Q2 2007 Market Commentary

Please find attached some comments on where we think the markets will go in Q2 2007. Information is from a variety of sources including suppliers. These are just indications rather than exact predictions.

If you have any comments or we can help with anything else, please let us know.

 

Methanol:

Methanol prices have returned to normal levels after  producer inventory levels have been replaced. Longer term, China is seeking to approve Methanol to meet its future fuel needs (as either a 15% or 85% blend in gasoline) and this demand will be met by new builds in the Gulf States and in Asia.

 

Acetic Acid:

Acetic Acid manufacturers intend to hold prices for Q1 despite falls in Methanol contract prices.

(N.B. US Producer has declared Force Majeure on Acetic Acid and derivatives and expected to last for May & June)

 

Ethanol:

Demand in Europe remains strong especially for fermentation Ethanol into the EC bio-fuels programme. Supplies in Europe have tightened significantly and bio ethanol prices have increased substantially. Synthetic Ethanol production remains strong in Europe and no changes are expected, even though there is a planned cracker shutdown in UK which will reduce output in Q2.

 

Ethyl Acetate:

European production came back to normal at start of Q2 and prices returned to normal levels with better availability of product. However, UK producer declared Force Majeure in early May due to plant leaks. This was followed shortly by US producer (see Acetic Acid above). Product is expected to remain tight until end June/early.

 

Isopropanol

As expected, Producers did not pass on fall in feed stocks as they try to improve margins. Unscheduled outages in Asia and US have left Europe short of product and this is coupled with planned shutdowns in Netherlands and southern France. The result is that prices will increase during Q2 and are expected to reach a 2 year high.

 

Acetone

Most commentators are predicting a static Acetone market. New production being brought on stream in Spain is offset by scheduled maintenance on major German plant. Supply-demand fundamentals will dictate value going forward and demand is strong. Pharmaceutical-grade acetone is said to carry a 10-20% premium over current normal-grade acetone.

 

Toluene

European market is expected increases as a result of rising crude oil and gasoline. Furthermore the onset of the driving season in the US will exert more pressure to push prices upwards.

 

THF (Tetra Hydro Furan)

Strong demand and reduced production continues to fuel increases in THF prices (coupled with net raw material increases and desire to improve margins). The announced mothballing of poly-THF plant in China (at significant cost) continues to draw on European & US THF production as demand into textiles increases. Demand into the pharmaceutical area is ever increasing and the question will be can end-users secure THF for the production of their valuable API’s.

 

REACH - (Registration, Evaluation and Authorisation of Chemicals)

ARE YOU PREPARED???  As a user of Chemicals, you will need to supply information up the supply chain on how you use a substance supplied by a manufacturer or distributor. Expect to start receiving requests for information towards the end of 2007. YOU HAVE BEEN WARNED.

 

Best Regards

Pat Short

Eirchem

A division of Brockley Group Limited

Tel +353 1 8392016

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