Q2 2008 Market Commentary
Please find attached some comments on where we think the markets will go in Q2 2008. 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 Q2 contract price has fallen by €195 per tonne from Q1 level even though spot prices were €130-150 pmt below the Q1'08 contract. I would expect that there will be a realignment upwards of the Methanol price in Q3. Problems continue in Chile with only one Methanex plant operational (3 plants closed) because of shortages in gas supplies. Methanol is seeing the growth of new sources of demand - dimethyl ether (DME), direct blending of methanol into gasoline, biodiesel and fuel cells.
Acetic Acid:
Supply has returned to normal and Acetic Acid spot prices are softening in Q1 as a result. Prices are expected to fall in Q2 due to projected lower Methanol contracts.
Ethanol:
Oil prices continue to provide opportunities for biofuels. Grain feedstocks will remain very high in 2008 while sugar/molasses will remain relatively low. Given the high grain costs in Europe and US and the potential for increase in bioethanol uptake will mean a tendency towards higher prices, High quality material remains tight and this situation will continue through Q2 especially after the TEREOS synthetic Ethanol closure in 2007. The prediction is for stable pricing through the rest of 2008.
Ethyl Acetate:
European production is back to normal. There is pressure to decrease prices in Q2 due to projected decreases in feedstocks, i.e. Acetic Acid, Methanol. As predicted in the last newsletter INEOS has agreed to buy the Ethyl Acetate and VAM business from BP. It is believed that Ethyl Acetate will be marketed by INEOS Oxide and VAM by INEOS Enterprises. The sale is expected to be complete by the end of Q1'08.
Isopropanol
Producers report that the market has grown tighter due to good demand and lower imports due to the weak dollar. Prices are starting to increase and there will be a further push for higher prices in Q2.
Acetone
The acetone market has remained tight with volumes heading to the Far East where prices are reported to be high. It is believed that Ertisa are closing one of their lines in March and will have very limited availability. INEOS although having started their newly extended line at Antwerp, were still operating at 65% capacity. Borealis also have some availability issues but this should not affect their ability to supply UK & Ireland. Producers say their calculations make no economic sense with high propylene prices and low Acetone values. They will either have to subsidise Acetone business with Phenol revenues or increase Acetone prices. EP-grade acetone is said to carry a 10-20% premium over current normal-grade acetone.
Toluene, Hydrocarbons and White Spirits
Volatile Oil and Gasoline markets continue into 2008 and this will continue to make 2008 a very difficult year for aromatics producers and consumers alike. Oil prices are over €100 per barrel and Jet A1 (Kerosene) has gone through the $1000 mark to reach another record high and continues to climb. The Toluene market appears to go against this trend as there are reports of a depressed market with low demand although this will change as the gasoline season starts. Producers are waiting on increased demand. Consequently a mixed message on Hydrocarbons, with demand dictating prices.
Mono Ethylene Glycol (MEG)
The MEG market has swung from being very tight to a well supplied market. Asian contract prices have fallen and this is being reflected in the European market. Q2 prices are expected to fall.
Glycerine
Glycerine prices are under strong pressure and are on the increase compared to Q4-2007. Availability is still very tight and this applies to both crude and refined Glycerine and allocation of material remains a concern for most producers. European demand is higher than production output, higher prices in China and US are leading to increased exports leading to a shortfall of around 50kmt in Europe (European stock levels are running at 30-40% of their normal levels).
THF (Tetra Hydro Furan)
Strong demand and reduced production continues to fuel increases in THF prices. Prices are expected to stabilise in Q2. China continues to draw on European & US THF production as demand into textiles increases. ISP has 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.
Other News Items
Brockley Group (Eirchem) is continuing to add to their portfolio of products and principals and we will keep you updated on developments. One of the most recent additions is:
TMOF (Tri Methyl Ortho Formate).
We have also started producing Adblue® under our BlueCat® trademark. Adblue® is required in all new trucks using SCR technology to reduce NOx emissions. We are the only Irish manufacturer of this product. If you want any more information, please contact me.
Brockley Group Ltd also offer a range of automotive products in bulk and packed, including antifreeze, screenwash, traffic film remover and will shortly add brake fluids also.
Our Rathcoole manufacturing facility is undergoing upgrading, particularly with regard to BlueCat® Adblue® manufacturing and packing and the new facilities will be officially opened by the Minister of Transport, Mr. Noel Dempsey T.D., early in Q2 2008.
Best Regards
Pat Short
Eirchem
A division of Brockley Group Limited
Tel +353 1 8392016
Fax+353 1 8392869
Mobile +353 87 2426720
www.brockleygroup.com
