Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended February 14, 2011

15-Feb-11
CRUDE OIL Volatile movement was seen in oil prices in the week of February 14, 2011. After rising through the first half of the week, oil prices ended the week lower. Light, sweet crude for March delivery ended the week at US$85.5 on the Nymex, its lowest settlement since Nov. 30, 2010. Crude oil prices sank to 10 week lows in New York at the end of the week on news that Egyptian President has stepped down. This announcement eased concerns of an oil supply disruption in the Middle East. NAPHTHA In Asia, naphtha price dipped to a two-session low and cracks ended the week of February 14, 2011 at their lowest in about 10 days, as spot demand failed to lift sentiment weighed down by impending maintenance at petrochemical units. Planned cracker maintenance in Japan, South Korea, Taiwan and Southeast Asia scheduled from March to June will obliterate about 1.8 mln tons of naphtha demand. Midweek, naphtha prices rose to 1-1/2 week high of US$880/MT CFR Japan, and cracks rose marginally to a two-session high to reflect Japanese demand. However, sentiment stayed relatively weak due to upcoming cracker maintenance. Naphtha is poised for a price correction soon because the peak cracker turnaround period starts this month. At least 22 crackers are due to be shut in 2011 for maintenance, with more than half of the turnarounds occurring in the first half of the year, according to ICIS . ETHYLENE Ethylene prices continued to move north, rising to US$1210/MT in Asia in the week of February 14, 2011. Spot ethylene prices gained US$20/ton CFR NE Asia over the past week and US$80/MT in the past month. PROPYLENE Propylene prices continued to move up, rising to US$1330/MT in Asia in the week of February 14, 2011. Some shutdowns in the region continue to give support to this rising trend. STYRENE Styrene prices continue to rise in Asia in the week of February 14, 2011. Traders in China elected to lift their import prices by US$20-60/ton prior to the Chinese New Year holiday regardless of the slowing trading activities. These sellers also pointed to the relatively limited supply levels for their hike decisions. POLYMERS PE Polyethylene prices in Southeast Asia’s local and regional markets have moved higher in the week after the Chinese holidays, as sellers lift offers in response to escalating ethylene feedstock costs, as per Chemorbis. Although China’s PE market has opened post-holiday on a quiet note, players are expecting to see higher import offers in the coming weeks as overseas producers will need to push through higher prices to cover their theoretical production costs based on spot ethylene prices. Price direction is expected to be clearer in about a week, when trading returns to normalcy as players return post-Lunar New Year holiday. HDPE HDPE prices rose to US$1320/MT in Asia in the week of February 14, 2010, on rising ethylene costs and limited supplies. Very few deals were concluded as a chunk of players have not yet returned from the Lunar New Year Break. CFR China offers have been heard at US$1325-1350/MT in Asia for March shipment. In China, import HDPE film offers at the high end of the range are still insufficient to cover producers’ theoretical production costs, while offers at the lower end of the range are actually below the prevailing offer levels for spot ethylene, as per Chemorbis. This situation is likely to be rectified over the coming weeks as producers are expected to announce higher offer levels to restore acceptable operating margins. Import offers from traders this week are mostly unchanged from pre-holiday levels, as they await new offers from suppliers before deciding on their next moves. Local PE prices inside China have also held largely stable over the past month even in the face of steadily rising ethylene feedstock costs resulting in buyer resistance against further hikes in import prices. In plant shutdowns, Honam Petrochemical plans to shut its 370,000 tpa HDPE plant at Yeosu, in early April for 15 days. LDPE LDPE prices rose to US$1720/MT in Asia in the week of February 14, 2010, sellers lifted their offers in response to escalating ethylene feedstock costs. After successful conclusion of deals at these levels, offers were heard about 30-40 dollars higher, but evoked no response. The markets await a chunk of players in the region to return to their desk post Lunar New Year Holiday. Prices are expected to rise further as the steep hike in ethylene prices has not yet been reflected in spot PE prices, which have held largely stable over the past month in both China and Southeast Asia, leaving many overseas PE producers operating at prices well below their theoretical break-even levels. LLDPE LLDPE prices moved up to US$1420/MT in Asia in the week of February 14, 2010 in line with rising feedstock values. Very few deals were concluded as most players have to return from the Lunar New Year Break. No interest was seen for CFR China offers for February shipment heard at US$1440/MT. Prices are expected to move up as producers move to reach theoretical break-even levels. POLYPROPYLENE Polypropylene prices moved up to US$1540/MT in Asia in the week of February 14, 2011 in line with rising propylene costs and restricted avails in the region. Few deals have been concluded this week as the majority of market players are yet to return from the Lunar New Year Holiday. Planned ongoing and upcoming plant maintenance in the Middle East and Asia have started to impact the markets. Formosa Chemicals and Fibers Corp is to run its 450,000 tpa PP facility at Mailiao at 60% rates in March due to a shortage of on-site propylene feedstock, Honam Petrochemical plans to shut a 380,000 tpa PP plant at Yeosu for 15 days in April, Polymirae plans to shut three PP plants in Yeosu in April for maintenance, Samsung Total Petrochemicals plans to shut two PP plants at Daesan in early May for a four-week turnaround, The Polyolefins Company plans to shut part of its PP facilities on Jurong Island at the end of July for 40 days. PVC PVC prices have moved up in Asia in the week of February 14, 2011. In China, prior to the New Year holiday, import sellers had concluded most of their February PVC deals with US$10-40/ton increases over January for mainstream Asian origins, as per Chemorbis. The rest of February deals are expected to settle at or close to the current levels given the firm oil prices and approaching high season for the construction sector into account. Looking at Southeast Asia, the PVC market portrayed a firm outlook despite the fact that the Chinese New Year dampened buying interest in the region during January and early February. The PVC market is quiet as it awaits return of players, but some early March sell ideas have already emerged. POLYSTYRENE Spot PS prices have witnessed substantial increases on the lower end of the range when compared with the beginning of the month. Faced with cost pressures, many GPPS producers are operating below their theoretical cost level based on spot styrene prices while HIPS producers complained that they are facing rising butadiene and rubber costs in addition to higher styrene prices. As per CHemorbis, most producers have already voiced their intentions of announcing higher prices, in anticipation of better demand post-holiday period as converters need to re-stock in anticipation of the upcoming high season for manufacturing.
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