Stronger buying interest Asia boosts IPA prices
Asian isopropanol (IPA) prices are $10-20/tonne higher during the week of 25 July, supported by renewed demand in China and southeast Asia as well as high feedstock costs.
Some traders and distributors in southeast Asia are returning to the spot market as a resurgence in Chinese demand, firm feedstock costs and higher prices for other solvents have lifted buying sentiment.
However, price discussions in China slowed down following a flurry of deals in the past two weeks. Most distributors are in a fairly comfortable position as they have already secured shipments for arrival in August. These buyers are cautious about taking additional quantities because offers are higher and the current tight supply in east China is expected to ease next month. A substantial quantity of cargoes booked in the past two weeks will be delivered next month.
Producers are eyeing prices at up to around $1,400/tonne CFR Asia in order to reflect high feedstock costs.
Acetone spot prices have risen by $30-40/tonne to $1,110-1,150/tonne in the week ended 29 July. Propylene prices in northeast Asia were around $5-15/tonne higher at $1,530-1,570/tonne CFR NE Asia.
Northeast Asia
Prices in northeast Asia are higher to reflect deals and buy-sell discussions for August shipments to China.
While Chinese buying ideas continue to firm in line with increasing domestic prices, the buy-sell gap has widened as sellers are raising their offers or price ideas by as much as $50/tonne this week.
Most distributors are hesitant to accept the higher prices as the current supply shortage in eastern China is expected to improve next month when close to 10,000 tonnes of domestic and imported cargoes are scheduled to be delivered. This includes 2,000-3,000 tonnes of supply from a major domestic producer, which has delayed its July shipments to the following month because of its low inventories.
However, most Chinese importers are expecting the current high feedstock costs, which have kept Chinese IPA production at reduced rates (see Production news), to underpin domestic prices.
Two regional producers each sold around 500 tonnes of IPA for loading in August at around $1,350/tonne CFR China. This is higher compared with deals done in the past two weeks at around $1,280-1,320/tonne CFR China.
An offer at around $1,350/tonne CFR China for a 1,000 tonne arbitrage cargo delivering in mid-August was countered by a buying idea at $1,300-1,320/tonne CFR.
Selling ideas were at $1,350-1,400/tonne CFR China with several regional suppliers targeting prices at the mid or high end of the range. Buying ideas were mostly at below $1,350/tonne CFR China.
Domestic prices in eastern China have risen by yuan (CNY) 100/tonne to CNY11,000-11,100/tonne ex-tank/EXW as a result of product shortages. However, importers said prices are likely to have peaked as several local and regional shipments will arrive in the first half of August. Downstream demand remains poor, they added.
Prices in southern China were at around CNY11,000-11,200/tonne ex-tank, a CNY200/tonne increase from the previous week.
Southeast Asia
Prices in southeast Asia tracked gains in the Chinese market.
Buying interest has improved with a few deals heard done this week. A 500 tonne regional cargo for loading in the first half of August was booked at around $1,320-1,330/tonne CFR SE Asia. Another 500-700 tonne Asian shipment was traded at around $1,350-1,370/tonne CFR SE Asia for loading in the second half of August.
However, some importers are expected to require cargoes only for loading at the end of August as they have sufficient inventories. The markets in Indonesia and Malaysia are also likely to slow down next month because of the Muslim fasting month of Ramadan.
Domestic prices in Singapore and Malaysia are stable at around $1,400/tonne ex-tank.
Production news
Japan’s JX Nippon Oil & Energy is planning to maintain the operating rates at its 85,000 tonne/year propylene-based plant at around 60-65% capacity until the end of August.
South Korean producer Isu Chemical has restarted its 30,000 tonne/year acetone-based plant. The producer took the facility off line in June because of weak margins.
China’s Jiande Xinhua Chemical is operating its 100,000 tonne/year IPA/isopropylamine swing plant at reduced rates this week as margins are still poor because of high acetone costs. The company shut the facility in June as a result of poor demand and resumed production intermittently last week.
Unfavourable economics have also led another Chinese producer Jinzhou Petrochemical to continue to halve its 100,000 tonne/year propylene-based IPA production.
This week on ICIS news ( www.icis.com ):
28-Jul-11 10:58 China’s Yanshan Petrochemical to shut cracker, derivative units mid-Aug
28-Jul-11 03:46 Japan’s Mitsui Chemicals eyes Chiba cracker restart on 29 July
27-Jul-11 07:13 Taiwan's Formosa restart plans may get delayed by fire
($1 = CNY6.44)
