Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended June 7, 2010

08-Jun-10
CRUDE OIL Oil prices have ended the week of June 7, 2010 with a fall to levels around US$70 as slowing economic recovery in USA and warnings about Hungary's debt dimmed outlook for energy demand. US crude for July fell to US$70.9, while ICE Brent crude for July fell to US$71.8. The euro fell below US$1.19 to its lowest since 2006, as investors preferred the US dollar, shedding riskier equities and commodities that sent stock markets in Asia and Europe lower. Concerns abound in the market on comments from ruling party officials in Hungary suggesting it could be heading for a Greece-style debt crisis. With this, worries linger about the European fiscal problems. NAPHTHA Naphtha prices have collapsed in Asia in the week of June 7, 2010 in line with weakening oil prices. Open spec naphtha for H2-July has fallen to US$645/MT levels. Feeble petrochemical margins and abundant supplies have tanked naphtha cracks to US$110/ton at near two-week lows in Asia. Buyers await the outcome of talks as officials from Kuwait Petroleum Corp (KPC) negotiate term naphtha sales with customers in Singapore. But high levels of polymer inventories in China have muted the outlook for downstream markets, causing prices to fall in the past few weeks. As petrochemical margins drop, cracker operators may be coerced to reduce operating rates. ETHYLENE Ethylene prices have collapsed to seven-month lows of US$950-1000/ton CFR NE Asia in the week of June 7, 2010. Prices have been dragged down by ample supply from the Middle East and limited tank storage space. Worries linger that the European fiscal problems and measures by the Chinese government to tighten credit lending will hurt consumer demand, impacting the industry. Currently, eight crackers in Japan are undergoing maintenance, scheduled for completion by the end of August, keeping ethylene balance tight. On completion of the turnaround season, production rates could be reduced to cope with these price levels. PROPYLENE Propylene prices have spiked past US$1100/MT in Asia in the week of June 7, 2010 on limited avails. Prices have seen stability amid propylene shutdowns in the region. The propylene plants scheduled for shutdown in May, June, July are Nippon Oil’s three plants in Japan, Mitsubishi’s three plants in Japan, S.Oil and SK Energy’s plant in South Korea. EDC EDC prices have fallen below US$500/MT in Asia in the week of June 7, 2010, as feedstock ethylene prices continue to fall, and derivative PVC markets continues to be lackluster. VCM VCM prices in Asia have fallen to US$800/MT in the week of June 7, 2010. VCM has started to move downward after resisting the pull of the declining upstream ethylene and downstream PVC prices for H1-May. After refusing to adjust offers throughout most of May, Asian VCM sellers have revised offer levels for two consecutive weeks. This week’s offers are US$75-80/ton lower than producers’ initial nominations for the month. STYRENE MONOMER Styrene Monomer prices have risen to US$1065/MT in Asia in the week of June 7, 2010 despite weakening crude oil and benzene. Despite successful conclusion of deals at these levels, a few offers saw a dip in line with consistently falling ethylene values. Benzene prices have weakened in line with falling crude oil values to US$820/MT. POLYMERS HDPE HDPE prices have fallen further to US$1145/MT in Asia in the week of June 7, 2010 as demand continues to be subdued in the region, particularly in China. As buyers are reluctant and prefer to wait and watch, deals await deal conclusion. Lack of sales is coercing sellers to offer further price cuts at a time when converters are faced with reduced end product orders. Although major Asian producers have announced large price cuts on their June offers, sellers offering materials from the Middle East have been able to capture an increasing share of the limited buying by offering material 40-50 dollars lower. Standalone HDPE margins in NE Asia jumped by almost hundred dollars in the week. Prices are getting a respite from falling upstream costs after PE had borne the brunt of mounting ethylene values earlier in the year. LDPE The dip in LDPE continued with prices falling to US$1355/MT in Asia in the week of June 7, 2010. Offers from Asian producers have been lowered amid weakening upstream costs as processors continue to be reluctant to conclude deals. Deals for Middle Eastern material have been concluded about 50 dollars lower than CFR China offers from South East Asia and South Korea for June shipment at levels around US$1400/MT. LLDPE Lower offers from producers amid weakening ethylene values have pulled down LLDPE prices to US$1195/MT in Asia in the week of June 7, 2010. Demand continues to be lackluster as distributors and converters are hesitant to conclude deals, despite large price cuts announced by major producers as the market is under the influx of US cargoes priced at less than US$1200/MT. POLYPROPYLENE Despite rising propylene values, polypropylene prices have fallen to US$1225/MT in Asia in the week of June 7, 2010, mainly due to lackluster buying. Despite the reduction, deal conclusion is not being reached as buyers are uncertain about the future direction of the market, preferring to wait and watch for further developments. Advent of material from Sinopec Zhenhai’s new 300,000 tpa PP as well as reduced offers from the Middle East that are undercutting offers from regional producers have also lent support to the downward movement in China. POLYVINYL CHLORIDE Polyvinyl chloride prices have fallen to US$950/MT in Asia in the week of June 7, 2010 amid weak demand from processors in the region, particularly in China. Most June shipment deals have been concluded at US$970/MT levels, after which offers have weakened further. Prices continue to be under downward pressure as sellers get compelled to agree to further discounts to secure deals as large amounts of competitive deep-sea American cargoes are being offered to the region. Concerned about their ability to reach monthly sales targets, a major Thai producer revised their June offers downward by US$80/ton earlier this week, while the done deal levels reported by traders in Southeast Asia have declined nearly US$70/ton over the past two weeks. POLYSTYRENE Despite rising upstream SM values, polystyrene prices have dropped in Asia in the week of June 7, 2010 amid lackluster demand. Offers have fallen to US$1270-1280/MT levels while buying interest has fallen below US$1250/MT for GPPS. CFR China HIPS prices have fallen to US$1275/MT levels. Despite lackluster demand, prices could begin to firm up as feedstock SM prices start to rebound. ABS A downtrend in ABS prices continues, with prices falling to US$1890/MT in Asia in the week of June 7, 2010 in line with weaker upstream costs and dull demand in the region.
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