Chemical market trends: March rises on high upstream and Asia prices

27 February 2012 00:00  [Source: ICB]

A US producer has nominated a 25 cent/lb increase for its March butadiene (BD) contract price. The hike would move the producer's contract price to $1.55/lb. The same supplier split the market in February by refusing to settle with other producers at $1.18/lb. The split settlement left about 85% of the US market in February at the lower contract level. The proposed increase is based on tight supply in the US, as several crackers are down for maintenance with more plants expected to go into turnaround in the coming months. Strong demand and high prices in Asia are also lending strength to the increase.

Japan's JX Nippon Oil & Energy has posted a rise of $65/tonne for its March benzene Asia Contract Price (ACP), taking it to $1,260/tonne CFR Asia. The nomination was much higher than spot prices, which were around $1,190-1,200/tonne FOB Korea. About 50,000-60,000 tonnes of benzene are expected to be shipped out from South Korea to the US this month as a result of the opening of an arbitrage window. US benzene prices are about $61-68/tonne higher than those in Asia. Prices in the US rose on February 16 to $4.19-4.20/gal, or $1,253-$1,256/tonne FOB Barges, while in Asia prices lifted by $5/tonne the next day to $1,185-1,195/tonne, supported by firm US crude.

The US February paraxylene (PX) contract price has increased by 7 cents/lb from January in the wake of higher Asian prices and upstream mixed xylene values. The settlement was at 79 cents/lb. Nominations are also out for the March PX ACP. Japanese aromatics producers Idemitsu Kosan and JX Nippon Oil & Energy are seeking hikes of $150/tonne and $100/tonne, respectively, while South Korea's S-Oil is also asking for an increase of $100/tonne. The February ACP was fully settled at $1,590/tonne CFR Asia.

By: Elaine Burridge
+44 20 8652 3214

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