olEFiNS
European spot prices for naphtha streaked past $1,000/m.t., cif early last week, and were closing in on $1,010/m.t. by CW presstime. Market watchers immediately responded with a flurry of analyses on the minimal or negative margins at Europe’s steam crackers, given currently softening spot prices of ethylene and propylene. There is also speculation on how olefin producers may respond if the situation persists. Producers may cut operating rates if they can’t raise prices.
Olefin producers say they are not overly troubled, however. All of the cracker operators contacted by CW confirm the current weak pricing situation for olefins, but their general consensus is that the derivatives markets, especially polymers for export, will continue to be strong. There is also some anticipation that the rocket ride for crude oil and naphtha is a speculative bubble
due for a correction.
“Margin? There is no margin, so that is a short conversation,” says one olefins producer.
Nevertheless, sales volumes for ethylene and propylene are strong in Europe, he says. Due to regional plant outages, “Asia is paying more than Europe, so the producers in the Middle East are being opportunistic,” the producer says. “This will continue because China has an insatiable appetite, especially for polypropylene. I think we have seen the low point,” he adds.
European naphtha prices have been as high as $870-$880/m.t. in each of the first three months of this year and were higher than $900/m.t. for all of April, and so the most recent rise in naphtha values represents a smaller change than the decline in propylene prices over the past few weeks. Spot prices for chemical-grade propylene were
recently quoted at about €750/m.t., off from close to € 1,000/m.t. earlier in the year.
Meanwhile, sellers say that olefins prices are starting to turn higher again, and that if that continues they have a chance to keep pace with rising feedstock and energy costs.
—GreGory DL Morris
iNorgANiC CHEMiCAlS
Soda ash producers FMC and General Chemical have announced price increases, citing high input costs and tight global market conditions. FMC says it will increase list and off-list prices for soda ash by $50/ton for all grades, effective July 1 or as contract terms allow. List prices will be $220/ton fob for bulk dense soda ash and $225/ton fob for its Grade 100, the company says. General Chemical (Soda Ash) Partners (GSAP) announced increases of $50/ton off-list and $75/ton list on all bulk and packaged soda ash shipments, effective immediately or as contracts permit. List prices will be $260/ ton fob for bulk dense soda ash, GSAP says. Both FMC’s and GSAP’s energy surcharge programs remain in effect, the companies say.
The latest round of price increases is distinct because of its magnitude, one market source says. Increase nominations for the last several years have been much smaller, in the range of $15-$20/ton, he says. The latest increase is driven in part by rising energy,
power, and labor costs, but it is largely due to tight global market conditions for soda ash. “The global market is virtually sold out,” one producer says.
Delays to announced soda ash expansion projects will continue to tighten supply throughout much of 2008 and put upward pressure on prices, sources say. There are speculations that half of the 1 million m.t./ year due online by year-end at Eti Soda’s (Beypazari, Turkey) greenfield project at Beypazari will be delayed. Tata Chemical’s soda ash venture with the government of Tanzania has been placed on hold because of environmental concerns.
Further soda ash supply difficulties are expected due to the recent earthquake in Sichuan, China, sources say. Early reports from the region indicate that about 5% of the country’s 17-million m.t./year of soda ash capacity is affected, sources say. China exported 3.6%, or 1. 7 million m.t., of the global market last year. —rebecca coons
■ Mitsubishi Starts Cracker Shutdowns Mitsubishi Chemical has closed two of its ethylene plants temporarily for planned maintenance, reports say. The company’s 410,000-m.t./year No. 1 cracker at Kashima, Japan will be offline until July 1 and its 496,000-m.t./year Mizushima, Japan cracker is expected to be down until June 4, reports add. The company will also carry out checks on its 516,000-m.t./year No. 2 Kashima cracker between July 4 and August 17. Mitsubishi has gradually increased the No. 2 unit’s operating rate to about 82%, following a fire in December 2007 that killed four workers (CW, Jan. 28, p. 20). The company estimates that the incident cost it ¥ 18. 7 billion ($179 million) in production losses, decreased sales, and procurement of substitute material. Separately, Mitsubishi says its growth strategies include a shift to high-perfor-mance products such as polycarbonate and polypropylene and a shift of its polyethylene (PE) production to more profitable applications such as high-density PE under a newly announced three-year strategy. The plan involves estimated investments of ¥155 billion through March 2011.
■ BASF Boosts Nitric Acid at Antwerp BASF says it has started operations at a 500,000-m.t./year nitric acid plant at Antwerp. The plant is one of the world’s largest nitric acid production facilities and replaces a 40-year-old unit at the site, BASF says. The new plant can produce 68% nitric acid concentration, which is used mainly in the production of methylene di-para-phenylene isocyanate (MDI) and toluene diisocyanate (TDI). BASF says it is evaluating several options to expand MDI and TDI capacity. Possible projects include: expanding existing plants; a previously announced MDI plant at Chongqing, China that is currently under study; and a 300,000-m.t./year TDI joint venture with Dow Chemical at one of BASF’s integrated sites in Europe.
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