Crude-oil futures dipped to US$88 at the end of the week of January 10, 2011 as the dollar rose, stocks fell and any beneficial effects from the payroll report dimmed. For the week, crude lost 3.7%, marking oil’s worst week since August. Earlier this week prices rose on optimism about the economy, but fell on a rising dollar and declining US equities. A Labor Department report that the US economy added 103,000 jobs in December, and unemployment rate fell to 9.4% also boosted oil prices.
Naphtha prices have eased to US$875/MT in Asia in the week of January 10, 2011. Naphtha cracks are rising with intermonth spread holding strong, supported by demand and persistently tight supplies. Naphtha supplies have been tight since late 2010 due to delays in shipments in the Gulf and impending refinery and splitter maintenance in 2011. Strength in naphtha is expected to be sustained due to healthy demand amid lower supplies from the Gulf, because of continuous refinery maintenance between January and April. CPC has not yet sealed a term deal for 2011, despite over two months of negotiations because of tight supplies that make it difficult to reach an agreement.
Ethylene prices have spiked to US$1130/MT in Asia in the week of January 10, 2011, in line with higher crude and naphtha values. Offers and negotiations were firmer for end of month and early February loading cargoes. Most buyers were active in China, while most Asian buyers preferred to stay in the sidelines amid sufficient stock levels and cargoes from the Middle East.
Propylene prices have spiked to US$1220/MT in Asia in the week of January 10, 2010, amid rising crude oil and naphtha values and healthy demand from downstream sectors.
Amid robust ethylene values, EDC prices have firmed at US$500-510 in Asia in the week of January 10, 2011 as downstream PVC markets remain lackluster.
Despite rising ethylene values and steady EDC prices, VCM has tumbled to US$900 in Asia in the week of January 10, 2011 on weakness in PVC markets.
POLYETHYLENES: PE prices have moved higher in major Asian markets during the first week of 2011, with sellers pointing to firm upstream costs as well as improved demand as support for their price increases, as per Chemorbis. However, most buying interest has been from traders and distributors this week while converters have generally remained on the sidelines, as they plan to watch market developments for a while longer before taking positions. Most converters plan to wait until the second half of the month to make their purchases as they are not confident about the demand outlook for their end products. While converters remain reluctant to purchase, demand has nevertheless picked up this week as traders and distributors have been more active in the market, with most producers saying that they have been receiving a greater number of price inquiries this week despite no uptake in sales. Speculation about the Chinese government’s move to let the yuan appreciate sharply over the next few months has stimulated buying in China. Demand from China is expected to dwindle at the onset of the Lunar New Year holiday, and pick up only a week after the week-long holidays. PE prices also began the New Year with increases in the Indian market. Local supplies were tighter on rumors that a major Indian producer managed to conclude some export deals in significant quantities last week.
HDPE prices propped up past US$1300/MT in Asia in the week of January 10, 2011 on firm upstream costs as well as improved demand. In China, PE prices in both the import market and the local market moved higher: domestic offers gained US$15-30/MT this week. In Southeast Asia, import offers rebounded by 30-50 dollars, after losing some ground in the previous week. As per Chemorbis, offers for Middle Eastern HDPE film were received with increases of US$20, with deals concluded at US$1320/MT- material is no longer available at this price.
LDPE prices moved up past US$1680/MT in Asia in the week of January 10, 2011 in line with rising feedstock costs and improved demand. After successful conclusion of deals at this level, CFR China offers for February shipment were heard past the US$1700 mark. However, buying interest is not strong enough to sustain very steep increases. An Indian distributor in the domestic market has lifted offers for locally-held Central Asian LDPE film by US$44/MT and in China offers for domestic material posted increases of over US$50/MT this week.
LLDPE prices gained to US$1385/MT in Asia in the week of January 10, 2011. In China, prices in both the import market and the local market moved higher this week. Import offers posted weekly increases of US$10-50/ton and domestic producers offered LLDPE film with increases of US$50-95/ton when compared with their most recent offer levels, citing their lack of inventory pressure along with higher LLDPE futures market prices as support for their price increases. As per Chemorbis, most traders added that they are unwilling to conclude deals in large quantities these days in anticipation that prices will continue to gain ground over the short term.
Polypropylene prices have moved up to US$1480/MT in Asia in the week of January 10, 2011, amid optimistic outlook and demand along with higher input costs, coupled with speculation that the Chinese government will let the Chinese yuan currency appreciate sharply over the next few months. As the week long Lunar New Year holiday draws nearer, buying interest in the region is expected to diminish until markets return to normalcy in China by end of next month.
POLY VINYL CHLORIDE
As market outlook and sentiments remain sluggish, PVC prices have steadied at US$985-990/MT in Asia in the week of January 10, 2011. Markets have been slow as it is conventionally in the winter months, with very little deal conclusion just ahead of the week long holidays in China. January shipment deep sea cargoes from USA have been offered at $980/ton CFR CMP. An end to power rationing policy in China is expected to lead to increased run rates in domestic plants in China, alleviating supply constraints, probably resulting in price declines.