Market Trends & Data: NPRA subdues markets

07 April 2008 00:00  [Source: ICB]

Trades are slow, with players absent at an industry event in the US. Margins are under threat for PX in April, while Latin American PP sellers rue feedstock hikes

Andy Brice/London

POLYVINYL CHLORIDE

Polyvinyl chloride (PVC) prices in China are yuan (CNY) 600-700/tonne ($86-100/tonne) above mid-March, leaving some sellers pressured to cut operating rates to 60-70%.

Prices are at CNY8,470-8,520/tonne ex-warehouse (EXWH) East China and CNY8,500-8,550/tonne EXWH South China.

Calcium carbide, a raw material for PVC, is still in short supply due to the ongoing power rationing, says the National Development and Reform Commission.

Calcium carbide prices were CNY3,900/tonne EXWH East China last week, up by CNY100-200/tonne on the week before.

POLYPROPYLENE

Latin American polypropylene (PP) sellers are feeling the pinch after April's initial US Gulf propylene contract rose by 3.5 cents/lb.

PP prices at the US border are at 66.5-67 cents/lb delivered at frontier (DAF) Laredo, Texas, for homopolymer bulk material.

If the initial settlement is endorsed by other market participants, monomer prices will reach 65 cents/lb in April. This is just 2 cents/lb or less below current export PP prices, which have yet to react to the 2 cents/lb increase in propylene agreed for March.

Without a proportional price increase, PP producers are guaranteed to lose money.

BUTADIENE

The uptrend in butadiene (BD) prices in the US is likely to continue thanks to tight crude C4 feedstock availability.

One buyer at the National Petrochemical & Refiners Association (NPRA) annual meeting in Texas said that little change is expected in the market unless olefins producers shift from light to heavier feeds.

One ship broker added that BD demand appears firm, with some product due to move from Asia to the US Gulf.

April contracts have been agreed at 69 cents/lb, up by 5 cents/lb from March.

BENZENE

Europe's April benzene contract has been confirmed down by €45/tonne at €742/tonne FOB NWE, equivalent to $1,172/tonne.

The drop is blamed on the erosion of spot values during March and a weaker US dollar against the euro.

In the US, spot prices are set to rise further in April, due to increased demand expected from gasoline blenders.

Speaking on the sidelines of NPRA, US aromatics traders suggested spot values could surpass $4/gal in the coming months.

Prompt spot benzene is at $3.78-3.82/gal FOB Houston-Texas City.

PARAXYLENE

US paraxylene (PX) margins could disappear in April. Raw material prices are expected to rise by 6-7 cents/lb, while PX suppliers are seeking hikes of 4-5 cents/lb.

Costs have never been so high at the start of the driving season, says one player.

Some say that the PX Asian contract price (ACP) has not increased sufficiently over the past eight months, undermining US producers' ability to seek higher prices.

US March PX contracts moved up by 4 cents/lb to settle at 58.25 cents/lb.

Last week in Asia, April's ACP settled $90/tonne above March at $1,260/tonne CFR Asia, in line with the earlier settlements by Idemitsu Kosan and Exxonmobil.

PURIFIED TEREPHTHALIC ACID

Mistubishi Chemicals, the Japanese purified terephthalic acid (PTA) producer, has nominated $80/tonne increases for April contracts.

This would take PTA prices to $1,030/tonne CFR China Main Port. The hike is blamed on higher upstream PX costs.

Other major suppliers in Asia, Japan's Mitsui Chemicals and BP of the UK, have also announced $80 and $90/tonne hikes, respectively.

ORTHOXYLENE

Europe's April orthoxylene (OX) contract has been announced at €820/tonne FD NWE, representing a €30/tonne increase on March's €790/tonne settlement. The increase was in line with expectations.

Sellers had said that they would be targeting increases to compensate for volatile raw material prices and to help relieve squeezed margins.

PHTHALIC ANHYDRIDE

Phthalic anhydride (PA) prices for April could climb by up to 7 cents/lb in the US because of higher feedstock and manufacturing costs.

Monthly PA prices typically follow the movement of feedstock OX in the preceding month.

However, one producer has announced an additional 3 cent/lb increase on top of OX for March and others have followed suit with similar initiatives for April.

PA sellers are seeking an increase of 3 cents/lb in addition to OX for April. March OX settled at 52 cents/lb, up by 4 cents/lb from February.

March PA was agreed at 61-66 cents/lb FOB molten and 62-66 cents/lb DEL flake.

STYRENE

First and second April barge contract settlements were confirmed last week for European styrene at €1,035 and €1,094/tonne FD NWE. March was agreed at €1,088-1,122/tonne.

SULFUR

Second-quarter (Q2) sulfur shipments to China and India from the Middle East are seeing price increases of at least $200/tonne.

Values have rocketed because of limited availability following reduced natural gas production, delays in the start-up of new projects, and extremely strong demand in 2007 and at the start of this year.

Abu Dhabi National Oil Company (Adnoc) has agreed some Q2 contracts with traders for shipments to China at $650/tonne FOB Ruwais, up from $450/tonne in Q1.

Meanwhile, Kuwait Petroleum Corp. (KPC) has shipments to India at $675/tonne, up from the $440s/tonne for January to March. KPC is still discussing April-June shipments to China, but is looking for a price in the mid-$600s/tonne.


MORE CONSOLIDATION IS KEY FOR EUROPEAN PET

The European polyethylene terephthalate (PET) market is in need of further consolidation to keep the industry healthy, according to one upstream supplier.

"The PET margins have been under real pressure," said a monoethylene glycol (MEG) seller on the sidelines of last week's NPRA meeting. "We do expect growth from the sector, probably above GDP levels but the market is still scattered and we need more market leaders to emerge."

Discussions have centred on the future sustainability of the European PET industry, with consumers pushing for greater use of recycled PET in certain applications.

Buyers have also been eyeing new capacity and offers from the Middle East as well as Asia, amid expectations that these could increase and put pressure on European prices.

Increasing Russian capacity is thought likely to be kept in the local market, but could displace imports from Asia and push these to other locations.

PET demand is expected to pick up, notably in Europe, in April and May - seasonally a stronger period for bottle-grade demand.

The comments came on the back of confirmation of the acquisition by Indonesian firm Indorama of the European PET assets of US producer Eastman Chemical. The $354m deal was announced last December and includes Eastman's plants in the UK and the Netherlands.





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