Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended July 26, 2010

27-Jul-10
CRUDE OIL Crude oil prices have ended the week of July 26, 2010 at levels below US$79 a barrel as concerns cloud fresh signs of economic growth that stress tests to be conducted on European banks could reignite the continent's debt crisis. Mid-week, benchmark crude oil for September delivery spiked by almost three dollars to US$79.30 on the Nymex. Oil prices rose to an 11 week high as stock markets spiked on better-than-expected Q2 corporate earnings. NAPHTHA Naphtha prices have spiked past US$650/MT in Asia in the week of July 26, 2010, in line with rising oil prices. Open-spec price for H2-Aug delivery rose to US$651/MT CFR Japan. About 300,000 tons of Mideast, Suez naphtha is headed for the West. This reversal of a usual Eastward journey toward NW Europe and USA will help improve weakening sentiments and ease high stockpiles in Asia. A 50,000 tons parcel, for August 27-29 loading, is being offered by Saudi Aramco, its second rare spot parcel loading from Jubail in less than a month. The Asian market plunged at the start of the month after Middle Eastern suppliers Saudi Aramco, Kuwait Petroleum Corp (KPC), Abu Dhabi National Oil Co (ADNOC), ADGAS, and Qatar's Tasweeq, released abundant spot cargoes after failing to get term buyers to renew their contracts after term buyers have either reduced the volumes, or dropped their contracts. ETHYLENE Lackluster market dealings have steadied ethylene prices at US$855/MT in Asia in the week of July 26, 2010. In line with rising crude oil and naphtha values, sellers have hiked CFR Far East offers to US$895/MT. They are faced with subdued demand amid pessimistic downstream market sentiments. Better prices for ethylene in Europe are luring Middle Eastern and US cargoes away from Asia. There is no demand for ethylene in Southeast Asia, as the region remains oversupplied with Middle Eastern cargoes. Normally, spot cargoes from the Middle East are sold to Southeast Asia due to better logistics such as storage tanks and discharging terminals. PROPYLENE Spot propylene prices have spiked to US$1055/MT in Asia in the week of July 26, 2010. August shipment prices have climbed up by over 20 dollars for August shipment as crude oil and naphtha price hikes draw back buyers to the markets. EDC EDC prices have moved up to US$430/MT in Asia in the week of July 26, 2010 as offers inch up amid optimistic crude oil and naphtha markets. Despite few offers from sellers amid firm market outlook, as downstream PVC looks firmer, deal conclusion has been scant on limited buying bids. VCM EDC prices have climbed up to US$755/MT in Asia in the week of July 26, 2010, as downstream PVC prices look firmer. However, lack of buying interest keeps deal conclusion at bay. STYRENE MONOMER Styrene Monomer prices have spiked by over fifty dollars to US$1015/MT amid rising input costs coupled with optimistic demand. Deals for August shipment have been concluded at the 1000 dollar mark; about 10-15 dollars lower than offers. Deals for feedstock benzene have been concluded past the US$800 dollar mark, against offers pegged about 20 dollars higher. POLYMERS From cautious optimism to rising anxiety, the mood surrounding China's polyolefins market in H2-2010 is pessimistic, due to a lethal combination of stronger output in China and the Middle East amid weak demand in China. Polyolefin inventories and volumes from new plants will require a few months to clear up. The market is fundamentally weak and directionally it is not looking good. Softer polyolefin markets in China have left producers with no choice but to push material at any price. End-July/August could possibly see a reduction in run rates by marginal producers. July-August is conventionally the peak season for manufacture of household goods in China, and demand could pick-up to sponge up extreme overstocking in polyethylene (PE). The increased spot sales from the Middle East can be attributed to production problems at one plant and commissioning of a new cracker ahead of associated downstream start-ups, as well as reduced PE rates in the region due to poor demand in China. HDPE HDPE prices have fallen further to US$1035/MT in Asia in the week of July 26, 2010. Markets remain lackluster on subdued demand in the region, particularly from China. July-August is conventionally the peak season for manufacture of household goods in China, and demand could pick-up to sponge up extreme overstocking. Asian producers have kept their CFR China offers for film grade at US$1065-1100/MT levels, with limited deal conclusion about 20-40 dollars lower. However, the market is seeing increased spot sales from the Middle East, mainly attributed to production problems at one plant and commissioning of a new cracker ahead of associated downstream start-ups. CFR China offers for Middle Eastern cargoes have been evaluated at US$1025/MT. LDPE LDPE prices have fallen to US$1245/MT in Asia in the week of July 26, 2010 on persistently weak demand from China. Market outlook continues to be pessimistic on the lack of positive signals, as the Chinese market is fundamentally weak and directionally poor. CFR China offers for August from Asia were heard at US$1260/MT levels, while those for the Middle East cargoes were heard 20 dollars lower. LLDPE As demand continues to be lackluster in China, LLDPE prices have dropped to US$1045/MT in Asia in the week of July 26, 2010. August shipment cargoes were being offered at US$1065-1115/MT CFR China. Demand has been subdued in China from ongoing economic uncertainty, whilst buyers prefer to wait and watch in anticipation of further price cuts. POLYPROPYLENE Polypropylene prices in Asia have softened to US$1145/MT in the week of July 26, 2010. Increased number of offers from sellers in South Korea and Taiwan permitted more active deal conclusion. Offers from Asian suppliers were heard at US$1175/MT levels, with deal conclusion about 20 dollars lower. Offers for Middle Eastern cargoes have been heard about forty dollars lower vs Asian suppliers for August shipment. POLYVINYL CHLORIDE PVC prices have stagnated at US$870/MT in Asia in the week of July 26, 2010 as most market players preferred to remain away from the markets. Asian market players have fortified themselves for increased offers from major Asian producers for August, as apparent with initial increases in domestic offers in Southeast Asia and import prices to India. Some players are skeptical of the feasibility of the PVC increases, pointing to weaker demand and lower PVC prices in China amid slower demand in India and Southeast Asia amid the monsoon season. Sellers are optimistic about their prospects for August. After concluding their July business on a bullish note, sellers have been predicting further price increases for August. POLYSTYRENE Polystyrene prices have steadied at US$1105/MT in Asia in the week of July 26, 2010. CFR China offers for GPPS were heard above US$1135/MT, while HIPS market prices dipped to US$1200/MT levels. Interestingly, most of these down adjustments were made at the beginning of last week. Persistently poor demand as well as the lower operating rates at converters contributed to these decreases. Import offers, which had been losing ground for a long time on the back of poor demand, began to stabilize towards the end of last week as producers started to see support from the upstream markets. ABS ABS prices have recoiled to US$1975/MT in Asia in the week of July 26, 2010 in line with increased offers amid higher input costs
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