Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended January 24, 2011

29-Jan-11
CRUDE OIL Crude oil prices have ended the week of January 24, 2011 ended the week below the 90 dollar mark on concerns of elevated supplies, capping a week of declining crude prices. Light, sweet crude for March delivery slid to US$89.1 on the Nymex, while Brent crude on the ICE futures Exchange rose to US$97.50 a barrel. Worries about high crude inventories, particularly at the Nymex delivery point of Cushing, Okla., continued to weigh on the front-month contract for West Texas Intermediate. The gap separating Brent crude oil prices from American crude futures has reached its greatest height since February 2009 as oil supplies from the North Sea have been tight while American traders have been faced with rising stock levels at the Nymex delivery point in Cushing. NAPHTHA Naphtha prices dipped to US$870/MT in Asia at the end of the week of January 24, 2011. Prices in Asia peaked to a two week high on the first day of the week, and cracks increased to a week's high, on healthy fundamentals. ETHYLENE Ethylene prices have spiked past US$1200/MT in Asia in the week of January 24, 2011. After successful conclusion of deals below US$1200/MT, sell offers have been hiked by 30-40 dollars. However, buying is beginning to slow down as most buying for February has been concluded by all major end-users. The week saw spot buying by traders in anticipation of increase in prices post-Lunar New Year holidays. Maintenance work at Ras Laffan Olefins Co’s 1.3 mln tpa ethane cracker has led to some supply disruptions as a result of reduced run rates. PROPYLENE Propylene prices have moved up to US$1265/MT in Asia in the week of January 24, 2011. Most transactions for next month have been concluded. Though a general slowdown on deal conclusion has been seen, many traders are purchasing added quantities in anticipation of a price hike post-Lunar New Year holidays. Some shutdowns in the region continue to give support to this rising trend. In Asia, spot propylene prices gained US$90/ton increases on FOB Korea basis when compared to the beginning of the month given tight supplies and good demand in the region, as per Chemorbis. YNCC’s No. 2 cracker with 270,000 tpa propylene capacity at Yeosu was hit by a fire towards the end of the previous week although the company managed to restart the cracker shortly after the outage. However, YNCC is currently running the cracker at lower operating rates at 80% capacity. Meanwhile, Guangzhou Petrochemical will shut its 220,000 tpa cracker on February 14 for a 30-40 days long maintenance shutdown. Formosa’s 270,000 tpa propylene plant, located in Taiwan, is also to halt operations during January-February for a month long turnaround on the metathesis unit. EDC Ethylene dichloride (EDC) prices have increased to US$25/MT in Asia in the week of January 24, 2011, amid rising ethylene values and firming downstream markets. VCM Vinyl chloride monomer (VCM) prices have moved up to US$895/MT in Asia in the week of January 24, 2011 amid robust input costs and firmer derivative demand BENZENE Benzene prices have moved up to US$1125/MT FOB Korea in the week of January 24, 2011. POLYMERS HDPE HDPE prices have moved up to US$1310/MT in Asia in the week of January 24, 2011 on deal conclusion for end of month/February. Market sentiments are beginning to slow down as the Chinese prepare for their lunar New Year break. After successful conclusion of deals at these levels, CFR China offers have been hiked by 70-80 dollars from Saudi Arabia, Taiwan, Thailand for next month shipment. The rise in offers has been triggered by booking of cargoes in anticipation of a price hike post Lunar New Year Break triggered by high input costs. LDPE LDPE prices have steadied at US$1690/MT in Asia in the week of January 24, 2011, as markets await deal conclusion for February. CFR China offers have been heard atUS$1650/MT from the Middle East as well as Malaysia. However, buyers have been reluctant to conclude deals at these high levels and the markets have been in quiet. LLDPE LLDPE prices have moved up to US$1415/MT in Asia in the week of January 24, 2011. After successful conclusion of deals at these levels, CFR China offers have been hiked past US$1425/MT for February shipment. Buyers prefer to wait in the sidelins and have not reacted to these higher priced offers. POLYPROPYLENE Polypropylene prices have spiked to US$1530/MT in Asia in the week of January 24, 2011 in line with rising feedstock values, limited availability, and active markets in the region. Supply is expected to get restricted on a series of plant maintenance in H1-2011 in Asia and the Middle East. Demand has picked up fairly as compared with the past month, although buyers remain hesitant to purchase in large quantities as demand outlook post-Chinese New Year holidays remains dim. As per Chemorbis, several converters report plans to stock some cargoes over the short term, adding that most find prices in their respective local markets to be more attractive than the prevailing import price levels. Homo-PP offers in the region’s import market moved up by US$50/ton on the low end and the high end of the overall range last week as producers and traders continued to revise offers higher in the face of stronger upstream costs and tight supplies. A major Southeast Asian producer began this week by lifting homo-PP prices by US$60/ton when compared with their latest offer levels while also increasing their PP copolymer prices by US$70-80/ton. A buyer in Vietnam reported to have received an offer for Indian raffia late last week with a price increase of US$60/ton when compared with recent offers received for this origin. Players had been expecting to see higher offer levels for Indian origins based on news that Reliance is planning to conduct a maintenance shutdown at its 1.1 mln tpa PP plant in Jamnagar in February. The Polyolefins Company plans to shut part of its PP facilities on Singapore's Jurong Island at the end of July for 40 days, and Honam Petrochemical plans to shut its 380,000 tpa PP plant at Yeosu in early April for 15 days, Polymirae plans to shut three of its polypropylene (PP) plants in Yeosu, South Korea, in April for maintenance, and Samsung Total Petrochemicals plan to shut its two PP plants at Daesan in early May for a four-week turnaround. Sellers appear adamant to maintain their current firm offer levels ahead of the Chinese New Year holiday. In Southeast Asia, a similar panorama shows up in the PP market as stronger upstream costs coupled with restricted supply levels caused sellers to issue further increases on their PP prices. January demand is reportedly performing better compared to December, according to players in the region. Some buyers also confirm this information by saying that they plan to make fresh purchases in anticipation of firmer offer levels to emerge following the Chinese New Year holiday. POLY VINYL CHLORIDE Polyvinyl chloride prices steadied at US$1010/MT in Asia in the week of January 24, 2011 amid rising input costs and sluggish demand pre-Lunar New Year holiday. Prices in Southeast Asia are expected to move higher in February, with initial offers for both local and regional business having already been announced with increases when compared with sellers’ most recent January sale prices, as per Chemorbis. Producers pointed to higher import PVC prices in China and India as well as persistently strong upstream costs as support for their price increases. In the region’s import markets, a major Thai producer announced initial February offers this week at a rollover from January done deal levels. The producer reported to be seeing better demand from the Chinese market than from Southeast Asia recently, although they expect buyers to become more active in the import market over the coming weeks. A trader offering Taiwanese PVC reported to have lifted offers to Southeast Asia by US$20-30/ton this week in line with rising import offer levels in markets in China and India. Traders offering towards the lower end of the import range are receiving a good number of price inquiries these days, though they continue to have difficulties concluding deals for large tonnages. In the region’s local markets, a Vietnamese producer announced initial February offer levels this week with increases of US$25-30/ton from their most recent January done deal levels. The producer is to run their plant at reduced rates of around 60-70% until after the Chinese New Year holidays. A producer in the Philippines also announced a price increase of PHP1000/ton (US$23/ton) on their offers to the local market this week, reporting that they are seeing normal demand from the local market at the moment. In Indonesia, a domestic producer reported plans to announce increases of US$20-30/ton on offers to the local market for February in line with firming regional trends. The producer has already sold out most January allocation at prices close to their initial offer.
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