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Prices rise tracking increases in Asia

– March traded at $1005/mt

– Asian markers up $3/mt on the day

European spot prices rose tracking earlier increases in Asia. S&P Global CSG assessed styrene for loading 5-30 days forward at $994/mt FOB ARA Wednesday, up $1.50/mt on the day. Buying interest continued on Wednesday as March cargoes were heard traded at $1,005/mt. “It seems [the market] is starting to pick up, especially the forward months which we can see from the prices,” a distributor said. Demand has picked up this month on expectations of turnarounds in the second quarter. Market participants were said to be waiting for movement in Asia, particularly China. High stocks in China were limiting shipments from Europe, sources said. Chinese inventory levels were last heard at 306,500 mt on Wednesday. The distributor added that European prices will be driven by Chinese supply and demand. Early discussions of the March contract price settlement were heard, and a source expected a small increase following an uptick in the spot market. “Considering benzene and ethylene costs, spot prices and buying activity, I expect a Eur20-25/mt increase,” the distributor said. In Asia, styrene rose $3/mt day on day to $1,077/mt CFR China and $1,027/mt FOB Korea Wednesday.

RATIONALE:

S&P Global CSG assessed styrene for loading 5-30 days forward at $994/mt FOB ARA Wednesday, up $1.50/mt on the day. February was assessed at $981/mt, up $5/mt on the day, $1 above the bid heard at $980/mt with the offer at $990/mt. March was assessed at $1,005/mt, down $4/mt in line with two trades heard at $1,005/mt and also within a bid offer range of $1,000-1,010/mt.

Asian Styrene: Price rises $3/mt, $1,077/mt CFR China

Asian styrene monomer rose $3/mt day on day at $1,077/mt CFR China and $1,027/mt FOB Korea Wednesday, tracking higher feedstock ethylene prices. Offers were heard at $1,078-$1,085/mt CFR China for March arrival cargoes but no buying indications or deal was heard concluded. In the east China domestic market, discussions were rangebound with the prompt marker assessed up Yuan 25/mt on the day at Yuan 8,455/mt ex-tank Wednesday. Its import parity equivalent is approximately $1,054.51/mt, based on an exchange rate of 6.7765. Feedstock ethylene continue to firm, rising to $1,130/mt CFR Northeast Asia on Wednesday, up $30/mt from the previous day. According to sources, despite the firmer ethylene prices, impact on operating rates will be limited as feedstock costs are less of a concern given the healthy styrene production margins. “Trading in [the] Chinese domestic market will resume gradually. The market is keeping a close eye on downstream’s return to normal operating rates and negotiations will pick up then. Operations resumed relatively late in 2018,” a Chinese trader said. Supply in Asia is tighter as the turnaround season approaches and buyers could be facing difficulties looking for spot cargoes amid limited availability, a market participant said.

RATIONALE:

Asian SM was assessed up $3/mt on the day at $1,077/mt CFR China and $1,027/mt FOB Korea Wednesday. The CFR China and FOB Korea SM markers currently take the average of the H1 and H2 March laycans. There were no transparent bids and offers during the CSG Market on Close assessment process on Wednesday. H1 and H2 March were assessed at the pegged level of $1,077/mt CFR China. The East China domestic prompt marker was assessed at Yuan 8,455/mt ex-tank Wednesday, up Yuan 25/mt on the day. On an import parity basis, this is approximately $1,054.51/mt. FOB Korea marker was assessed at $1,027/mt Wednesday, based on the pegged $50/mt spread to CFR China, while CFR Taiwan marker was assessed at $1,065/mt Wednesday, based on the pegged $12/mt spread to CFR China.

