22 November 2013 23:59 [Source: ICIS news]
The contracts were concluded on a free delivered (FD) northwest Europe (NWE) basis. Price negotiations took longer than usual, but the overall trend was steady from the previous month.
November price settlements were indicated in the low to mid-€800s/tonne FD NWE. This included rollovers, modest increases, and some small reductions.
Producers said prices had been agreed towards the high end of the assessed range, while buyers mostly saw prices closer to the low end. Settlements above and below the assessed range were also noted.
The €30/tonne decrease in the upstream ethylene contract price was counterbalanced by the closure of INEOS’s Hull plant in the UK last month and the announcement that Celanese is considering shuttering its VAM plant in Tarragona, Spain.
The combined nameplate capacity of these two plants is 500,000 tonnes/year, but the INEOS plant was understood to have been operating at well below its total capacity of 300,000 tonnes/year.
Most market participants said they do not expect the increased dependence on imports to reduce supply in Europe in the long term.
One producer observed that the improving macroeconomic environment in the EU is benefiting the automotive and construction industries, which in turn is raising consumption of VAM end-use products.
A second producer said consumers are having to look for new sources of VAM to replace the lost European production, and this will have an impact on prices for 2014.
One buyer that agreed its November contracts at a rollover said it is confident that importers will be able to cover the shortfall, and noted that Europe has long been structurally dependent on imports.
A second buyer said it had concluded some decreases for its November contracts, and added that its suppliers are offering additional material.
A third buyer said that while there may be some effect from the VAM plant closures, it is not experiencing any difficulty in finding alternative suppliers.
A fourth buyer commented that demand is still rather poor and destocking has begun in preparation for the end of the year.
A buyer that was still involved in negotiations felt that November contract prices should be around €820/tonne FD NWE, but said producers were offering €850-870/tonne FD NWE, representing a €30-50/tonne increase from October.
The source emphasised the lack of demand in Europe, adding that spot prices last month were at €790/tonne FD NWE.
Spot prices were assessed on Friday in the range €805-830/tonne FD NWE. A slight upward trend is evident in the spot market, as less extra-contractual material is now available.
One producer said it is negotiating to sell a cargo for December delivery at an increase of €10/tonne compared with November price levels.
A buyer said it purchased tonnes this month at a price in the low €800s/tonne FD, reflecting a €10/tonne increase from October.
A reseller said spot prices are still in the high €700s/tonne FD with limited opportunities to sell. A second reseller said prices are under pressure and talked in the high €700s/tonne FD, although it was able to sell spot material earlier in the month at €800-810/tonne FD.
A third reseller said spot prices are around €810-820/tonne FD NWE, although there are rumours that import material is obtainable in the high €700s/tonne FD.
Prices in the UK are at €840-850/tonne FD, the source said, adding that the usual end-of-year downturn in European prices has yet to be seen.
($1 = €0.74)
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