Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended April 5, 2010

06-Apr-10
CRUDE OIL Oil prices have risen in the week of April 5, 2010, racing towards US$86 as demand gets optimistic amid signs of a global economic upswing. New York's light sweet crude for delivery in May rose past US$85.2 while Brent North Sea crude for May rose to US$84.2. The optimism was triggered by upbeat economic data including US jobs report, which showed the biggest growth in three years, a report showing the US manufacturing sector grew at a faster pace than expected and a government report that said Chinese manufacturing picked up in March. Manufacturing in the eurozone also defied forecasts in March, with a key index hitting a 40-month high. Oil spiked to an 18-month high to US$84.4 in New York on Thursday, with talk of fresh investor inflows at the start of the new quarter. The move higher came despite a stronger dollar, which often dampens enthusiasm for commodities, and after news of yet another build in US crude oil inventories. Continued signals of strength in the manufacturing industry helped extend a recent rally. Oil prices have risen about 23% from early February as the industrial sector leads a gradual recovery in the US economy. NAPHTHA Naphtha prices in Asia have moderated on the last day of the week, settling below US$750/MT in the week of April 4, 2010; after having risen by over US$17/MT in early trade in line with rising crude values. H2-May open-spec naphtha was valued a tad above US$740/MT CFR Japan. Benchmark naphtha crack spread narrowed to US$111/ton against Brent crude due to rising naphtha supply. ETHYLENE Ethylene prices have steadied at last week’s US$1130/MT in Asia in the week of April 4, 2010. Supply from the newly commissioned crackers in Southeast Asia and falling downstream markets have led to reluctant buying. Despite stability in prices, trading activity has been limited as buyers’ bids are considerably below sellers’ offers. Currently, spot ethylene is notionally quoted US$25/ton lower than CFR Northeast Asia offers reported at beginning of March, while buyers’ bids stand US$50/ton or more below the notional price level. This decrease in ethylene prices has occurred despite crude oil prices rising to their highest levels in 2010 as PE demand fallen steeply in Asia, forcing PE sellers to reduce their prices to levels below their theoretical break-even point to conclude deals. PROPYLENE Propylene prices have dipped to US$1240/MT in Asia in the week of April 4, 2010 as demand from derivative polypropylene wanes. Spot propylene has been relatively weaker for the last 2-3 weeks. Until mid-March, 13 scheduled shutdowns along with unplanned outages in Asia pushed spot offers and done deals to US$1310/ton CFR China and US$1280/ton FOB Korea. These have dropped by US$20-30/ton due to reduction in run rates at PP plants along with additional capacity from two new crackers that have started up in Singapore and Thailand with a total 1.25 mln tpa propylene capacity. Despite the easing, spot propylene values in Asia are above ethylene. Currently, propylene carries a premium of over US$100/ton over ethylene in Asia. EDC EDC prices have fallen to US$515/MT in Asia in the week of April 4, 2010 in line with lackluster buying from downstream markets amid slackening ethylene values. VCM VCM prices have dipped to US$845/MT in Asia in the week of April 4, 2010 in line with falling prices of downstream PVC amid lackluster buying. Asian producers continue to maintain their initial March offers for VCM this week, although buyers have lowered bids. Initial March offers were heard at around US$880/ton CFR China, an increase of around US$40/ton from the February deal level. The new offers were countered with buyer’s bids at around US$850/ton CFR China, citing sluggish demand in China’s domestic PVC market and falling feedstock costs. A month after the announcement of the initial March offers, spot VCM business remains unfinished in Asia, as producers refuse to relent from their initial offer levels while buyers lower intentions. STYRENE MONOMER Styrene Monomer have inched up to US$1270/MT in Asia in the week of April 4, 2010. FOB Korea deals were concluded for May shipment at US$1265/MT for offers heard about ten dollars higher. Feedstock benzene prices have firmed to US$990/MT on the back of spikes in crude values. POLYMERS HDPE A further fall was