30 January 2012 00:00 [Source: ICB]
Significant increases are sought for February propylene contracts, with European sellers keen to offset a spike in naphtha and crude costs since the last settlement (see page 10). Producers say a €100/tonne propylene hike - and possibly greater increases for the other olefins - will make cracker margins "acceptable again, but would certainly not make them sustainable."
An 18 cent/lb ($397/tonne) hike is proposed by a US butadiene (BD) producer for February. The 16% increase puts its contract at $1.30/lb, based on its January contract of $1.12/lb - which split the market after it refused to settle with other suppliers at $1.05/lb. Observers expect Feburary's price to rise by 5-15 cents/lb.
The arbitrage window for benzene from Asia to the US is open, although spot prices slipped late in the week ending January 20. Spot prices in Asia were weaker at $1,190-1,205/tonne FOB Korea, after US January values fell to $4.15-4.22/gal, or $1,241-1,262/tonne, FOB Barges. WTI crude futures were also down at about $100/bbl. The benzene spread was about $51-57/tonne that morning. Freight costs for 5,000 tonnes of benzene from South Korea to the US was about $60/tonne. Meanwhile, Japan's JX Nippon Oil & Energy Corp. announced its nomination for February's benzene Asian Contract Price (ACP) at $1,250/tonne CFR Asia, $190/tonne or 18% higher than its January price.
US-based major ExxonMobil has nominated its February ACP for paraxylene (PX) at $1,690/tonne CFR Asia. This came soon after proposals by Japan's Idemitsu Kosan at $1,690/tonne, JX Nippon Oil & Energy at $1,630/tonne and South Korea's S-Oil at $1,700/tonne.
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