Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended August 9, 2010

10-Aug-10
CRUDE OIL Crude oil prices have risen past US$80 in Asia in the week of August 9, 2010. In the first half of the week, oil rose to US$81.8 in New York amid optimistic sentiments, a weakening dollar and hurricane concerns in the US Gulf of Mexico. A weak greenback makes dollar-priced commodities cheaper for buyers using stronger currencies, and therefore tends to stimulate demand. Later in the week, crude oil dipped as the US economy lost jobs for a second consecutive month in July, adding to worries that economic recovery will continue to struggle, leaving demand outlook for commodities uncertain. That crude oil prices have sustained above US$80 is an indication that crude oil is taking its cues from the global economic growth. Crude oil has crossed the US$80 thresh hold for the first time since May. NAPHTHA Naphtha prices have spiked in line with robust crude oil, to reach US$700 in Asia in the week of August 9, 2010. Naphtha prices have surged to 10 week highs and cracks have spiked to week highs on demand from Taiwan and South Korea. Honam Petrochemicals, with its requirement of two cargoes, had to be satisfied with just one parcel on inadequate offers. Taiwan’s Formosa also came to the market to buy despite one of its three crackers being shut since July first week because of a fire. However the demand could be short-lived due to ample supplies in the region. Open-spec prices for H1-September delivery have increased to US$695/MT CFR Japan. ETHYLENE Ethylene prices have mounted along with rising derivative prices to US$905/MT in Asia in the week of August 9, 2010. Spot ethylene prices have risen by US$50/MT over the past two weeks led by higher crude oil prices amid unexpected outages at regional crackers. The region continues to face shortage of ethylene due to a shutdown after a fire at Formosa’s No. 1 steam cracker, with capacity to produce 700,000 tpa of ethylene. The supply scarcity has been compounded by Formosa’s purchase of spot ethylene cargo at US$900/MT CFR Taiwan for delivery in H2-August. PROPYLENE Propylene prices have spiked to US$1175/MT in Asia in the week of August 9, 2010 in line with robust derivative demand amid supply concerns. Spot propylene has moved up twice as fast as ethylene, rising by US$110/ton over the past two week period. Propylene has seen a greater incline due to the number of propylene plants affected by outages. EDC Amid limited deal conclusion, EDC prices have stagnated at US$430/MT in Asia in the week of August 9, 2010 despite optimistic demand from downstream PVC market. As input naphtha and ethylene costs ascend, offers have been hiked to US$450/MT, but reluctant buying intentions continue to be pegged about 25 dollars lower. VCM VCM prices stand still at last week’s US$755/MT in Asia in the week of August 9, 2010. Despite upbeat PVC markets, VCM prices have not shown much movement on inadequate deal conclusion, as market awaits offers from sellers. STYRENE MONOMER Amid firm downstream demand, styrene monomer prices have inched up to US$1065/MT in Asia in the week of August 9, 2010 for September shipment. Feedstock benzene prices have moved north to US$850/MT in the week. POLYMERS HDPE HDPE prices have soared to US$1125/MT in Asia in the week of August 9, 2010; riding on a new high amid upbeat demand and positive market sentiments in China. Stronger upstream costs have also propped up prices: crude oil prices have crossed US$80, spot ethylene prices have gained over US$50/MT and spot naphtha has spiked by US$35/MT in this week. Prices have nudged up as buying interest gathers momentum in the Middle East market this week. Converters have responded to rising PE prices in Asian markets by stepping up purchases, although most buyers continue to avoid making purchases in large amounts given their expectations that the current cost-driven PE price increases will not prove sustainable over the medium term due to the lack of sufficient support from the downstream sector. LDPE LDPE prices have increased to US$1295/MT in Asia in the week of August 9, 2010 amid upbeat demand in China and stronger upstream costs, as buying interest gathers momentum in the Middle East market this week. Offers have increased past US$1330-1350/MT, but buying bids remain pegged at the 1300 dollar mark. Markets have posted considerable increases over the past two weeks. LLDPE LLDPE prices have risen sharply to US$1145/MT in Asia in the week of August 9, 2010, rising faster than the other PEs. Prices has witnessed a quantum jump as supply concerns coupled with impending high season for agricultural film support strong buying interest. Two Southeast Asian producers are reported to have sold out their August allocations for LLDPE film to the Chinese market. A Thai producer has concluded August deals with cumulative increases of US$90-100/MT over the past two weeks. Traders in China and Vietnam have reportedly lifted their offers by US$100-105/ton this week. Demand is entering its high season in Asia as re-exporters begin preparations for their Christmas orders and the agricultural film sector begins to replenish stocks ahead of the upcoming high season to begin in mid-August in China. On the supply side, ExxonMobil’s 600,000 tpa LLDPE plant in Singapore was forced to shut following an extruder problem for about two weeks. Yangzi Petrochemical is conducting a month-long shutdown at its 200,000 tpa LLDPE plant in China. POLYPROPYLENE In line with rocketing propylene prices, polypropylene prices have climbed to US$1245/MT in Asia in the week of August 9, 2010. Amid robust demand from China, buying interest for PP gathered momentum in the markets of Middle East this week. Diversion of cargoes to the buoyant market in Asia has kept supply tight in the Middle East. Availability from Saudi Arabia was further constrained by an outage at Petro Rabigh’s plant amid intermittent problems in previous months at the Al-Waha Petrochemicals plant. Offers from Taiwan were heard at US$1290-1300/MT levels. PVC PVC prices nudged up to US$925/MT in Asia in the week of August 9, 2010 on firm demand. Few August shipment CFR China offers have been heard at US$945-950/MT levels. Demand is not expected to be particularly good this month due to the possible impact on demand in Southeast Asia of slowdown during the month of Ramadan. Governments in Indonesia and Malaysia impose restrictions on overland cargo transportation towards the end of the Ramadan month. POLYSTYRENE In line with rising upstream SM prices, polystyrene prices have increased to US$1185/MT in Asia in the week of August 9, 2010. CFR China offers for GPPS surpassed the US$1200 mark, with deals concluded about 10-20 dollars lower. CFR China September shipment offers for HIPS have mounted to US$1325-1345/MT. ABS ABS prices have risen to US$1880/MT in Asia in the week of August 9, 2010 on rising input costs amid recovering demand. CFR China offers from South Korea and Taiwan were hiked for September shipment to US$1930-1945/MT levels.
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