Q1 2008 Market Commentary
Please find attached some comments on where we think the markets will go in Q1 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 spot prices are currently €130-150 pmt above the Q4 contract price leading to expectations that the European Q1 contract price could increase by a similar amount. Problems continue in Chile with only one Methanex plant operational (3 plants closed) because of shortages in gas supplies.
Acetic Acid:
All Force Majeures have been lifted on Acetic Acid and derivatives but due to higher Methanol, prices are expected to increase by Euro80 pmt in Q1.
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 Q1. The prediction is for an upward movement in ethanol prices in Q1 and then stable through the rest of 2008.
Ethyl Acetate:
European production is back to normal although product remains tight as producers replenish stocks. There is pressure to increase prices due to increases in feedstocks, i.e. Acetic Acid, Methanol by €60 pmt.
Isopropanol
Slow demand and consumer resistance has resulted in a flat IPA market. However propylene increases in Q1 will mean a push for higher prices.
Acetone
Market supply remains tight but demand has been low. Producers were looking at firmer pricing for the New Year as they seek to recoup margins following persistent production problems in Q2 and Q3. Ineos has this week attempted to restart production at its 300,000 mt/year acetone Antwerp, Belgium unit, EP-grade acetone is said to carry a 10-20% premium over current normal-grade acetone.
Toluene and Hydrocarbons
Volatile Oil and gasoline markets have made 2007 a very difficult year for aromatics producers and consumers and 2008 will be equally challenging. Consequently the European market is expecting further increases due to rising crude oil and gasoline
Mono Ethylene Glycol (MEG)
Tight global supply has enabled producers to push prices increases and further increases are expected as strong demand in China continues.
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 (coupled with net raw material increases). Prices are expected to increase by€120-150 pmt in Q1. 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 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 and the question will be can end-users secure THF for the production of their valuable API's.
Other News Items
Brockley Group (Eirchem) is continuing to add to their portfolio of products and principals - more news of this in the New Year.
We have also started producing Adblue® under our BlueCat® trademark. Adblue® is required in all new trucks to reduce NOx emissions. We are the only Irish manufacturer of this product. If you want any more information, please contact me.
BP sale of its Ethyl Acetate and VAM business continues and an announcement is expected in early Q1. Any bets on the new owners (my prediction is INEOS).
Merry Christmas and a Happy New Year.
Eirchem
A division of Brockley Group Limited
Tel +353 1 8392016
Fax+353 1 8392869
Mobile +353 87 2426720
