Europe contracts
A monoethylene glycol (MEG) supplier to Europe is seeking an increase to about €1,100/tonne FD NWE ($1,571/tonne) for the August contract price to reflect the current firming market conditions. Three European producers have already expressed their intentions to attempt an increase over July’s €1,044/tonne, but have yet to specify a figure.
Fresh available imports are rare and pricing, particularly spot, is on the up globally. The arguments for an increase become stronger day by day, one of the producers added.
While a major consumer is targeting a decrease in line with the Asian contract price nominations, others acknowledge the possibility that the European contract MEG price may increase.
Asia contracts
Asia contract price nominations dropped by $50-60/tonne compared with July, to $1,300-1,320/tonne China Main Port (CMP).
US contracts
The US contract benchmark for August is down 2 cents/lb to 65 cents/lb.
Upstream
The European ethylene contract settled at €1,120/tonne FD NWE for August, up by €30/tonne from July. The increase was driven by firm feedstock and a better-than-expected outlook for demand. Spot numbers are rising and have reached the low €1,000s/tonne on the pipeline.
The European ethylene oxide (EO) market is focused on a €30/tonne increase in ethylene feedstock costs for August, which will translate into a rise of about €25/tonne for EO formula-related contracts. For freely-negotiated EO business, sellers expect a similar, if not slightly higher, rise in August, supported by ongoing good demand, despite the summer holidays. Customers’ views on freely-negotiated EO business in August, however, ranges from a similar, if not lower increase, to a rollover, on the back of good supply and slower offtake during the summer holidays.
Downstream
After three months of polyethylene terephthalate (PET) prices decreasing because of competitive imports and weakening feedstocks, buyers and sellers now believe prices may have bottomed out. Justification for this includes fewer imports and increasing production costs. Rollovers or increases of €20–100/tonne, depending on source, are likely for August PET. July prices have mainly been in the €1,200s/tonne FD Europe.
Spot bulk market
The spot CIF NWE T2 market gathered momentum as both antifreeze, and reportedly PET buyers, resorted to buying MEG at the higher offers. The market was more buoyant than it has been in weeks as customers realised their options were limited going into the antifreeze season. At least 7,000 tonnes changed hands, though some business took place behind the scenes.
A trader responded to a tender and sold 1,000 tonnes to the coolants sector for August delivery at €918/tonne. This deal was followed by a second trader selling 2,000 tonnes at €935/tonne to antifreeze for any August. Both these deals were fully confirmed. A third trader reported selling 1,000 tonnes to a PET producer for prompt delivery.
P&C activity from the start of the week took place below the range, including an €880/tonne which almost all players deemed to be an outdated figure. One of the traders said it managed to source US spot material at a €900/tonne equivalent in the early part of the week. US sources now say exports have stopped and European players warn of offer prices increasing further.
Spot truck market
The truck market was dead in areas such as France, Italy and Spain, but rather active in the rest of Europe. Not everyone agreed with this synopsis, so while up to €940/tonne was recorded regularly and on occasion €950/tonne was mentioned, the low €900s/tonne FCA Rdam continue to feature in the published range.
The antifreeze sector came alive after what many said had been a dull few weeks as customers held back uncertain of what lay ahead. Truck prices have lagged behind the bulk market for several weeks, a situation which is not sustainable for long. Renewed interest and still-higher bulk prices have spurred suppliers to increase their offer prices. It remains to be seen whether the holiday season stifles their success to achieve €960-970/tonne.
Russia
Russia's MEG spot rouble (Rb) prices are marginally down this week at Rb45,500-48,000/tonne EXW, including 18% VAT. Domestic prices softened as local MEG manufacturers, Kazanorgsintez and Nizhnekamskneftekhim, discounted their sales price. Domestic producers are not expected to review their official quotes in early August.
Asia
Prices in Asia rebounded to $1,235/tonne CFR CMP, following unconfirmed news of a fire at a hydrogen pipeline belonging to Formosa Petrochemical Corp. Upcoming shutdowns in Asia have spurred traders on to buy as they expect higher prices are on the cards, but macro-economic factors was countering the bullish sentiment.
US
Spot barge prices for EGAF are 53-54 cents/lb, down slightly from earlier in July. Demand from antifreeze blenders is likely to provide a support floor; ramping up for antifreeze season typically begins in August. The second Nan Ya fire could have a small impact on pricing, but for now, US Gulf Coast is well-balanced.
Production
BASF’s EO/MEG shutdown in Antwerp, Belgium, is due for a three-week shutdown from September, a source verified on Friday. EO capacity is rated at 500,000 tonnes/year, according to ICIS records.
October/November will see a two-week maintenance shutdown at Clariant’s Germany plant in Gendorf. A company source said capacity is 240,000 tonnes/year for EO equivalents.
Taiwan’s Nan Ya Plastics, part of the Formosa group, plans to shut down its four MEG units in turns from September. Each will be shut down for around one month. The company has a combined MEG capacity of 1.8m tonnes/year.
Jubail United Petrochemical Co's 640,000 tonne/year No 2 MEG plant in Jubail will shut down from mid-September for an approximate 35-day maintenance.
Eastern Petrochemical Co (Sharq), a joint venture between SABIC and a Japanese consortium led by Mitsubishi Corp, plans to shut down its 450,000 tonne/year Sharq 2 in December for around ten days and shut down its 450,000 tonne/year Sharq 3 plant in October for about ten days.
Bulk DEG
There are no deals to report for bulk diethylene glycol (DEG). The range has been widened to incorporate the price ideas held by the few players in the market. Some sources said there was a surplus of domestic and imported product which was putting pressure on prices to go down. Others said the opposite.
Truck DEG
Truck sales continued in a similar vein to recent weeks with prices oscillating between €1,000-1,050/tonne FD NWE, depending on source. A supplier still says its business is taking place at €1,050/tonne FCA NWE, although this figure is not repeated by others.
US
DEG benchmark prices for August were rolled over at 67 cents/lb, with some prices heard down to about 60 cents/lb.
Asia
Asia DEG values remained stable at $1,210-1,215/tonne CFR CMP.
($1 = €0.70)
(€1 = £0.88)
(€1 = Rb39.48)
This week in ICIS ( www.icis.com):
29/07/2011 16:55 MEG supplier to Europe seeks around €1,100/t for August contract
28/07/2011 18:50 Europe PET prices may increase for first time in three months
28/07/2011 12:27 Artlant begins testing 700,000 tonne/year PTA plant in Portugal
28/07/2011 05:55 Asian PET producers hike August offers on higher feedstock costs
27/07/2011 19:01 Suppliers prepare Europe MEG market for an August increase
