Chemical market trends & data: price uptrend continues

28 April 2008 00:00  [Source: ICB]

CRUDE OIL

NYMEX light sweet crude futures gained more than $2/bbl last Tuesday to take the front-month May contract to a new record high of $119.74/bbl.

At the same time, June Brent crude on ICE Futures was trading around $116.35/bbl, having hit an all-time high of $116.75/bbl, a gain of $2.32/bbl on the previous close.

DIETHYLENE GLYCOL

US diethylene glycol (DEG) price increases of 3-5 cents/lb, targeted from May 1, are likely to succeed amid tight supply and increased demand, according to one trader.

DEG is produced from ethylene glycol (EG), which has been snug since August 2007 following numerous unplanned outages. US DEG is also tight because high offshore prices opened the arbitrage window. Current numbers are pegged at 48-52 cents/lb.

POLYVINYL CHLORIDE

The spread between Asian polyvinyl chloride (PVC) and its feedstock, vinyl chloride monomer (VCM), has widened to $260/tonne CFR Northeast Asia - its largest in two years.

Surging PVC values and cautious buying in the VCM market are behind the increase.

This price differential started to rise at the end of March last year and has remained above $200/tonne for the past six months.

To convert VCM into PVC costs around $100/tonne, so VCM buyers have been enjoying strong profit margins.

PROPYLENE

A US propylene producer has nominated an increase of 5 cents/lb for chemical grade propylene (CGP) and polymer grade propylene (PGP) contracts in May.

Limited material and surging energy values are likely to lend support to higher propylene prices in May, says one buyer.

Prices reached record levels, at 63.50 cents/lb and 65 cents/lb, respectively, in April, owing to tight supply and feedstock upward pressure.

ISOPROPANOL

Supply issues and high feedstock prices are fueling the continued uptrend in Indian isopropanol (IPA) prices.

Numbers have risen by $75/tonne since early April amid a supply crunch and high propylene prices. Last week, IPA prices were pegged at $1,325-1,375/tonne CFR India. Although the arrival of supplies from elsewhere has slightly eased the ­availability problems, offer prices have been heard higher.

PARAXYLENE

Japan's Nippon Oil is considering cutting back its paraxylene (PX) production following the sustained surge in upstream crude and naphtha prices.

According to a company source, the producer was thinking about reducing output by around 20%. However, a final decision had not yet been made.

Nippon has two 225,000 tonne/year PX lines in Mizushima and a 350,000 tonne/year unit in Kawasaki. It also operates a 400,000 tonne/year joint-venture facility at Oita with Kyushu Oil.

STYRENE

European spot styrene leapt by $45/tonne last Monday due to rumored ­production ­difficulties at Spanish major Repsol's Tarragona styrene/propylene oxide (PO) unit.

Prices continued to climb, and by Wednesday, offers for April loading material were heard at $1,500/tonne FOB Rotterdam. A May deal was heard done at $1,495/tonne on Tuesday.

A company source confirmed that it had declared force majeure on styrene supplies from its 465,000 tonne/year styrene production unit.

BUTANEDIOL

The majority of European second-quarter butanediol (BDO) contracts have been agreed lower due to faltering feedstock costs.

Although producers had initially been aiming for rollovers, which were achieved in some instances, buyers have also been able to secure €30-50/tonne decreases.

Numbers are now pegged at €1,820-1,980/tonne FD NWE.

Upstream, methanol had undergone a hefty €195/tonne drop for the second quarter, while propylene contracts dipped by €18/tonne.

PHOSPHATE FERTILIZERS

Prices of US phosphate fertilizers have reached an all-time high in the export market on the back of tight supply.

The US-based Phosphate Chemicals Export Association (PhosChem) sold 24,000 tonnes of diammonium phosphate (DAP) at $1,215/tonne FOB Tampa to a Central American market for June shipment.

PhosChem also sold 12,000 tonnes of monoammonium phosphate (MAP) at $1,235/tonne.

DAP values have doubled since the start of the year, driven by demand and tightness.

Supplies have been stretched even further by China's decision to impose a 135% duty on exports of DAP and MAP.

In effect, this will remove 20% of supply from the international market until September - a key export period for major consuming markets such as India and Pakistan.

PHENOL

European April phenol contracts have been agreed at a decrease of €45/tonne from March, in line with upstream benzene.

Pre-discounted contracts settled at €1,216-1,256/tonne FD NWE.

Buyers attributed the April reduction to improved supplies in Europe, as well as talk of softer-than-expected demand from some downstream sectors, particularly ­polycarbonate (PC).



STRIKE ACTION COULD DENT CRUDE AND GAS SUPPLY

A 48-hour strike by up to 1,200 workers at INEOS's refinery at Grangemouth, UK, could have serious repercussions for crude and gas supplies from the North Sea, according to a BP spokesman.

The site plays a key role in the BP-operated Forties Pipeline System, which transports around 700,000 bbl/day of liquids from the North Sea to the UK mainland. BP says disruption at the Grangemouth refinery could impact gas production.

INEOS had been in discussions with UK workers' union Unite to avert the industrial action, which stemmed from plans to alter its pension scheme. However, talks between the parties broke down and the strike was set to go ahead as planned.

Last week, INEOS was in the process of closing down its 200,000 bbl/day refinery in preparation for the action. The company also declared force majeure on polyethylene (PE) and polypropylene (PP), having been forced to curtail production at crackers and downstream petrochemical plants.





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