Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended August 16, 2010

18-Aug-10
CRUDE OIL Crude oil prices have plunged by over 5 dollars in the week of August 16, 2010. Falling for fourth consecutive session, light, sweet crude for September delivery settled at US$75.3 on the Nymex, while Brent crude on the ICE futures exchange fell to US$75.1. A rising dollar coupled with worries of slowing global economic recovery continues to weigh on prices. Persistently high unemployment in USA amid slower growth in Asia and Europe has added to the concerns. The Federal Reserve has acknowledged that the pace of recovery has slowed amid higher than expected weekly jobless claims in USA. Oil inventories continue to remain above average- gasoline inventories rose for the seventh consecutive week. Crude oil futures had a buoyant start in the month of August, settling above US$80/barrel after trading at US$72-79/barrel through July, mainly on soaring stock markets and the noticeable appreciation of the euro against the US dollar. Along with China’s slowing economic growth as a result of the government’s efforts to cool down the housing market and infrastructure investment, imports of China have also lost steam in many items including crude oil and polymers. NAPHTHA Naphtha prices have dropped to US$665/MT in the week of August 16, 2010. Recent demand from Formosa Petrochemical Corp could help absorb surplus naphtha from the Middle East, and could result in an uptrend in naphtha prices. Over the past few weeks, the Asian market was impacted after Formosa stopped buying due to closure of its 540,000 bpd refinery and 700,000 tpa No 1 cracker in Mailiao following separate outages last month. Since one of its three crude units has remained shut, Formosa’s demand for naphtha supply will persist, until a CDU comes back on stream until October. Amid ample supplies and weak demand in Japan, Asian petrochemical companies may import little or no naphtha from Europe for the second month in August. ETHYLENE Ethylene prices have inched up to US$915/MT in Asia in the week of August 16, 2010 amid robust derivative demand. As demand from polyethylene markets strengthens, offers from sellers have moved up to US$950/MT. As China increases domestic production, demand for ethylene from Japan is witnessing a drop. Spot ethylene market in Asia has, on paper, become a great deal longer because of a 150,000 tpa surplus at Shell Chemicals in Singapore. Short supply has been seen from Saudi Arabian and Iran- Al-Jubail’s exports of 20,000-40,000 tpa have been reduced to zero. PROPYLENE September shipment propylene prices have fallen to US$1155/MT in Asia in the week of August 16, 2010. Waning demand from downstream sectors that have reduced operating rates has tanked prices. EDC Optimistic sentiments and bullish outlook from downstream PVC has propped up EDC prices to US$450/MT in Asia in the week of August 16, 2010. Offers from sellers have been raised past US$455/MT CFR China VCM Amid robust demand and optimistic outlook from downstream PVC markets, VCM prices in Asia have ascended to US$770/MT in the week of August 16, 2010. September shipment CFR FE offers have been heard at the 800 dollar mark. STYRENE MONOMER Styrene monomer prices have inched up to US$1070/MT in Asia in the week of August 16, 2010. Prices have climbed on downstream demand, despite a drop in input costs. Benzene prices witnessed a fall of US$25/MT in line with falling crude oil values. POLYMERS HDPE HDPE prices have soared to US$1175/MT in Asia in the week of August 16, 2010; on improved demand. Many attribute the demand revival to higher upstream costs that have improved buying interest among converters and distributors who had been away from the market for a while, and have returned to restock. Dfrom Thailand pegged about 20-25 dollars higher. LDPE LDPE prices have spiked to US$1335/MT in Asia in the week of August 16, 2010 on optimistic markets, significant increases in input costs and expectations of better demand in line with the high season for agricultural film. Players attributed these price increases to higher upstream costs and better buying interest as converters and distributors have returned to the markets to replenish stocks. CFR China offers were hiked to US$1350-1360/MT levels, with deals concluded about twenty dollars lower. LLDPE LLDPE prices have climbed to US$1165/MT in Asia in the week of August 16, 2010 on upbeat markets as buying interest has revived with the return of converters and distributors to replenish their stocks. Prices have also been driven by higher crude oil costs and expectations of better demand in line with the high season for agricultural film. As crude oil dips and the high season is yet to materialize, sentiment is beginning to shift in China’s local market, as some producers and distributors move to lower prices to preserve their sales. Hence the coming weeks could see a drop in prices. September shipment offers have spiked past the 1200 dollar mark. POLYPROPYLENE Polypropylene prices have inched up to US$1255/MT in Asia in the week of August 16, 2010 on persistent supply issues due to scheduled shutdowns and unexpected outages in the region, and limited supplies from the Middle East. Converters prefer to wait in the sidelines in anticipation of price reductions in the distribution market along with dipping spot propylene prices. However, PP prices are expected to decline more gradually than PE prices, as PP availability remains relatively limited inside China. Formosa Petrochemicals’ 850,000 tpa PP plant is running at reduced operating rates due to propylene outages, China’s Nanjing Jinling’s 150,000 tpa PP plant is still not back after a shut down due to an explosion in late-July, Petro Rabigh’s 700,000 tpa PP plant in Saudi Arabia continues to have problems. Maintenance shutdowns in China scheduled for August include Daqing Refinery’s 300,000 tpa plant, Yangzi Petrochemical’s 400,000 tpa plant, Formosa Ningbo’s 450,000 tpa plant. September shipment CFR China offers from Taiwan were heard above the 1300 dollar mark, and about 30- 40 dollars lower from the Middle East. POLYVINYL CHLORIDE Amid robust demand, PVC prices have stepped up to US$945/MT in Asia in the week of August 16, 2010. In Asia, most overseas producers have concluded PVC business for August, followed by September sell ideas at higher levels. Demand is good in the region, especially in India, reducing overall import supplies spared for China. PVC offers are increasing inside China, too, as most sellers gain ground from the scheduled plant shutdowns inside the country at the end of the month. The market is lackluster as it awaits September offers, even as prices were assesses above US$950/MT CFR China. CFR India prices for September stood at US$1035/MT levels. POLYSTYRENE In line with rising feedstock SM prices, polystyrene prices have increased to US$1195/MT in Asia in the week of August 16, 2010. September shipment CFR China offers for GPPS spiked up to US$1240-1255/MT levels, while HIPS offers were heard about 100 dollars higher. ABS ABS prices have soared to US$1945/MT in Asia in the week of August 16, 2010 on rising input costs and increased offers. September shipment seller’s offers are seeing a steady increase. CFR China September shipment offers from Taiwan have been heard at above US$1965/MT, and about 10 dollars higher from South Korea.
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