Acetic acid prices stable-to-soft on weak demand, ample supply
Asia’s acetic acid spot prices were assessed as steady-to-soft reflecting lower discussion levels for August loading China-origin spot cargoes in line with prolonged bearish market sentiment in the domestic market.
Offers for August loading cargoes were heard as stable-to-soft at $515-530/tonne FOB China, depending on the volume. This was countered with buying notions at $490/tonne FOB China but the wide bid-offer gap hindered trades.
The outlook for end-August and September loading cargoes, was mixed, with firmer offers from China, fuelled by rising upstream methanol values and spot availability concerns. Selling indications for end-August/September loading spot cargoes were at $530-540/tonne FOB China, up $10-15/tonne from current levels. Major acetic acid producers will carry over their July contract commitments to August as a result of unplanned outages in July. This raised concerns of a shortage of spot availabilities, a local producer reasoned.
Buyers however, argued that the key factor to drive up spot prices would only be from unexpected production issues as output levels at most major plants worldwide are back to normal while previous shortfalls in Europe have been accounted for. BP’s UK-based plant is expected to resume production by September following an 80-day outage. (See production news)
Northeast Asia
Prices in this region were assessed as down by $10/tonne on the top end of the range on lower discussion levels for August loading cargoes. A 3,000 tonne China-origin cargo was heard sold at $570/tonne CFR NE Asia for August loading, but this could not be confirmed. Buying notions were capped at below $550/tonne CFR NE Asia.
Regional supplier sources however, argued that discussion levels for regional product remained in the high $500s/tonne CFR NE Asia. Confirmed deals however, remained elusive owing to the shortage of spot cargo availabilities from regional sources.
China
Although key eastern China-based producers continued to hold their offers steady at yuan (CNY)3,900/tonne ex-tank, stiff competition from inland supply sources and heightened buyer cautiousness resulted in lower transaction prices.
Ex-tank deals in the key eastern China market were thus concluded CNY100-150/tonne lower at CNY3,400-3,800/tonne during the week. These transacted prices were depressed by inland cargoes that were priced lower at CNY3,450-3,500/tonne delivered into the region. The weak domestic market and the return to normal production at most local plants prompted a key producer to focus more on maximising its export volumes.
Meanwhile, a Chinese producer reported receiving a buying enquiry for a 1,000 to 2,000 tonne end-August loading cargo to Iran. Market participants termed this as a possible acetic acid-methanol barter trade between the two countries whereby the acetic acid cargo would eventually be re-exported from Iran. This however, could not be confirmed.
The CFR China Main Port (CMP) price was notionally assessed as lower by $10/tonne in line with the broader northeast Asian market.
Southeast Asia
Spot acetic acid prices were assessed as lower by $5-10/tonne in line with discussion levels in the broader market. Buying notions were mentioned around $10/tonne lower at $550-560/tonne CFR SE Asia versus offers in the high $500s/tonne CFR SE Asia. Deals however, were scant because of sluggish demand. An end-user said it has postponed its August spot purchase to September, citing weak downstream market conditions and ample availability.
South Asia
Prices were assessed as down by $5-10/tonne reflecting lower discussions for August shipment cargoes in the key India market. Buyers largely withdrew to the sidelines in anticipation of further price declines for China-origin cargoes given the improved supply and declining spot prices in Europe, which have contributed to increased availability of spot cargoes for this region.
A supplier of Middle East cargoes was expected to kick off discussions next week for a 3,000 to 5,000 tonne lot for H2 August loading. Meanwhile, buying notions edged lower to $560-575/tonne CFR India, down by $5-20/tonne on the week . Despite this, serious discussions were scant.
Transaction levels in the domestic sector declined this week as suppliers of both local and imported products reduced their offers owing to the arrival of import cargoes. Deals were heard concluded at Indian rupee (Rs)30.25-31.50/kg ex-tank, down by Rs0.50-0.75/kg on the week.
