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NWE AA/VAM – Prices under downward pressure

– VAM slides Eur50/mt on the week on ample supply

– European AA due to rise in line with prices abroad

AA: The European acetic acid price was assessed down Eur10 week on week at Eur700/mt FD NWE Thursday in a quiet market. The supply and demand balance in the trucks market was unchanged on the week, according to sources. “I see the same price at Eur700/mt, give and take [is] stable all around,” a trader said. Price movements in South Asia were expected to affect the European market in the near future. “I expect prices to go up again in the months to come,” a second trader said. Acetic acid export prices in Asia increased marginally on the week on more bullish fundamentals. CFR Far East Asia price rose $5 from last week to $450/mt Thursday and, similarly, the FOB China price also increased $8 on the week to $409/mt.

VAM: The European vinyl acetate monomer was assessed at Eur850/mt Thursday, down Eur50 on the week on low but steady demand and greater availability. “The market in Europe is still long and [there is] still downwards pressure [on VAM prices],” a trader said, adding that the zero-duty quota resulted in more imports into Europe. Prices were expected to pick up toward the end of March/beginning of April when seasonal demand for paint and coatings picks up, sources said. VAM prices in Asia rose on the week despite few changes in fundamentals. The pressure was mainly reported on ethylene-based VAM producers, according to sources. CFR China was assessed at $935/mt Thursday, up $5 from last Thursday on more bullish fundamentals.

 

RATIONALE:

S&P Global   assessed acetic acid spot truck prices at Eur700/mt FD NWE on Thursday, down Eur10 on the week. The product was heard pegged in a range of Eur680-Eur710/mt FD NWE. Acetic acid FOB NWE was assessed at $780/mt,  down $10 and in line with the FD price. Vinyl acetate monomer spot trucks were assessed down Eur50 on the week at Eur850/mt FD NWE Thursday and in line with source indications in a Eur820-Eur850/mt range. FOB NWE VAM was also assessed down $55 at $945/mt, in line with the FD price. 

Hanwha Chemical to shut 2-EH unit from Mar 1

The 2-ethyl hexanol market gained this week as tighter spot supply lent firmer support to the spot market. Two major 2-ethyl hexanol producers in Asia had shut or were planning to shut down their plants for turnaround. Taiwan’s Nan Ya Plastics will restart its 2-ethyl hexanol unit by March 1, after it was shut down unexpectedly due to a technical issue two days ago, a company source said Friday. The 2-EH unit is located at Mailiao and has a production capacity of 205,000 mt/yr. “We had to shut down the 2-EH unit due to technical issues, and we are aiming to restart the plant by March 1,” said a company source. The source added that “the production outage due to this unexpected shutdown will cost us around 10,000 mt of 2-EH.” “We have no 2-EH to offer after Friday, as we need the existing 2-EH stockpiles for our DOP production,” said the company source at Nan Ya Plastics, the largest 2-EH producer in Taiwan. Meanwhile, South Korea’s Hanwha Chemical will shut its 120,000 mt/year 2-ethyl hexanol unit at Yeosu from March 1 for a 31-day planned maintenance, a company source said Friday. “We are going to shut down our 2-EH plant on March 1 and restart around April 1,” the company source said. Hanwha Chemical is one of the largest 2-EH producers in South Korea. Industry sources said these shutdowns are expected to push up the 2-EH market. 2-EH was assessed up $10/mt on the week at $1,045/mt CFR China Friday. However, demand for other oxo-alcohol products such as dioctyl phthalate and phthalic anhydride from Chinese buyers remained tepid, and this lead to lower offers and bids, and pulled down the spot market “The Chinese buyers have not come back yet. I think more restocking will come back after they come back from the Lunar New Year next week,” a source said.

RATIONALE:

Dioctyl phthalate was assessed down $15/mt week on week at $1,035/mt CFR China Friday, below a selling indication at $1,040/mt CFR China, and above a buying indication at $1,030/mt CFR China. The CFR Southeast Asia marker was assessed unchanged over the same period at $1,210/mt, based on three spot trades totalling over 500 mt, in the range of $1,200-$1,220/mt CFR SEA. Phthalic anhydride was assessed down $30/mt on week at $870/mt CFR China, below a selling indication heard at $880/mt CFR China. The CFR SEA marker was assessed up $5/mt on week at $970/mt CFR SEA,  based on three spot trades concluded at $965-$980/mt CFR SEA. 2-EH was assessed up $10/mt on the week at $1,045/mt CFR China, below a selling indications heard at $1,050/mt CFR China, and above a buying indication at $1,040/mt CFR China. The Southeast Asia marker was assessed up $10/mt on week at $1,085/mt, on a stronger adjacent market. Normal butanol was assessed unchanged on week at $910/mt CFR China and CFR Southeast Asia on muted trading.

Chemicals-Update-1
Chemicals-Update-1

Mixed views on impact of high inventories in China.

