Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended August 2, 2010

03-Aug-10
CRUDE OIL Crude oil prices witnessed a marginal rise in Asia to end the week of August 2, 2010 a tad higher at US$79. Oil ended the week on a higher note after the latest gauge of China's manufacturing sector soothed market concerns that Beijing had acted too aggressively in slowing the economy down. Prices also saw a recovery amid a weaker dollar and positive data from Europe. News of an unexpected fall in first-time claims for US jobless benefits has bolstered investors to seek out currencies such as the Euro, propping up the Euro. A stress test on European banks pointed to a recovery in condition, gradually raising clouds of fear from the market. New claims for US unemployment benefits saw an unexpected drop to 457,000, while jobless claims fell by 11,000 in the week ending July 24. Mid week, oil prices dropped sharply after the US Department of Energy reported that crude oil inventories spiked by 7.3 million barrels last week in the United States. This rise, the strongest weekly increase since October 2008, indicates sluggish demand in USA. NAPHTHA Naphtha prices have spiked past US$660/MT in Asia in the week of August 2, 2010, in line with rising oil prices. Prices strengthened amid buoyant downstream prices and outlook. Open-spec prices for H1-September delivery strengthened to US$665/MT CFR Japan. Reversal of a usual Eastward journey toward NW Europe and USA has helped improve weakening sentiments and ease high stockpiles in Asia. ETHYLENE Bouyant derivative polyethylene markets and optimistic outlook amid reduced production at Formosa’s No. 1 700,000 tpa ethylene cracker have strengthened ethylene prices to US$865/MT in Asia in the week of August 2, 2010. Offers by sellers strengthened past the 900 dollar mark, with buying bids pegged above US$860/MT. PROPYLENE Upbeat sentiments in derivative polypropylene markets have propelled propylene prices to US$1095/MT in Asia in the week of August 2, 2010. Prices have also found support from reduced operating rates at several propylene facilities in the region. Spot propylene prices on FOB Korea basis have risen by US$45/ton in the week. Following two consecutive fires at its petrochemical complex in Mailiao, Formosa has experienced reduced propylene output at a cracker, an olefins conversion unit and its RFCC units. In addition, South Korea’s Samsung Total is reported to have lost nearly 10,000 tons of propylene as a result of the recent outage at the 240,000 tpa Daesan facility that was shut following an electrical outage caused by a thunderstorm. EDC EDC prices in Asia have steadied at last week’s US$430/MT in Asia in the week of August 2, 2010. CFR China offers have mounted to US$450/MT amid optimistic upstream markets. Even as downstream PVC looks firmer, deal conclusion has been scant on limited buying bids. VCM VCM prices have stagnated at US$755/MT in Asia in the week of August 2, 2010 amid scant deal conclusion on limited buying bids. Deals by a South Korean producer were heard concluded at these levels. STYRENE MONOMER Propped by strengthening demand, styrene monomer prices have spiked by almost fifty dollars to US$1060/MT in Asia in the week of August 2, 2010. Robust buying intentions have resulted in deal conclusion for September shipment at US$1050/MT FOB Korea. Feedstock benzene prices for September have mounted US$830/MT. POLYMERS HDPE HDPE prices have spiked to US$1055/MT in Asia in the week of August 2, 2010 amid increased offers by sellers. Deal conclusion has been limited as sellers hiked CFR China offers to US$1070/MT levels, and buying bids remained pegged about 45-50 dollars lower. July-August is conventionally the peak season for manufacture of household goods in China, and demand is expected to pick-up to sponge up extreme overstocking. In August China's manufacturing industry augments purchases to meet Christmas demand from the West. However, slow growth in USA and China has dimmed chances of a strong peak buying season. This has been exacerbated by increased Chinese and Middle East production. LDPE LDPE prices have climbed to US$1265/MT in Asia in the week of August 2, 2010 amid promising demand in the region’s largest market, China. After successful conclusion of deals at US$1260/MT levels, CFR China offers were heard at US$1185-1200/MT levels. LLDPE Budding demand from China seems to have pushed up LLDPE prices to US$1085/MT in Asia in the week of August 2, 2010. August shipment CFR China offers from Singapore were heard at US$1150/MT levels, while those from the Middle East were raised to US$1090-1110/MT, with deal conclusion about 30 dollars lower. Currently, there is a significant gap between higher priced domestic material and cheaper imports, leading to a rise in imports. As per ICIS, the cheaper imports have been put into storage to resell to the Dalian Commodity Exchange's LLDPE futures contract. The price hike in the physical market seems well timed with the rise on the exchange driven by higher crude. POLYPROPYLENE Surging propylene costs coupled with a recovering demand in China has propelled PP prices to US$1175/MT in Asia in the week of August 2, 2010. Stronger upstream markets have propelled prices in spot PP market as traders and distributors increased purchases after several weeks of slow trading. August shipment CFR China offers from South Korea and the Middle East were hiked to US$1200/MT levels. POLYVINYL CHLORIDE PVC prices have spiked to US$915/MT in Asia in the week of August 2, 2010 amid robust demand in the region. Most August shipment CFR China offers were heard at US$920/MT levels with deals concluded at the 900 dollar mark. Import PVC offers from the US had been raised in China by ten dollars in August, after rising by 30-40 dollars in July, exacerbating the lack of interest for this origin. Chinese buyers have turned to nearby Asian sources to meet their requirements and this renewed buying interest has helped regional producers raise August PVC offers amid already improved demand in India. POLYSTYRENE Polystyrene prices have mounted to US$1135/MT in Asia in the week of August 2, 2010, amid robust feedstock markets. CFR China offers fro GPPS have been increased to hover around US$1185-1195/MT. ABS ABS prices have spiked past US$1825/MT in Asia in the week of August 2, 2010 in line with increased offers amid higher input costs. August shipment offers were hiked past US$1875/MT levels, with buying interest pegged 40 dollars lower.
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