Ethylene prices noticed strong in Asia

Asian ethylene continued firming Friday, rising $10/mt day on day, buoyed by healthy spot demand in China ahead of the Lunar New Year holidays next week. On a week on week basis, spot prices rose $45/mt. Participants were completing last minute buying in the spot market this week, driven by firm demand from the styrene monomer sector where margins have been positive. This week, the Asian styrene monomer margin was hovering above $100/mt, in line with firmer spot styrene prices, according to data. Market sources said spot demand also emerged in China for ethylene-oxide following the recent EO capacity expansion there. Asian monoethylene glycol margins have been hovering at around minus $150-$180/mt this week,  data showed. Looking forward, market sources said it was unclear if Asian ethylene would continue rising as margins for most ethylene derivatives were currently negative. Asian polyethylene ethylene margin was calculated at minus $45/mt Friday, much lower than a typical breakeven spread of plus $150/mt, according to data. Some market sources said integrated producers would start considering selling spot ethylene cargoes, reducing their downstream plant runs amid positive ethylene margins. The recent strength in Asian ethylene pushed up the ethylene-naphtha spread above $570/mt this week, the highest level since September 2018,  data showed. The spread is higher than a breakeven spread of $350/mt. Rationale Spot prices rose $10/mt day on day to be assessed at $1,085/mt CFR Northeast Asia and $985/mt CFR Southeast Asia Friday. The tradable level was in the high-$1,000s/mt CFR Northeast Asia and high-$900s/ mt CFR Southeast Asia Friday. Rationale CFR China MEG price was assessed flat day on day at $625/mt on Friday for 15-30 days forward cargoes, reflecting a trade discussion heard at this level, and below an offer heard at $630/mt. China domestic price was assessed flat at Yuan 5,100/mt over the same period, reflecting tradable discussions heard at this level. CFR Southeast Asia MEG was assessed up $7/mt week on week at $630/mt on Friday, for 15-30 days forward cargoes, amid thin trade discussions, $5/mt higher than the CFR China marker.

Acetic acid assessed stable to firm on the week

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Asian acetic prices were stable, if not a little firmer this week, with a few turnarounds planned in March and April, and producers have started stockpiling inventory. “There’s not a big change on the buyer’s side as the market heads into the Lunar New Year holidays,” a trader said. Trade sources said downstream purified terephthalic acid production was stable till the Lunar New Year, and acetic acid suppliers were not in a hurry to dump prices. “Buyers buy what they need … Many are covered already for the holiday period,” a second trader said. “Inventory for downstream is not high as people prefer to keep inventory low and have more cash in hand for the festive season. But buying activity should pick up after the Lunar New Year,” he added. Meanwhile, China’s Jiangsu Sopo’s No. 1 acetic acid plant with a capacity of 250,000 mt/year was heard to have reduced its operating rate last weekend, according to market sources. A company source said it was unclear if the reduced operating rates were due to a technical issue at the plant or something else, and did not know when it would return to normal operating rates, which was 90% of its capacity. VAM: Stable acetic acid prices this week were a good sign for the vinyl acetate monomer market, trade sources said this week. However, sentiment across Asia remained largely bearish as business had slowed with the impending Lunar Year holidays, they added. A producer said that ethylene prices were rising and there were concerns around higher costs. He added that they will be informing their customers about higher prices for February shipments to Southeast Asia and South Asia. Other producers said higher ethylene prices would affect VAM producers which use ethylene as a feedstock. A selling idea for ethylene-based VAM for end-February and March deliveries for Southeast Asia was heard at $920-$950/mt CFR. The CFR Northeast

Asia VAM marker was assessed at $1,040/mt Friday, up $40/mt from Thursday, and up $85/mt on week, Data showed. Still, a trader said demand for VAM was not expected to move much before the Lunar New Year holidays, and that buyers have probably “stocked up by now”. RATIONALE: AA: The CFR Far East Asia marker was assessed $5/mt higher week on week at $445/mt CFR Friday, tracking firmer FOB China prices. Discussions were heard around $440-$450/mt this week. Southeast Asia AA was assessed $5/mt higher over the same period at $445/mt CFR, tracking firmer prices in Far East Asia and China. The FOB China price was up $9/mt at $399/mt, against selling indications heard at $400-$410/mt FOB. The CFR South Asia marker was assessed at $435/mt, tracking firmer market fundamentals across regions. VAM: CFR China was assessed at $930/mt Friday, stable from last Friday, amid thin trading. The CFR Southeast Asia and CFR South Asia prices were unchanged week on week at $895/mt and $830/mt, respectively, amid stable market  fundamentals.

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US MTBE prices went down

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Spot USG MTBE pricing slipped for the third consecutive session Friday amid sustained weakness in its Northwest European counterpart. With the premium to the FOB ARA marker unchanged at 10 cents, spot pricing followed Europe down 1.69 cents on the day. No activity was seen in the Platts Market on Close assessment process and spot trading activity was limited. Related energy was slightly stronger on the day, inching up 19 points to $1.3876/gal. Blended and shipped values were last estimated near 203 cents/gal while the MTBE factor relative to gasoline was at 1.1987. In other regions, the FOB Singapore marker was down $13/mt to $561/mt while the FOB ARA marker was 1.69 cents weaker at 156.44 cents/gal.  RATIONALE: Spot USG MTBE was assessed Friday at 166.44 cents/gal FOB USG, down 1.69 cents on the day. The assessment was based on a 10-cent premium to ARA, where the netback was last talked.