Editor Mike Nash, mike.nash@icis.com

    NOTE: For full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com  and click on “methodology”.

A major European producer had announced contract price nominations for March up €120/tonne. A second major producer had yet to nominate March prices but was considering a similar price level. This producer indicated that its March nomination price would be announced next week. Producers justified these figures on the back of increasing feedstock prices and continued tight supply.

Producers were prepared for tough negotiations this month but were confident these prices would go through. Buyers on the other hand reacted strongly to the €120/tonne increase saying that this price level was unjustifiable and that it would not hold. Buyers were willing to meet March increases in feedstock prices, which were approximately €60/tonne (€40/tonne covered the increase in propylene prices and approximately €20/tonne the increase in ammonia), but not higher.

In production news, the force majeure at INEOS Olefins and Polymers’ ACN facility in Cologne remained in place but the plant increased its production slightly and was currently running at 80-90% of its capacity. There was no set date for the fm to be lifted but INEOS indicated it would be lifted once a reasonable level of inventory was reached. Production at DSM’s plant in the Netherlands was running smoothly and at full capacity.

European acrylonitrile-butadiene-styrene (ABS) producers were pushing big hikes for March contracts this week, as feedstock pressures were depleting margins. Values being quoted ranged between €70-120/tonne, however sellers were hoping for a more modest rise of around €50/tonne, and there were rumours of one producer offering a rollover for the month. Negotiations were just getting underway but market conditions were said to favour a price push, as players reported strong downstream demand, particularly in the automotive and electrical appliances sectors. Supply was also said to be tight as traders found it increasingly difficult to source competitive Asian material, as prices from the region had risen €200-300/tonne in Q1, making it a sellers’ market in Europe.

Propylene supply problems continued to impact heavily on the European market this week. Yet another force majeure was declared this week on the back of a problem at a German refinery. Sources said there was now tremendous pressure on the propylene system in Europe. Spot prices were pegged by some sources at €980-1,000/tonne CIF NWE this week, but in the absence of deals due to the lack of volume. The March contract settled €910/tonne FD NWE.

 There were no confirmed deals in the European spot ACN market this week. However, a major European producer reported a sale into the Mediterranean at $2,240/tonne CIF WE for March delivery, but this was not confirmed on the buy side. Trader opinion was divided as to whether this higher price was achievable.

Pending further confirmation of deals in the spot market, prices were assessed at $2,150-2,200/tonne CFI WE, up $50/tonne, on tight supply, healthy demand and market sentiment.

A cargo out of Turkey was reported sold at $2,210/tonne FOB but the producer could not be contacted to confirm this. This FOB price was consistent with CIF prices in Asia, around $2,400/tonne CIF. There were also rumours of a cargo from Russia sold to India at $2,390 CIF WE, but this was also not confirmed.

Traders saw strong demand from end users, particularly demand for acrylic fibre. According to traders, spot market prices reflected this level of demand, coupled with tight supply conditions and increased feedstock prices. The higher prices were expected to be passed downstream to producers easily.

Another trader believed that end users would be able to absorb the extra costs for at least another month and therefore saw room for further price increases during that period.

($1 = €0.74)

This week on ICIS news ( www.icis.com):

05 March 2010 15:02  US ACN export prices hit record high

02 March 2010 06:54  Strong feedstock prices lift Asian ABS values

26 February 2010 23:59  Europe February ACN contract settles up €120/tonne