Chemical market trends: Prices wane across markets

Market trends and data

19 October 2009 00:00  [Source: ICB]

Spot prices for vinyl chloride monomer (VCM) in Europe have slipped by $50/tonne, thanks to depressed sentiment in the downstream polyvinyl chloride (PVC) market and a dip in upstream ethylene costs.

Limited activity is reported in the VCM market, with a wide gap between buying and selling ideas. Values are heard at $620-700/tonne FOB Northwest Europe (NWE).

Several buyers expect both spot and contract prices to decline further as US imports make their way into the market.

Meanwhile, some producers suggest that tightness in Europe will keep prices largely stable until the end of the year.

US styrene butadiene rubber (SBR) producers appear likely to seek October price hikes of 3-4 cents/lb, says one.

The increase would need to be enough to maintain margins after a 3 cent/lb rise in October prices for feedstock butadiene (BD) and any increases in other feedstocks, including styrene, natural rubber and carbon black, adds the seller.

Throughout the first three quarters of the year, tire producers and buyers generally accepted SBR hikes that were attributed to rising production costs.

US Gulf prices for 1502 non oil-grade SBR for September were 88.5-91 cents/lb FOB, with 1712 oil extended-grade material at 77.5-83 cents/lb.

European October bisphenol A (BPA) contracts dipped by €60/tonne below September's settlement because of lower feedstock costs, ample supply and the availability of cheaper imported material.

October prices are reported at €1,010-1,090/tonne FD NWE.

One trader says: "Demand is not great, and it is currently tough to cover costs."

Some sellers concede that formula-based contracts have fallen, but add that most freely negotiated contracts have rolled over.

A handful of producers say that they expect the €71/tonne drop in the October benzene contract to have more of an effect on November pricing.

One trader says it believes that the key factor in this month's BPA price dip is the volume of cheap imported material from Russia, with some cargoes being offered below €1,000/tonne.

Purified terephthalic acid (PTA) values are poised for a post-holiday fall in the key China market, owing to a $200/tonne decline in October's paraxylene (PX) contract.

PX was agreed at $840/tonne CFR Asia - the lowest contract since March. Some PX suppliers said that this was too low and gave the impression that the PTA market was performing poorly. "The settlement sent out wrong signals to the PTA industry," says a source at Thai PTA maker Indorama.

Indeed, the settled PX contract price was so low that talks between the two other contract nominators, Japanese oil company Nippon Oil and compatriot refiner Idemitsu Kosan, and their customers, either broke down or remained in a stalemate. One China-based end-user from the polyester sector agrees that PTA prices should be lower, and that it would be reluctant to accept any post-holiday rollover in pricing.

The end-user adds that it would find it difficult to accept prices higher than the production cost of PTA, which he estimated at $720/tonne CFR China Main Port.

Spot PTA talks in China a few weeks ago were hovering around $780-788/tonne.

European October dimethyl terephthalate (DMT) reference prices have declined by €113/tonne from September, after prices fell for feedstocks PX and methanol.

DMT settled at €656-697/tonne FD NWE - in line with the traditional formulae relating to its raw materials.

October PX emerged at €615/tonne, marking a €145/tonne drop, while fourth-quarter (Q4) methanol was at €223/tonne FOB Rotterdam, down by €60/tonne from Q3.

Strong crude values and a rebound in prices of feedstock styrene in Asia pushed up styrenics prices by as much as 7% last week.

As NYMEX light sweet crude hovered at around $76/bbl last Thursday - because of a weaker dollar and optimism over the global economic recovery - styrene rose by more than $70/tonne to breach $1,000/tonne CFR China.

Suppliers raised their offers for general purpose polystyrene (GPPS) by $30-50/tonne, to above $1,100/tonne. Offers for acrylonitrile-butadiene-styrene (ABS) were likewise increased to above $1,400/tonne.

The US polystyrene (PS) market has retreated from peak pricing in August - and values could continue to drop, as weak demand brings feedstock prices under further pressure, according to buyers.

October PS pricing is flat or slightly lower than in July, say buyers. Domestic pricing for GPPS was pegged at 71-75 cents/lb DEL in the week ending October 9. By way of comparison, GPPS prices averaged 78 cents/lb during the peak August period.

One buyer notes that sellers appear hungry for orders after demand did not rebound as strongly as expected in September.

Another buyer says it is not expecting a strong finish to the year, but is unsure whether the market would experience as sharp a decline as that seen in November and December last year.

Asian methyl methacrylate (MMA) makers are being forced to settle for smaller price increments for October thanks to decent availability in the region. MMA demand, meanwhile, has remained healthy. A number of October fixtures have been priced $10-20/tonne above September levels, against producers' proposed $50-100/tonne hike because of higher feedstock costs, say some sellers.

Fixtures for bulk MMA lots for October have been concluded at $1,680-1,690/tonne CFR SE Asia/Korea, it adds - around $10-20/tonne higher than September.

A standoff between US paraxylene (PX) contract buyers and sellers continued last Wednesday as the clashing factors of lower benchmarks in other regions and higher energy prices delayed October settlements.

Buyers have petitioned for decreases to at least mirror the October Asian Contract Price and the European benchmark, which both settled down by about 9 cents/lb. One US PX supplier says buyers are seeking even deeper cuts than this in a well-supplied North American market.

September's US benchmark of 51.25 cents/lb was steady from August after producers maintained that prices should be on par with rollovers in the other regions.

A 9 cent/lb PX decrease in the US would take values to 42.25 cents/lb - above US Gulf spot prices of 36.29-37.19 cents/lb seen mid-week.

Producers cited rising energy prices to counter buyers' push for a drop, pointing to an increase in crude oil and natural gas values from September to October.

By: Andy Brice
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly