Chemical market trends & data: Buyers fight huge hikes

09 June 2008 00:00  [Source: ICB]

Prices continue to climb, but sellers face fierce resistance. China's ABS producers may cut operating rates to stem losses. European buyers oppose bullish OX contract ideas 


US ethylene contracts are up by 1.50 cents/lb and 2.50 cents/lb for April and May, respectively. This takes April ethylene to 63 cents/lb, while May contracts are at 65.50 cents/lb.

The combined 4 cent/lb hike followed protracted negotiations during which buyers opposed initiatives for a 5 cent/lb hike in April and a similar increase in May.

Producers have nominated June contract increases of 5 cents/lb.

In Europe, an unplanned outage has forced the US's Dow Chemical to declare force majeure on ethylene supplies from its No. 2 cracker at Terneuzen, in the Netherlands. The 575,000 tonne/year ethylene cracker tripped on June 1 and is expected to be down for at least a week, says a company source.


Isopropanol (IPA) numbers in the Middle East have risen by $25/tonne week on week following a sudden spike in Indian IPA values.

IPA prices were at $1,480-1,530/tonne CFR Middle East last week - up nearly $100/tonne over the past month. Domestic ex-tank prices have also surged by $65/tonne to $1,540-1,550/tonne in a week.

Demand is decent, while supplies are tight, exacerbated by a shutdown of a 70,000 tonne/year plant by a major Indian supplier.

Indian IPA prices were at $1,450-1,500/tonne CFR India last week.


Prices of acrylonitrile-butadiene-styrene (ABS) have risen by yuan (CNY) 1,000/tonne ($144/tonne) in China since early May, due to rising feedstock costs.

ABS prices are at CNY16,550-16,950/tonne delivered East China and may rise further if feedstocks remain high, say traders.

Raw material butadiene (BD) prices have risen by CNY3,000/tonne to CNY18,000/tonne ex-works, while another feedstock, styrene monomer (SM), is up by CNY2,200/tonne since early May to CNY13,720-13,770/tonne ex-tank.

Some ABS producers, who have been unable to pass on the rising costs to downstream converters, are said to be planning to cut their operating rates to reduce losses.


In the US, June's benzene contract has been confirmed at a record $4.31/gal, representing a 44 cents/gal gain. This was driven by a flurry of highs for NYMEX energy prices.


Japan's Nippon Oil has agreed the June paraxylene (PX) Asian Contract Price (ACP) with a key Taiwanese customer at $1,440/tonne, up by $150/tonne from May.

Nippon Oil had previously announced its June nomination at $1,470/tonne CFR Asia because of high upstream crude and naphtha prices. However, negotiations met strong resistance from customers, says a company source. US major ExxonMobil is also said to have settled its ACP $150/tonne higher, although this has not yet been confirmed.

Europe's initial June PX contract is at €950/tonne, up €92/tonne on May.


A wide gap between buy and sell ideas for June's orthoxylene (OX) contract in Europe has thrown the market into uncertainty.

Producers are looking for as much as a €120/tonne increase from May's settlement.

The recent run of gasoline and crude highs has led to sellers pushing for targets of up to €960/tonne FD NWE the May contract was concluded at €840/tonne.

This bullish stance has been met with fierce resistance from buyers, who are looking to keep June values below €900/tonne.

Despite acknowledging the large swings in upstream crude values, some point out that the seasonal demand predicted to take off in the second quarter had been lower than expected.


Second-quarter (Q2) acetic acid contracts in Europe have fallen by €80/tonne on average because of ample supply and lower methanol contract values.

A range of decreases were heard, mostly €70-90/tonne below Q1 levels.

The acetic acid contract is therefore now pegged at €560-620/tonne FD NWE.


State-owned urea fertilizer company Pupuk Iskandar Muda has sold prilled urea at more than double the level achieved in the last Indonesian sales tender, say traders.

The $738/tonne deal will be shipped between mid-June and early July.

The highest bid at the previous Indonesian export sales tender in November last year was heard at $350.50/tonne FOB.

The rise is blamed on strong international demand and tight supply, because of China's absence from the export arena since its 100% increase on export duties for all chemical fertilizers.


US phenol contracts for May have risen by up to 2 cents/lb for most accounts, taking prices to 80-85 cents/lb freight equalized, in line with the May benzene hike.

The increases are due to high feedstock costs, which have been squeezing producer margins throughout the year, says one seller.


US industrial ethanol maker Grain Processing Corp. (GPC) intends to charge its customers on a FOB basis in 2009 due to the impact of surging crude oil prices on transportation costs.

Iowa-based GPC sent a letter to its customers explaining that freight would be covered as a separate line item on its accounts from next January.

The proposed change in the pricing scheme is the first of its kind in the US industrial ethanol sector, according to a company souce.


For the first time in three months, a third European styrene barge contract has emerged. The third June contract was concluded at €1,185/tonne FD NWE.

A significant rise had been widely expected, as sellers struggled to cover production costs as a result of rapid price movement upstream for benzene and energy values.

The partners had not managed to reach a third public settlement in April or May, and were instead forced to revert to an undisclosed fallback mechanism. This had caused consternation in the market, with players calling for greater transparency in settlements.

The initial European styrene barge settlement settled up €85/tonne from May at €1,190/tonne last Monday, followed by a second contract at €1,145/tonne. This also represented an €85/tonne increase.

Meanwhile, June's European free carrier (FCA) styrene contract settled at €1,190/tonne FCA Rotterdam - up €85/tonne because of upstream costs.

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