seen in HDPE as prices declined to US$1235/MT in Asia in the week of April 4, 2010. Softer demand and lower prices from other regional producers due to lackluster demand in China are cited as reasons for the price cuts. However, only few deals have been concluded at the new price levels. A major Middle Eastern producer has announced CFR China April offers at US$1230/MT with price decreases of US$120/MT vs March offer levels. Other key exporters to China have announced April offers for HDPE film with discounts ranging from US$90-130/ton. HDPE film offers in India currently stand at US$1220-1330/ton CIF India, cash, with distributors reporting that only a few deals have been concluded at the lower end of the range. LDPE LDPE prices have plunged to US$1445/MT in Asia in the week of April 4, 2010 on pessimistic buying sentiments and unenthusiastic outlook in China. April shipment CFR China offers from Malaysia were slashed to US$1450/MT, even as deals for lower end cargoes were heard concluded at the 1400 dollar mark. Distributors in India report that they are actively on the lookout for import film cargoes owing to good demand due to limited availability of domestic materials. For the first few trading days of April, import offers have been reported at US$1550-1600/ton for LDPE film, with some done deals being concluded at US$1550-1565/ton in India. LLDPE LLDPE prices dived to US$1315/MT in Asia in the week of April 4, 2010 on gloomy buyer’s outlook in China. POLYPROPYLENE Polypropylene prices have dipped to US$1295/MT in Asia in the week of April 4, 2010 as demand from China continues on a pessimistic note and on persistent pressure from lower-priced offers from traders. A South Korean producer’s CFR China offers were quoted at US$1320/MT for homo-PP raffia and injection and US$1360/MT for PP block copolymer. These offers represent a per ton decline of US$20-40 from March offers for homo-PP and US$60/ton for PP block copolymer. CFR China offers for Singaporean PP were heard at US$1330/MT for homo-PP injection and at US$1420-1430/ton for PP block copolymer. Producer’s CFR China offers for Middle Eastern homo-PP injection and raffia stand at US$1300/ton and at US$1430/ton for PP block copolymer. POLYVINYL CHLORIDE PVC prices have fallen to US$1015/MT in Asia in the week of April 4, 2010 on reduced offers from producers amid strong buyer reluctance. April CFR China offers from Taiwan have been down-revised by 20 dollars to US$1040/MT due to strong price resistance from end-users, and to US$1050/MT from Japan. Major Asian producers have sold over half their April PVC allocations to China ten dollars lower than March done deal levels on poor demand from end-users. Lower prices prevail despite relatively limited monthly allocations for April. In Southeast Asia, import deals for April are being concluded with even larger discounts of US$15-30/ton from March levels, as Thai producers rush to sell their monthly allocations prior to the mid-April Thai New Year holidays, when monthly consumption will be reduced. SEA Asian PVC producers’ operating margins have been squeezed significantly this month as they have conceded to lower prices to conclude deals amid VCM feedstock costs that have not reflected the softening trend in PVC prices. POLYSTYRENE GPPS prices have steadied at US$1365/MT in Asia in the week of April 4, 2010 despite rising feedstock costs. April CFR China offers from South Korea were heard at elevated levels of US$1415/MT for GPPS grade and at US$1525/MT for HIPS. However, these increased offers were met with lackluster buying outlook in Asia, where buying intentions were heard almost 75 dollars lower for each of the grades. Since the start of 2010, HIPS feedstock butadiene prices have been following a bullish trend on the back of restricted supplies caused by production problems, impacting the downstream chain. A growing number of HIPS producers have started to talk of raising the traditional premium between GPPS and HIPS prices to cope with the higher production costs. ABS ABS prices have increased to US$1895/MT in Asia in the week of April 4, 2010 amid rising crude oil and robust feedstock costs. April offers, CFR China, from Taiwan and South Korea were heard at US$1920-1945/MT. As buying interest remained pegged at the 1900 dollar mark, very few deals were heard concluded upto US$1915/MT.
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