiet start to the week for European MTBE, trades were reported at $849/tonne and $851/tonne. Bids and offers were heard at $840-865/tonne on Thursday morning, with the factor to gasoline at 1.14-1.17. No deals have been done in Asia and prices are still at $790-800/tonne.

Abundant ammonia supply in Asia and evidence of spot availability casts a bearish tone over the market, with expectations of possible price reductions. However, with the lack of spot sales, and providing Yuzhny prices do not drop below $230/tonne FOB, Middle East levels may hold in the high-$260s/tonne range and the low-$270s/tonne range for contract cargoes to India. Taiwanese buyers are targeting prices below $300/tonne CFR for July.

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.


Propylene buyers in Europe have been largely successful in stemming the scale of the third-quarter (Q3) contract settlement, which was announced last Wednesday.

Producers' early targets of around €50/tonne were countered by talk of adequate supply anticipated in the coming months.

Despite a series of maintenance turnarounds scheduled at European crackers in the third quarter, ethylene is far more likely to bear the brunt than propylene and buyers, therefore, argued that availability would not be problematic. The initial Q3 contract was agreed at €878/tonne, up from the previous quarter's €850/tonne figure. Most players have followed.

An increase had been widely expected, given the high naphtha costs upstream. One manufacturer suggested that the €28/tonne hike would adversely affect margins against the feedstock.

Spot activity has been limited over the past week, with contracts dominating discussions. The range is down slightly at €890-915/tonne CIF NWE, with no deals done.

Meanwhile, INEOS Olefins has declared force majeure on both ethylene and propylene from its 660,000 tonne/year cracker in Cologne, Germany. Repairs are expected to take several weeks.

In Asia, propylene prices are languishing at $960-1,020/tonne CFR NE Asia for August deliveries, down from $1,000-1,020/tonne a week earlier.

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