Crude oil prices ended the week of December 27, 2010 on a high note of US$91.5 on the Nymex. Oil futures peaked to the highest closing since October 2008, on news of a sharp drop in US stockpiles and a severe winter. The falling inventory levels mark confidence in a rebounding North American economy.
An uptrend in naphtha continues in Asia as prices rise past US$865/MT in the week of December 27, 2010, amid robust crude oil prices amid persistently robust demand. Open-spec naphtha for delivery to Japan was at US$869/MT. At the start of the week, naphtha margins in Asia fell after crude oil prices started to climb. Naphtha's crack spread to Brent crude declined to less than US$160/MT.
Ethylene prices steadied at US$1100/MT FOB Korea in the week of December 27, 2010 amid firming naphtha values and lacklustre downstream markets.
Propylene prices have dipped to US$1175/MT in Asia in the week of December 27, 2010 amid stable demand from downstream PP markets.
EDC prices dwindled to fall below US$500/MT in Asia in the week of December 27, 2010 amid weaker downstream polyvinyl chloride and VCM demand.
VCM prices steadied at US$915/MT in Asia in the week of December 27, 2010 amid weaker derivative PVC markets.
Polyolefin markets have seen some revival in Asia as crude oil values continue to rise and buyers move to cover their immediate requirements. Speed of revival has been lethargic as majority of traders avoided inventory build up just before the year-end book keeping, but those looking to cover immediate requirements of some grades were faced with higher prices. Most key producers have yet to announce offers for next month shipments. Demand in China may continue to be dampened if more credit-tightening measures are introduced to curb inflation. Also demand from India is weaker than normal as the country recovers from a prolonged monsoon. Unseasonable weak demand from India has dampened sentiment across Asia as exporters to India fail to conclude deals and Indian producers explore options to export.
HDPE prices rose to US$1260/MT in Asia in the week of December 27, 2010 as demand sees some revival amid rising crude oil values and buyers move to cover their immediate requirements. Key producers have yet to announce offers for next month shipments, but an uptrend is being anticipated. CFR China offers for January shipment were heard past US$1275/MT from the Middle East and about 20 dollars higher from Malaysia. Offers remained stable in China’s domestic markets. Distributors in India are complaining that supplies are building up in the local market as a result of persistently slow demand over the past few weeks.
LDPE prices rose past US$1650/MT in Asia in the week of December 27, 2010. After successful conclusion of deals at these levels, January shipment CFR China offers were heard at US$1670/MT from Middle East,a nd about 25 dollars higher from Malaysia. LDPE avails will continue to be limited in the region caused by producers shifting to EVA production on account of better margins. EVA prices continue to move north as demand in the region surpasses supply.
LLDPE prices have steadied at US$1360/MT in Asia in the week of December 27, 2010. Sellers continue to quote offers as high as last week. Also affecting the markets in very feeble demand from India, sales to the local market have fallen off by nearly 40% when compared with the past month. With stocks accumulating in the local market, Indian PE producers have begun to take a greater interest in exports.
Polypropylene prices have risen past US$1460/MT in Asia in the week of December 27, 2010. Markets have seen some revival in Asia as crude oil values continue to rise and buyers move to cover their immediate requirements, however with higher prices. The market awaits offers from key producers in Asia for next month. Market outlook remains unclear as one section anticipates prices to rise amid higher upstream costs, while others anticipate lower prices amid sluggish trading pre-Lunar Holidays.
POLY VINYL CHLORIDE
Polyvinyl chloride prices have dropped to US$985/MT in Asia in the week of December 27, 2010 amid limited deal conclusion and weaker offers. The market awaits a rise in supplies amid dwindling demand due to the upcoming year end bookkeeping period and the holiday season in China. Supplies are expected to improve as China’s power rationing policy eases, and further eases PVC supply. Weaker PVC demand from India has been one contributing factor to softer January outlooks in both China and Southeast Asia. In Southeast Asia, slower export demand has left regional producers with larger than expected allocations for their local markets, leading some players to predict lower domestic prices for January as sellers are expecting a difficult month for their export business.