Wide buy-sell gap mutes trade
The buying frenzy witnessed in the Asian oxo-alcohol spot arena in the preceding weeks fizzled out as prices for August and early September shipment edged lower on the back of weaker buying interest and sliding local values in the China market.
Participants said that the bullish sentiment had cooled down as buyers stayed at the sidelines in anticipation that the tight regional supply will ease with the restart of Chinese majors this week following scheduled turnarounds.
BASF-YPC and Qilu Petrochemical resume production on 27 and 28 July respectively and were heard to be ramping up operating rates, while Lihuayi Petrochemical was planning to recommence operations on 30 July.
Furthermore, end-users felt that a group of traders had played a significant role in pushing up oxo-alcohols numbers by taking positions in the recent weeks. Buyers deemed such price levels to be unsustainable as market conditions in the derivative plasticiser and solvents segments were still feeble. Prices of such products were still struggling to play catch-up to oxo-alcohols values.
Adding to the bearishness, growing concerns of debt woes in the US and Europe could further dampen sentiment, potentially reducing exports in the near term.
Regional producers, however, remained optimistic that the cooling off period was merely temporary and market would soon rebound amid scarcity of spot molecules and rising feedstock propylene prices. A large number of buyers were still holding low inventories and would eventually have to return to the trading scene to restock for year-end production.
On the production front, the restart of Taiwanese Nan Ya Plastic’s 220,000 tonnes/year 2-ethyhexanol (2-EH) facility in Mailiao could be further delayed in the wake of a fire at a hydrogen pipe in the vicinity of the complex on 27 July.
The unit was initially taken off line for security and safety checks following a power outage after a fire at the Formosa group’s Mailiao petrochemical complex on 12 May. No damages were reported.
Separately, production at Formosa Plastics’ 250,000 tonnes/year NBA plant, located in the complex, was heard to be running at normal rates.
NBA
Spot activity was described by market players to be dull and eventful during the week ended Friday.
A 1,000-tonne regional parcel, subject to import duties of 5.0-5.5%, was executed at around $1,620/tonne CFR China for August delivery.
Another discussion for an August parcel, subject to import duties of 5.5%, was heard ongoing with buy-sell indications tagged at $1,600-1,620/tonne CFR China.
Other offers for deep-sea and regional-origin material, subject to import duties of 5.5%, were at $1,630-1,650/tonne CFR China for the same delivery period.
However, these offers met strong resistance from buyers who kept buying indications at below $1,600/tonne CFR China.
In eastern China, n-butanol (NBA) values slid by yuan (CNY) 150-200/tonne to CNY12,550/tonne ex-tank, weighed by lacklustre demand. NBA domestic prices in the southern provinces were similarly weaker at CNY13,000/tonne ex-tank, down by CNY100/tonne from the previous week.
Meanwhile, in southeast Asia, NBA spot prices were notionally assessed to be stable at $1,600-1,630/tonne CFR SE Asia, in the absence of trade. End-users reiterated that they were comfortably covered by term material, capping buying appetite for spot cargoes.
IBA
Sporadic offers for regional material, subject to import duties of 5.5%, were at $1,550/tonne CFR China for August delivery. No fixtures were heard by the end of the week, as buyers stood by indications at $1,510-1,520/tonne CFR China.
On the local front in China, isobutanol (IBA) numbers in the eastern part of the country tumbled by CNY100-150/tonne to CNY11,950-12,050/tonne ex-tank on the back of weaker sentiment. Meanwhile, domestic prices in the south were unchanged at CNY12,500/tonne ex-tank amid thin trade.
2-EH
Few fresh numbers emerged during the week as the majority of buyers retreated to the sidelines, preferring to monitor the market situation before initiating fresh discussions. Seeing that buying interest was weak, most sellers withheld their indications as they felt it was meaningless to offer any material.
Around 2,000 tonnes of regional material, subject to import duties of 5.5%, were sealed at $1,900/tonne CFR China for August delivery.
Other traders’ selling indications were at $1,940/tonne CFR China for the same delivery period. However, these offers failed to materialise into fixtures.
Notional buying indications were kept below $1,890/tonne CFR China.
Similarly, no new business was heard for tariff-free southeast Asian material. Hence, on a CFR basis, 2-EH prices were notionally adjusted to $1,995-2,015/tonne in tandem with weaker sentiment in the broader oxo-alcohols market.
Domestic 2-EH prices in east China slumped by CNY250-300/tonne week on week to CNY14,700-1,4750/tonne ex-tank while values in the north rolled over at CNY14,450-14,650 ex-tank.
DOP
Frail demand and prevailing wide-sell gap continued to mute trades for imports.
A sole offer, northeast Asian material, was pegged at $1,800/tonne CFR China. The offer failed to materialise into a fixture as buyers kept buying indications at below $1,780/tonne CFR China.
In China, dioctyl phthalate (DOP) prices in the eastern part of the country fell by CNY50/tonne to CNY13,750-13,850/tonne ex-tank. Similarly, in south China, DOP numbers were similarly weaker by CNY100/tonne to settle at CNY14,000-14,150/tonne ex-tank.
($1 = CNY6.44)
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