Contract
Second quarter contracts were heard settled at higher levels than in the first quarter for some market participants. The pricing range was mentioned at $540/tonne and up to $730/tonne across Asia outside China.
Separately, a northeast Asia-based producer proposed a $100/tonne hike for its second quarter contract prices, in line with prices in the spot market during the quarter. However, this was met with mixed responses from buyers.
In northeast Asia, contract prices for the first quarter of this year were heard concluded at an increase of around $50/tonne over the fourth quarter of 2010, depending on the buyer.
Average spot price
Q1: $480/tonne CFR NE Asia
Q2: $598/tonne CFR NE Asia
Q1: $503/tonne CFR SE Asia
Q2: $610/tonne CFR SE Asia
Freight rates
East China to southeast Asia: $60/tonne for a 1,000 tonne lot
Shanghai to Ulsan, $22-23/tonne for 3,000 tonnes; $19-21/tonne for 4,000 to 5,000 tonnes.
East China to south Asia: $60-80/tonne for a 3,000 tonne lot
Production news
Production at Formosa BP Chemicals Corp’s (FBPCC) 300,000 tonne/year acetic acid plant at Mailiao, Taiwan was unaffected by a fire at Formosa Group's Mailiao petrochemical complex late on 26 July and is currently operating at 100% capacity, according to a company official.
Chang Chun Petrochemical plans to start up its 400,000 tonne/year plant at Mailiao at the end of August or September, according to a company official.
In China, the 1.2 m tonne/year Nanjing facility is heard to be fully operational and operating at or near maximum rates.
Jiangsu Sopo is operating its 1m tonne/year Zhenjiang acetic acid plant in Jiangsu province at around 80% capacity this week after a minor outage on 21 July which was caused by the outage at its upstream 500,000 tonne/year methanol plant on the same day.
Shanghai Wujing is operating its two acetic acid plants with a combined capacity of 700,000 tonnes/year at 80-90% this week. The facility can produce up to 800,000 tonnes/year of acetic acid. The producer restarted operations at the 500,000 tonne/year unit as scheduled last week following a shutdown on 2 July in line with an outage at its upstream methanol plant. The smaller 200,000 tonne/year plant was operating normally during the outage of the bigger facility.
Hebei Chung Shun Chemical is operating its 500,000 tonne/year acetic acid plant at Xingtai city in Hebei province at around 80% capacity, up from 65-70% in mid July after the company restarted production on 7 July following a month-long turnaround.
The 500,000 tonne/year Singapore-based acetic acid facility is also heard to be fully operational and operating at or near maximum rates. The plant is scheduled for maintenance in the fourth quarter.
BP Chemicals' 380,000 tonne/year line at Hull, UK, is undergoing maintenance until the end of August. Force majeure was announced on 10 June and allocation levels are at 40% for July and 60-70% in August.
Production data
In China, a 500,000 tonne/year acetic acid plant at Nanjing in Jiangsu province is scheduled for a three-week shutdown from 10 August, according to sources close to the company. However, this could not be confirmed.
Shandong Hualu Hengsheng plans to shut its 200,000 tonne/year acetic acid plant at Dezhou in Shandong province for maintenance in August. The exact dates and duration of the shutdown are not confirmed, according to a company official. However, sources close to the company said that the shutdown will be from 1 to 26 August.
($1 = CNY6.44)
($1 = Rs 44.08)
This week on ICIS news ( www.icis.com )
29-Jul-11 00:22 US methanol contract prices almost reach 3-year high on outages
28-Jul-11 23:05 US Methanex says outages, supply issues raising methanol prices
28-Jul-11 12:02 China’s Qinghai Zhonghao to shut methanol plant on 1 August
28-Jul-11 05:55 Asian PET producers hike August offers on higher feedstock costs
27-Jul-11 18:10 Europe June PTA prices decrease in line with upstream PX
