Q4 2007 Market Commentary
Please find attached some comments on where we think the markets will go in Q4 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 spot prices have increased significantly in recent weeks due to problems in Chile. Only one Methanex plant is operational (3 plants closed) because of shortages in gas supplies. A 1 million tonne per year plant in Russia will be on shutdown at start of October and the MHTL plant in Trinidad is on a maintenance turnaround resulting in further tightening of European supply. It is expected that European contract prices could increase by Euro50-70 pmt in Q4.
Acetic Acid:
Following the Q2 Force Majeure on Acetic Acid and derivatives by a US producer, Acetic Acid remains tight. Prices are expected to increase by Euro30-40 pmt in Q4 on the back of the projected Methanol increases.
Ethanol:
Demand in Europe remains strong especially into the EC bio-fuels programme although some producers are believed to selling the grain feedstock as they are getting a better return than converting it into Ethanol. INEOS continue to operate far from capability due to ongoing ethylene situation at Grangemouth so they will be very tight on product going into Q4. There may be pressure to increase European prices depending on inventory levels.
Ethyl Acetate:
European production is back to normal after FM in US and problems in Q2 at UK producer. Product remains tight as producers replenish stocks and there will be pressure to increase prices due to increases in feedstocks, i.e. Acetic Acid.
Isopropanol
Consumers have resisted Producers efforts to increase prices on the back of propylene increases. Europe remains tight on product although the pick-up in demand after summer holidays has not materialised yet. The result is that prices may increase during Q4.
Acetone
Most commentators are predicting a rising Acetone market. Supply-demand fundamentals will dictate value going forward and demand is strong. Ineos have a 2 month shutdown at their Antwerp plant but Borealis and Ertisa are producing at normal rates. EP-grade acetone is said to carry a 10-20% premium over current normal-grade acetone.
Toluene
European market is expecting 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 mothballing of poly-THF plant in China (at significant cost) continues to draw on European & US THF production as demand into textiles increases. ISP have announced plans to double production at their Marl plant and this is expected on-stream in early 2009. It is believed that Lyondell have ceased direct production of THF and while they continue to market product, it is believed that they are taking material directly from another producer. 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.
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