A lack of clarity continued to shroud the Asian benzene market Friday as dwindling demand continued to widen the spread between March and April. The H1 March/H2 March and H2 March/April spreads had been volatile since laycan declarations for March cargoes concluded Friday. The H1 March/H2 March spread stood at minus $5/mt Friday, from minus $7/mt Friday. H2 March/April was valued at minus $11/mt Friday, from minus $7.50/mt Friday. A trader noted that the Asian benzene market had been in a persistent contango for “quite some time,” as the market is structurally long while producers seek outlets beyond Asia in the US and Europe. Buying from China, the key demand center within Asia, had come to a standstill Friday, amid high inventories and a volatile yuan currency relative to the US dollar. Market sources said that East China inventory levels, defined as the sum of benzene, toluene, xylene, styrene and monoethylene glycol stocks, had hit an all-time high of more than 3 million mt. As a result, traders were heard not keen to import cargoes. Furthermore, several traders were heard turning away from the CFR China market to the FOB Korea market to sell April cargoes. A trader likened growing East China inventory to a “bubble,” with prices bound to fall quickly should bearish fundamentals arise. On the other hand, another source said that it was unlikely to occur in the benzene market, with benzene prices “still quite low,” while CFR China prices were more than sufficient to account for freight between South Korea and East China. CFR China was assessed at $611/mt Friday, $15/mt above the FOB Korea benchmark, which stood at $596/mt.

RATIONALE:

FOB Korea benzene was assessed higher by $3.83/mt on the day at $596/mt Friday. The marker takes the average of the third, fourth and fifth half-month laycans, currently H1 March, H2 March and H1 April. During the CSG Market on Close assessment process, there were no transparent bids and offers seen. The H1 March laycan was assessed at $589/mt FOB Korea, above a bid last seen at $588/mt FOB Korea. The H2 March laycan was assessed at $594/mt FOB Korea, below an offer last seen at $595/mt FOB Korea, and above a bid at $590/mt. The H1 April laycan was assessed at $605/mt FOB Korea, above a bid last seen at $604/mt. The CFR China marker was assessed higher by $3/mt day on day at $611/mt, above buy indications heard for March and April at $610/mt CFR China. The East China marker was assessed at Yuan 4,873/mt Friday, up Yuan 3/mt day on day, or $607.99/mt on an import parity basis.

Asian paraxylene rose $8.16/mt day on day to $1,101.83/mt CFR Taiwan/China

Asian paraxylene rose $8.16/mt day on day to $1,101.83/mt CFR Taiwan/China Friday on the back of firmer prices upstream and signs of stability in the downstream PTA futures market. May futures on the Zhengzhou Commodity Exchange rebounded after a mid-morning fall to close at Yuan 6,430/mt, down Yuan 8/mt on the day. A trader said the recent selloff in PTA futures was likely over for the moment. April ICE Brent crude oil futures rose $1.60/b day on day to $64.59/b at 0830 GMT in Asian trade, while naphtha rose $7.88/mt over the same period to $515.50/mt CFR Japan. Trading activity in the CSG Market on Close assessment process for PX was focused on April cargoes, with two trades for Asian origin cargoes at $1,105/mt CFR Taiwan/China in the MOC process.

RATIONALE:

PX was assessed up $8.16/mt day on day at $1,101.83/mt CFR Taiwan/China and $1,082.50/mt FOB Korea Friday. The markers take an average of the H2 March, and H1 April and H2 April laycans. The H1 and H2 April laycans were each assessed at $1,104.50/mt CFR Taiwan/China, above a bid for Asian origin from GS Caltex at $1,105/mt, after normalizing $1/mt for the restriction in origin, and below an offer at $1,105/mt from Oman Trading International. The H2 March laycan was assessed at $1,096.50/mt CFR Taiwan/China, at an $8/mt contango to April, in line with the pegged structure. No bids or offers were submitted for March in the MOC process. The above rationale applies to the following market data codes: PHASS05 for FOB Korea and AAQNE00 for CFR Taiwan/China.

phenol price updates
phenol price updates

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.

S&P Global CSG assessed benzene for delivery 5-30 days forward at $596/mt

S&P Global CSG assessed benzene for delivery 5-30 days forward at $596/mt Wednesday, up $5/mt from Wednesday’s assessment. Fundamentals on the benzene market remained largely unchanged, with considerable volumes available. Despite the benzene-naphtha spread rising to $118.75/mt Wednesday from $116/mt Wednesday, values below $150/mt usually indicate ample benzene supply in the market. “At the moment, it’s more of a supply issue than anything else,” one source said, referring to the low benzene prices. Furthermore, offers have returned to the market, with the source adding that the lack of offers on Wednesday morning “was more about [it] being a Wednesday rather than underlying fundamentals.” The source also said the market was thin. Upstream, crude oil prices rose, with the 1630 GMT ICE Brent crude oil futures assessment increasing to $62.54/b Wednesday from $61.28/b Wednesday. Higher crude oil prices provided support to the benzene market, with the source saying that the market is “more sentiment driven rather than anything else.”

