Chemical market trends: Many are still eyeing hikes for New Year

03 January 2011 00:00  [Source: ICB]

Producers are said to be targeting three-digit increases for January ethylene and propylene contracts in Europe. This is blamed on high upstream costs as well as tight supply and demand.

Cracker margins are under pressure from strong crude oil and naphtha, and olefins supplies have been squeezed because of overruns for planned maintenance, slow restarts after strikes in France, and reduced operating rates prompted by economics and the bad weather.

The January butadiene (BD) monthly contract price has been agreed in Europe - the first ­industry-wide contract agreement on a monthly basis.

The contract at €1,340/tonne FD Northwest Europe (NWE) marks a €60/tonne hike from December and a €15/tonne rise from the fourth-quarter (Q4) contract.

Orthoxylene (OX) suppliers in the US are eyeing increases of 3-4 cents/lb ($66-88/tonne) for January contracts, up from 51 cents/lb the month before.

Kansas, US-based Flint Hills ­Resources had nominated 54 cents/lb FOB. Another producer is said to be a little more ambitious as it is looking for 56 cents/lb.

In Europe, the first-quarter (Q1) methanol contract has been fully confirmed at €315/tonne FOB Rotterdam - €38/tonne above the previous contract.

Spot values have been higher than the €277/tonne Q4 settlement for most of the quarter.

However, some buyers maintain that the new contract was too high, ­following losses in the spot market over the past few weeks. The price of €275/tonne in the week ending December 17 was down from €286-293/tonne three weeks earlier.

Data for this issue was gathered on December 22 because of the Christmas holidays.

By: Andy Brice
+44 20 8652 3214

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