Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 29, 2010

30-Mar-10
CRUDE OIL Crude prices for May delivery fell to US$80 a barrel on Friday, amid volatile trading, as investors scout for clear signals that the global economic recovery will continue. Prices ended the week 3.8% below a 2010 peak of roughly US$83.18 a barrel. Crude oil for May delivery rose in the week of March 29, 2010, to US$80.49 a barrel on the Nymex. Crude oil prices rose for the first time in four days on expectations of an increase in fuel demand as the global economic recovery strengthened and concerns over Greece’s debt crisis started receding, bolstering the euro. The dollar fell against the euro following a pledge by the International Monetary Fund and European Union to help Greece finance it’s debt. As this rescue plan reduces concerns of a double dip recession in the Eurozone, the news in bullish for crude. NAPHTHA Naphtha prices have dropped in line with volatile crude oil prices that continue to dip. In the week of March 29, 2010, open-specification naphtha forward contracts for H1-May were valued at $725/ton. Naphtha suppliers are expected to be hard hit if Asia's top petrochemicals buyer China lowers imports of ethylene and polyethylene. As newer capacities come on stream in China, imports into China are expected to dip, which may force petrochemical makers to reduce run rates from H2-2010. Cracker run cuts in Asia are crucial to maintain petrochemical margins, but will hurt naphtha demand. South Korea, Japan and Taiwan currently have a nameplate capacity of around 19.14 mln tpa of ethylene. A 25% cut in runs would approximately amount to a naphtha demand loss of nearly 1.2 mln tons a month. ETHYLENE Ethylene prices have fallen to US$1130/MT in Asia in the week of March 29, 2010 as supply concerns ease and derivative PE prices dwindle. The region is to witness an abundance of supply with the start up of Shell’s 800,000 tpa cracker in Singapore and Map Ta Phut Olefins Co’s 900,000 tpa cracker in Thailand. On the demand side, buying was lethargic in line with a further drop in downstream prices. This year, China, South Korea, Thailand, Singapore and India will add 6.3 mln tons of ethylene capacity, taking the region's total to 48.33 mln tpa. Out of this, 38% capacities will come up in China alone. As a result, imports into China are expected to dip, which may force petrochemical makers to reduce run rates from H2-2010. Adding to the ethylene supply glut will be additionally, competitive Middle East petrochemical plants, which use cheaper gas instead of naphtha as feedstock, that are beginning to start up production. PROPYLENE Propylene prices have declined to US$1250/MT in Asia in the week of March 29, 2010 as supply concerns ease in the region. The region will be well supplied as Shell Chemicals’ Singapore cracker with a surplus 440,000 tpa C3 and Map Ta Phut Olefins Co’s 800,000 tpa propylene cracker start up. Additionally, about 150,000 tpa from PetroVietnam and over 100,000 tpa of additional supply from Saudi Arabia is expected to ease the supply scenario further. EDC EDC prices have nudged up to US$520/MT in Asia in the week of March 29, 2010 on restricted supplies in the region. Supplies have been impacted by a 30% reduction in production at Formosa’s 1300,000 tpa EDC plant at Mailiao due to technical problems. CFR China offers were heard at US$555/MT, while buying intentions were gauged about 25 dollars lower. VCM VCM prices steadied at last weeks’ US$850/MT in Asia in the week of March 29, 2010 as the buyers were reluctant to move, as sellers offered material for April shipment. Sellers indicated CFR China offers for April shipment at levels above US$850/MT, but failed to conclude many deals as buyers preferred to wait and watch. CFR SE Asia offers from South Korea were heard at 15-20 dollars higher than those to China. STYRENE MONOMER Despite rising feedstock benzene, Styrene Monomer prices have slumped to US$1260/MT in Asia in the week of March 29, 2010 on lackluster derivative demand. Offers were gauged at US$1260/MT levels, with deals concluded about 10 dollars lower. Benzene prices continued on an uptrend in Asia despite weaker crude oil and naphtha values. H1-May shipment FOB Korea prices were assessed over US$970/MT. POLYMERS HDPE HDPE prices have declined to US$1245/MT in Asia in the week of March 