RATIONALE:

S&P Global CSG assessed benzene for delivery 5-30 days forward at $596/mt CIF ARA Wednesday, up $5/mt from Wednesday’s assessment. February was assessed at $591/mt, up $5/mt day-on-day and within the bid-offer range of $590-$600/mt. March was assessed up $4/mt from Wednesday’s assessment at $600/mt, within the Wednesday bid-offer range of $595-$610/mt and following a trade reportedly conducted Wednesday at $600/mt. April was assessed up $4/mt on the day at $610/mt, based on a stable March-April contango of $10/mt and within the bid- offer range of $600-$615/mt. May and June were assessed flat to April. FOB was assessed at $596/mt, flat to CIF.

FOB Korea trades rangebound, up 16 cents/mt

The FOB Korea benzene marker inched up 16 cents/mt day on day, fluctuating within a narrow band to be assessed at $596.33/mt. With laycan declarations for March FOB Korea cargoes concluded, a rare spread emerged between H1 and H2 March. H1 March benzene was last bid and offered at $587/mt and $590/mt FOB Korea, while H2 March benzene was last bid and offered at $591/mt and $594/mt FOB Korea. H1 March/H2 March was assessed at minus $3/mt Wednesday. The intramonth spread emerged on the back of length in the prompt market, with February cargoes heard still available. Traders also expressed concerns over persistent buying interest in the CFR China market, despite high inventories in the East China market, on expectations that yuan-denominated prices would fall too much too fast if inventories continue to rise. Stock levels were heard unchanged over the Lunar New Year holidays, as shipments in and out of tanks ground to a halt over the festive season. East China stocks last stood at 230,000 mt Wednesday, unchanged week on week, but rose 80,000 mt on the year. Producers of downstream phenol and caprolactam were also heard mulling the recent strength in benzene, which had risen $85.33/mt since the start of the year. Nonetheless, production margins remained strong for phenol and caprolactam producers. Styrene margins, too, remained firm at $106.80/mt, despite the recent strength in ethylene, another feedstock for styrene.

RATIONALE:

FOB Korea benzene was assessed higher by 16 cents/mt day on day at $596.33/mt Wednesday. The marker takes the average of the third, fourth and fifth half-month laycans, H1 March, H2 March, and H1 April. During the CSG Market on Close assessment process, there were no transparent bids and offers seen. The H1 March laycan was assessed at $592/mt FOB Korea, keeping the H1 March/H2 March spread at the pegged level of minus $3/mt. The H2 March laycan was assessed at $595/mt FOB Korea, based on the H2 March/April spread valued at minus $7/mt, above a bid at minus $8/mt. The H1 April laycan was assessed at $602/mt FOB Korea, above a bid last seen at $601/mt FOB Korea. The CFR China marker was assessed at the pegged level of $608/mt, down $1/mt day on day, above buying indications heard at $605/mt CFR China, and below an offer seen at $615/mt CFR China. The East China marker was assessed at Yuan 4,880/mt, down Yuan 10/mt day on day, or at $608.63/mt on an import parity basis.

Falls $12/mt on bids and offers

Asian toluene prices tumbled $12/mt over the weekend to settle at $595/mt FOB Korea and $629/mt CFR China on Tuesday amid bids and offers heard during the CSG Market on Close assessment process, though no transparent bids or offers were observed. During the CSG MOC Tuesday, a 2,000 mt bid for any March was heard at $615/mt CFR China, which was eventually brought up to $619/mt at the close. On offers, an offer for a 2,000 mt any March delivery was heard at $640/mt CFR China which was brought down to $632/mt CFR China and left standing at the close. During the CSG MOC, a bid was also heard at $625/mt CFR China for 2,000 mt, H2 February to any March delivery but CSG could not verify the buyer despite attempts to. Similarly, an offer at $610/mt FOB Korea for 2,000 mt, H1 March laycan was also heard during the MOC but the seller chose to remain unverified by CSG. Meanwhile, the Chinese market showed some activity although not all market participants were back from the Chinese New Year holidays, sources said. The East China prompt, ex-tank prices was heard discussed at around Yuan 5,000/mt to Yuan 5,100/mt in the morning, and fell slightly to Yuan 5,000/mt to Yuan 5,060/mt towards the end of the day. For those who have returned to the market, many were sidelined. “The first day after holiday, so many things need to talk, moreover the factories are mostly starting in a few days time”, a Chinese trader said Tuesday. “We have not started work yet” another toluene end-user from China said Tuesday. Meanwhile, other toluene end-users in the paint industries in East China were also heard to have accumulated enough cargoes before the Chinese New Year and are not looking to buy. “They told me they are in no rush to buy MX and toluene, with their current inventories enough to last for about a month”, a Chinese toluene trader said Tuesday.

RATIONALE:

The FOB Korea marker was assessed at $595/mt FOB Korea Tuesday, down $12/mt from Tuesday largely tracking the CFR China marker. The marker takes the average of the third and fourth half-month laycans, currently H1 and H2 March. The CFR China marker was assessed at $629/mt, between the best bid heard at $619/mt CFR China, and best offer heard at $632/mt CFR China, both for 2,000 mt any March laycan, but no transparent bids or offers were seen during the MOC process Tuesday. The H1 March and H2 March laycans were assessed at $629/mt CFR China Tuesday, maintaining a flat market structure from Tuesday.