Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 14, 2011

16-Mar-11
OIL In a volatile week, oil prices on the Nymex, ended the week at levels above US$100. During the week ended March 14, 2011, Libyan government forces attacked rebels on western and eastern fronts, intensifying their offensive to crush the revolt against Muammar Gaddafi. Oil prices slipped on news that OPEC was considering a production boost as war-torn Libya's output remained disrupted. Saudi Arabia has offered to help make up for Libya's shut output, estimated at about 1 mln bpd of its normal 1.6 mln bpd. NAPHTHA Naphtha prices dipped to US$990/MT in Asia for the week ended March 14, 2011. Traders are on the lookout for vessels to ship at least 300,000 tons of Western naphtha for H1-May arrival vs 250,000 tons for H1-April arrival. Midweek, open spec naphtha for front-month H2-April rose to US$1017/ton, the highest since March 7. Formosa Petrochemical and Honam Petrochemical purchased a total of about 200,000 tons for H2-April arrival, while LG Chem and Samsung Total bought at least 75,000 tons for H2-April arrival. Asia's top naphtha buyer Formosa was estimated to have locked in around 150,000 tons, bringing its total spot purchases next month to over 300,000 tons. The impact of the largest ever earthquake that has struck Japan over the weekend is being assessed. ETHYLENE Ethylene prices dipped to US$1300/MT in Asia in the week ended March 14, 2011. Despite high naphtha prices and tight supplies, spot ethylene buyers have deferred spot buying. Demand has weakened in view of the ongoing and upcoming turnarounds at derivative plants. Weakness in downstream markets has also depressed ethylene outlook. The impact of the largest ever earthquake that has struck Japan over the weekend is being assessed. PROPYLENE Propylene prices continue to rise past US$1500/MT FOB Korea in the week of March 14, 2011, on persistent supply concerns stemming from unexpected propylene outages and the approaching maintenance season for propylene units. EDC Amid strengthening derivative markets, ethylene dichloride prices have risen to US$500/MT FOB Korea. VCM VCM prices have risen to US$890/MT FOB Korea amid tight supplies, robust ethylene values and steady derivative PVC market. STYRENE MONOMER Styrene Monomer prices continued dipping to US$1405/MT FOB Korea in Asia in the week of March 14, 2011. Spot styrene prices in Asia have lost ground over the past weeks despite rising crude oil and naphtha prices. Styrene demand has not been responsive to tightening supplies in the region as existing stock levels have proven high enough to dissuade styrene buyers from purchasing beyond current needs amid ample buffer stocks. Feedstock benzene prices were heard at US$1170/MT. POLYMERS POLYETHYLENES Players in Asia’s PE markets report that sellers have been forced to reevaluate their initial increase targets for March in the face of widespread resistance from converters and slower than expected demand, as per Chemorbis. Recent events in upstream markets, which have seen crude oil and naphtha feedstock prices take a step back after racing to two year highs have also contributed to sellers’ loss of confidence in their ability to push through the full extent of their original March increase targets. Chinese buyers returned to the market to secure some cargoes last week after crude oil futures jumped to their highest levels since 2008 on the Nymex, and domestic producers announced increases of US$15-46/ton at the start of the week in line with higher upstream costs. However, producers began to lose confidence in their ability to achieve higher prices as crude oil and naphtha prices began to retreat from their early month highs and spot ethylene prices also began to move lower. One Chinese producer conceded to a reduction of CNY100/ton (US$15/ton) on offers, while distributors reported that they are prepared to consider discounts of CNY50-100/ton (US$8-15/ton) for buyers willing to place firm bids. PE demand has been disappointing since the end of the Chinese New Year holidays as converters have been operating at reduced rates in the face of a labor shortage in the coastal regions of the country while complaining that their operating margins have been impaired by persistently rising raw material costs. Converters now say that they are planning to delay their purchases for as long as possible in anticipation that sellers will agree to some reductions over the next few weeks assuming that upstream costs continue to step back from their early month highs. Poor demand in China has also had a spill-over effect on the nearby Southeast Asian market. Southeast Asian producers who normally export to China have increased availability to the region in response to weaker demand from Chinese buyers. Several traders report receiving re-export offers from the bonded warehouses in China as Chinese struggle to liquidate their stocks. A Southeast Asian producer reported to have concluded some deals for LDPE film this week at prices US$50/ton below their initial sell ideas for the month as their initial price targets proved unworkable. A trader from Taiwan reported that they are diverting some Thai LDPE film they had originally planned to offer to China to Southeast Asia instead owing to poor demand within China. HDPE Offers have inched up to US$1345/MT in Asia in the week of March 14, 2011. CFR China offers from Asia as well as Iran were heard at the 1400 dollar mark. However, these offers met with damp buying interest, with bids at US$1375/MT levels, and sellers struggle to conclude deals at current price levels. LDPE LDPE prices steadied at US$1710/MT in Asia in the week of March 14, 2011. CFR China offers for March shipment were heard at US$1725-1755/MT from Asia and Middle East. Offers have risen in line with stronger upstream costs but have failed to attract much buying interest. By end of week, few deals were concluded at US$1725/MT levels. LLLDPE LLDPE prices have steadied at US$1410/MT in Asia in the week of March 14, 2011. Higher offers have failed to attract much buying interest, and sellers struggle to conclude deals. POLYPROPYLENE Polypropylene prices have steadied at US$1620/MT amid limited avails and rising feedstock propylene in Asia in the week of March 14, 2011. Offers have been heard at elevated levels, but were met with buyer’s resistance, on lower domestic offers from China. Buying has been lacklustre in SE Asia as most deals for the month have been concluded. Outlook, however, remains firm amid stronger crude and propylene values, and tighter PP supply estimated in Q2-2011. POLYVINYL CHLORIDE Polyvinyl Chloride prices have steadied at US$1110/MT in China in the week of March 14, 2011, where buyers have adopted a wait and watch stance. Offers were heard at higher levels in line with higher upstream costs amid limited deal conclusion. However, demand and offers have improved to India, Middle East and SE Asia. Most sellers await benchmark offers to China from Taiwan for April shipment, to gauge a sense of direction for their offers.
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