29, 2010 as demand falters in China. As sell offers to China failed to attract much buying interest after large discounts on initial April offers, producers have been forced to give in to a further round of decreases to facilitate deal conclusion. The downtrend in China’s PE market has also had a noticeable impact in Southeast Asia, where buyers have retreated in hopes of further decreases. In Southeast Asia, regional producers who recently announced new offers for April, have already indicated willingness to agree to extra discounts in case of firm bids. They are also beginning to seek out alternative markets to counter the poor demand in China. A producer from Taiwan offered April shipment CFR China film grade at US$1300/MT but failed to conclude deals. Low end deals from Middle East were concluded about 60-70 dollar lower than offers from Taiwan. LDPE Amid weak demand from China, LDPE prices have deteriorated to US$1475/MT in Asia in the week of March 29, 2010. LDPE film prices have posted the steepest declines of any PE product recently as increasing substitution by LLDPE film has led to a significant drop in demand. Prices are falling not only in China but also in Southeast Asia where producers have indicated willingness to agree to extra discounts in case of firm bids. CFR China offers from SE Asian producers were heard at less than US$1500/MT, while CFR SEA offers from South Korea were heard about 50 dollars higher. But market outlook continued to be pessimistic as buying interest from China continues to be lackluster, forcing conclusion of CFR China deals at US$1450/MT. Asian PE producers have been forced to agree to steep discounts to achieve sales for April. A major Middle Eastern producer has concluded a few deals for April with US$170/MT decreases when compared to their March done deal levels. LLDPE LLDPE prices slumped to US$1345/MT in Asia in the week of March 29, 2010 as demand from China weakens. Prices are falling not only in China, but also in Southeast Asia where buyers have also reacted to the downward slide in Chinese PE markets by retreating to the sidelines and negotiating further decreases. Producers have indicated willingness to agree to extra discounts in case of firm bids. In China, a Thai producer sold most April allocation with discounts of US$40/ton when compared with their initial offer levels. A Taiwanese producer, who had reduced offers by US$70/ton in late March, has agreed to further price reductions of US$75/ton on April offers to speed up sales, as well as beginning to seek out alternative markets to counter the poor demand in China. POLYPROPYLENE Polypropylene prices have steadied at US$1300/MT in Asia in the week of March 29, 2010. As the region faces supply constraints, most CFR China offers for April for yarn/injection grade were heard at US$1325/MT from South Korea, and about ten dollars higher from Taiwan. POLYVINYL CHLORIDE As producers rolled over offers for April, PVC prices in Asia have stagnated at last week’s US$1035/MT in the week of March 29, 2010. Sellers have preferred to maintain offer levels due to tight supplies and optimistic view regarding the PVC trend over the near term. Trading gained momentum as buyers returned to the markets, and buying improved in the domestic markets of China. A major producer from Taiwan closed deals at US$1040/MT CFR China. A Thai and South Korean producer also followed the same policy as they renewed their April prices from March levels at US$1040/MT CFR China. POLYSTYRENE Offers for April ticked up to US$1365/MT in Asia in the week of March 29, 2010 despite lackluster buying sentiments and outlook. Most buyers preferred to wait in the sidelines as CFR China April offers rose past the 1400 dollar mark in Asia. Key sellers from South Korea and Taiwan quoted offered April shipment GPPS at US$1400/MT CFR China, and were met with buying intentions about fifty dollars lower. CFR China offers for HIPS were pegged at levels below US$1500/MT. ABS ABS prices rose to US$1865/MT in Asia in the week of March 29, 2010 in line with rising costs of inputs ACN and butadiene. To meet the rising costs of production, CFR China offers for April shipment were heard at US$1915-1945/MT levels. Most Chinese buyers resisted these high levels that led to deal conclusion at US$1865-1870/MT
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