Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 1, 2010

02-Mar-10
CRUDE OIL Oil prices have ended the week of March 1, 2010 on a stable note. Prices have been yo-yoing to hover around the US$80/barrel mark. At the end of the week, regional stock markets rose, pushing benchmark crude for April delivery rose to US$80.1 on the Nymex. All the major Asian stock indexes ended the week on a healthy note, as equity markets were boosted by hopes that Greece's debt-ridden economy would soon be rescued and a slowdown in Chinese manufacturing growth eased fears of additional government measures to cool the economy. Oil traders often follow the cue of the equities as a measure of overall investor sentiment. Threats from Iran that it would cut energy supplies to Europe amid escalated tensions over its nuclear program have also supported the oil price hike. NAPHTHA In line with strengthening crude oil values, H1-April open-spec naphtha rose to US$725/MT CFR Japan in the week of March 1, 2010. Naphtha markets are expected to witness a change in trend with the reopening of the naphtha arbitrage from Europe to Asia, that was shut in February due to cracker maintenance. These shipments to Asia would be the first in over a month since heavy cracker maintenance in Japan curbed demand for western feedstock. Reopening of the arbitrage boosted European naphtha prices as crack spread. ETHYLENE Dipping below US$1200/MT, spot ethylene prices are sharply down from the levels seen just before the Chinese New Year holidays on comfortable avails due to fresh supplies from Japan and Middle East. As compared to H1-February levels, CFR Northeast Asia spot ethylene prices have fallen by almost US$140/MT to US$1195/MT. Some petrochemical plants in the Middle East have resumed production after shutdowns, and production glitches at downstream units that have led Japanese producers to seek alternative markets for their ethylene. Persistently high ethylene costs with a large premium over naphtha costs throughout the early part of February led to healthy margins on ethylene production. Most ethylene producers are maintaining high production rates as a large cash spread of US$510/ton separating spot ethylene prices from spot naphtha costs persists. PROPYLENE Propylene prices have firmed to US$1225/MT in Asia in the week of March 1, 2010. Spot ethylene and propylene markets are moving in opposite directions in Asia, with propylene prices being propelled upwards on concerns of a possible worsening supply scenario as well as robust crude oil values. The supply tightness for propylene is estimated to last through spring into summer. Supply is limited post-Lunar New Year holidays as most derivative makers continue to run at full rates despite poor production economics on fears of worsening supply. Producers in South Korea, Japan and Taiwan are scheduled to shut down 13 plants with a combined propylene capacity over 360,000 tons between now and June. EDC EDC prices have stabilized at US$505/MT in Asia in the week of March 1, 2010 despite an uptrend in downstream prices. The market is dull as it awaits sellers offers for March. VCM VCM prices have remained at US$850/MT in Asia in the week of March 1, 2010. Prices have steadied despite a rising trend in upstream costs and derivative PVC prices. The market has remained lackluster as buyers await offers for March. STYRENE MONOMER Styrene Monomer prices have slipped below US$1300 in Asia in the week of March 1, 2010 amid weakening feedstock benzene prices on one hand and rising supplies on the other. Offers for April dipped to US$1295/MT as feedstock benzene fell below US$920/MT FOB Korea amid lacklustre negotiations. Offers this week were pegged lower than a deal concluded last week. Though prices have declined as compared to the beginning of February, the spot market trend is expected to remain firm as there are numerous maintenance shutdowns coming up in Asia during March. POLYMERS HDPE Despite deteriorating ethylene prices, HDPE prices rose to US$1335/MT in Asia in the week of March 1, 2010. Most key sellers in Asia from Taiwan, Malaysia have offered film grade for March shipment at increased levels of US$1350-1360/MT CFR China. CFR China deals were concluded for film grade cargoes from the Middle East about 15-20 dollars lower. LDPE Increased offers due to supply constraints have propped up prices in Asia to US$1595/MT in the week of March 1, 2010 despite weakening ethylene prices. Most CFR China offers for March shipment have been pushed up by limited supplies to levels just below US$1650/MT. However, buyers have to yet accept these hiked offers and have expressed intentions at the 1600 dollar mark. LLDPE Limited supplies in the region have pushed up prices to US$1415/MT in Asia in the week of March 1, 2010. Sellers have hiked March shipment CFR China offers to US$1440-1450/MT despite weakening feedstock costs. CFR China offers from South Korea that have spiked past US$1660/MT are an indication of a further price hike in the weeks to follow. POLYPROPYLENE Polypropylene prices have risen to US$$1315/MT in Asia in the week of March 1, 2010 as sellers elevated offers in line with persistently rising propylene values. Sellers have hiked CFR China offers for yarn/injection grades for March shipment to US$1350-1375/MT. Deal conclusion for March shipment has been heard at US$1350/MT levels for cargoes from Taiwan and at US$1320/MT levels for cargoes from the Middle East. POLYVINYL CHLORIDE Polyvinyl chloride prices have pushed up past US$1035/MT in Asia in the week of March 1, 2010 in line with elevated offers. Sellers have hiked offers to US$1030-1065/MT levels – offers from Taiwan and Thailand have been hiked by about 15-20 dollars. A Taiwanese producer reported selling around half of his March allocation at US$1030-1040/ton CFR China. Negotiations are on with some customers, so the rest of their March allocation could get sold out at similar levels by the end of this week. A trader reported concluding some deals for Japanese PVC at US$1040-1050/ton CFR China, and some deals for American origins at US$990-1000/ton with the same terms. POLYSTYRENE Polystyrene prices have increased to US$1435/MT in Asia in the week of March 1, 2010 though buying interest has still not recovered amidst dipping feedstock prices. This is because most major sellers in South Korea and Taiwan are attempting to recover erstwhile poor production margins, pushing up CFR China offers for GPPS to US$1475/MT. However, lackluster buying has led to limited deal conclusion for March at about thirty dollars lower. Following the Chinese New Year holiday PS offers recorded gains mainly based on the sellers’ expectations of an improved demand as of March, when the manufacturing season will start for PS applications. Plus, the Chinese Government is also planning to expand subsidies for home appliances and autos in an attempt to boost domestic consumption. The country is seeking to increase consumption among the 900 million residents in the rural areas which is also expected to give an additional boost to demand. Despite the fact that a firming trend is likely to be observed as March demand picks up, players do not expect large increases over the short term, considering the relatively modest upstream costs. HIPS remained more or less stable. ABS ABS prices have gained on elevated offers for March shipment, rising to US$1835/MT CFR China. Most key producers from South Korea and Taiwan have hiked CFR offers to hover around US$1875-1900/MT. Few CFR China deals were heard concluded at around US$1845/MT levels.
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