Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 21, 2011

22-Mar-11
CRUDE OIL Crude oil prices ended the week of March 21, 2011 on a higher note, spiking by over two dollars past US$103 on the Nymex. Prices spiked as allied forces fired on Libyan defense sites and the military called for an immediate cease-fire. Concerns abound about the geographical extent of the tensions in the Middle East, as protests abound in Yemen, Bahrain and Oman. NAPHTHA Naphtha prices have dipped to US$985/MT CFR Japan in the week of March 21, 2011. Cracker shutdowns in Japan had led to lower naphtha prices. In Japan, four crackers remain down with a total capacity of 1.805 mln tpa. Of the country's 15 crackers, 9 were near the areas affected by the earthquake. Upto 25,000 tons of olefins shipments for March had to be cancelled due to the shut crackers. Since Japan is one of the largest importers of naphtha, its catastrophe has pressured light-end refining margins as traders speculate demand to fall. ETHYLENE Falling for the third consecutive week, ethylene prices have dropped to US$1280/MT FOB Korea in the week of March 21, 2011, amid lackluster derivative demand. Despite an interruption in supplies from Japan, the market has balanced on inadequate transactions amid domestic ethylene avails in China. Mitsubishi Chemical’s Kashima crackers, Maruzen Petrochemicals’ Chiba unit, JX Nippon Oil and Energy’s Kawasaki cracker continue to be down. Crackers are being run at reduced rates by Keiyo Ethylene, Tonen and Sumitomo Chemical. PROPYLENE Propylene prices have rallied to US$1520/MT FOB Korea in the week of March 21, 2011, as supply concerns continue amid propylene outages. EDC CFR NE Asia ethylene dichloride (EDC) prices have fallen to US$535/MT in the week of March 21, 2011. VCM VCM prices have risen to US$910/MT in Asia in the week of March 21, 2011, as the persistent limited supplies intensify with plant shutdowns in Japan. POLYMERS Domestic PP and PE prices moved lower in China as lackluster demand within the country pushed sellers to reduce prices, as per Chemorbis. Chinese traders are also reported to be actively searching for possible re-export outlets for excess materials, as stock levels within the country are said to be high exerting further pressure on sellers to reduce prices in a bid to speed up sales. Many sellers have directed their re-export offers to Southeast Asia, where demand for both PP and PE has been healthier than China. Many of these re-export offers have been directed to Vietnam, although this large number of offers has further dampened buying interest n Vietnam. An unknown quantity was also exported from China to Japan. Declining local PP and PE prices have weighed down on import prices in China. Beginning of the week saw a sharp fall in crude futures, dampening buyer’s outlook. Several PE plants in Japan remain shut and fuel speculation of increased enquiries from Japan. Japan PE's 260,000 tpa LLDPE and 60,000 tpa LDPE plants are shut in Kashima while Japan PP's 640,000 tpa PP plant at Kashima is shut. Sun Allomer's 127,000 tpa PP plant is also shut at Kawasaki. Several PVC plants are shut including Kaneka's 178,000 tpa PVC plant at Kashima, Shin-Etsu's 550,000 tpa PVC plant at Kashima, and Taiyo Vinyl's 90,000 tpa plant at Chiba. However, demand from Japanese converters is also estimated to reduce on account of earthquake related issues like power shortage, logistical and infrastructure glitches and fuel scarcity. HDPE HDPE prices have steadied at US$1350/MT in Asia in the week of March 21, 2011. Import offers for HDPE film on a CFR China basis have fallen below the prevailing CIF SEA offers. Producers continue to maintain higher sell ideas to the Chinese market, but have been unable to achieve prices close to their target levels since traders have a substantial backlog of previously purchased cheaper material, as per Chemorbis. Even with import prices to China trailing import prices to Southeast Asia, import offers for HDPE film carry a considerable premium over the prevailing local price levels. CFR China offers have been heard at US$1400/MT for end of month shipment, but have failed to attract buyers. LDPE LDPE prices stagnated at US$1710/MT in Asia in the week of March 21, 2011 amid high offers that have failed to attract buyers. CFR China offers from Asia and the Middle East for end of month shipment have been heard at US$1740-1750/MT levels. But the markets await deal conclusion. Offers for locally-held LDPE film cargoes witnessed declines of CNY100-200/ton (US$15-30/ton). Despite lower crude oil and naphtha prices, most Chinese producers are still operating well below their theoretical production costs based on spot ethylene prices, which have registered only relatively modest declines of around US$10/ton over the past week. LLDPE LLDPE prices have persisted at US$1410/MT in Asia in the week of March 21, 2011. Though producers continue to maintain higher sell ideas for both PP and PE to the Chinese market, they have not been able to achieve prices close to target levels as traders are stocked with substantial backlog of previously purchased cheaper materials. Even with import prices to China trailing import prices to Southeast Asia, import offers for LLDPE film still carry a considerable premium over the prevailing local price levels, as per Chemorbis. This week, offers for locally-held LLDPE film cargoes in China fell CNY200/ton (US$30/ton). CFR China offers at US$1425/MT levels have met with buy ideas about 50 dollars lower. POLYPROPYLENE Polypropylene prices have steadied at US$1630/MT in Asia in the week of March 21, 2011, as the markets await deal conclusion. Higher offers by sellers have met with lack of interest from buyers. Few, small volume deals have been concluded. In China’s PP market, offers for locally-held homo-PP cargoes are down CNY150/ton (US$23/ton) on the low end despite a fifty dollar increase in feedstock propylene values. As feedstock propylene continues to rise, a price hike of about fifty dollars is being mulled for next month. Supply constraints lurk as a result of plant shutdowns in South Korea and Taiwan in the months to come. How much PP will converters in earthquake ravaged Japan import remains to be seen. POLYVINYL CHLORIDE Polyvinyl chloride prices have risen to US$1130/MT in Asia in the week of March 21, 2011, on disrupted supplies from Japan. Several PVC plants have been shut in Japan, including Kaneka's 178,000 tpa Kashima plant, Shin-Etsu's 550,000 tpa Kashima plant and Taiyo Vinyl's 90,000 tpa plant at Chiba. Supply concerns abound in Asia in light of obstruction of almost 50% of PVC capacity in Japan, mostly located in the earthquake ravaged areas. A further hike is expected in prices.
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