Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 7, 2011

09-Mar-11
OIL Oil prices spiked past US$104 a barrel to end the week of March 7, 2011 at a 29 month high. Prices have soared as fighting in Libya intensified and on news of addition of 200,000 jobs in February in the United States. Even as the job report reflects positive news for the economy, it also suggests that more people are driving to work at a time when world oil supplies are under pressure because of unrest in Libya and the Middle East. Saudi Arabia has increased production to make up for the loss of Libyan crude, but a long struggle could exert significant pressure on world supplies. NAPHTHA Naphtha prices in Asia rose for a third consecutive session to end the week of March 7, 2011 at a 30 month high, while cracks hit a 1-1/2 month high, supported by a stronger European market. Persistent unrest in Libya led to concerns of supply disruptions, at a time when huge volume of European naphtha cargoes have been lifted by the United States, withdrawing supplies from Asia. An explosion hit a natural gas liquids storage facility in Texas, causing US petrochemical makers to scramble for alternative feedstock. Open spec naphtha for front-month H2-April rose to US$1020/MT. ETHYLENE Ethylene prices steadied at US$1340/MT in Asia in the week of March 7, 2011. Prices are likely to see a downturn in the near future despite bullish naphtha feedstock prices, as high naphtha costs drive producers to crack LPG, which gives a higher ethylene yield. As a result, despite high naphtha prices and tight ethylene supplies, spot ethylene buyers continued to wait and watch. Asian producers are not considering steam cracker run cuts due to robust margins for other olefins. PROPYLENE Propylene prices have soared past US$1510/MT in Asia the week of March 7, 2011. Due to persistent supply concerns stemming from unexpected propylene outages and the approaching maintenance season for propylene units in Europe, players are seeing firm spot propylene prices as an indicator of higher March contract prices and firmer initial March PP offers. VCM VCM prices firmed at US$875/MT FOB Korea in Asia in the week of March 7, 2011, amid tight supplies, robust ethylene values and steady derivative PVC market. EDC Ethylene dichloride (EDC) prices increased to US$470/MT FOB Korea in the week of March 7, 2011. STYRENE MONOMER Styrene Monomer prices dipped to US$1435/MT FOB Korea in Asia in the week of March 7, 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. Weaker styrene feedstock costs have also had a limiting effect on PS demand inside China. Styrene producers complained that they are unable to cover theoretical production costs at the current price levels as upstream costs posted considerable gains last week. Feedstock benzene prices were heard at US$1115/MT. POLYMERS HDPE HDPE prices crept up to US$1330/MT in Asia in the week of March 7, 2011. CFR China offers were heard at US$1350-1375/MT levels, but were met with buying intentions at US$1310-1320/MT. Offers have risen in line with stronger upstream costs despite widespread complaints that demand is not as strong as estimated. Higher offers have failed to attract much buying interest, and sellers struggle to conclude deals even at current price levels. By end of week, rate of deal conclusion recovered as buyers started to restock on unrelenting high crude and ethylene values. However, limited deal conclusion was seen amid lower offers in China’s domestic markets. LDPE LDPE prices steadied at US$1710/MT in Asia in the week of March 7, 2011. CFR China offer for March shipment were heard at US$1725-1750/MT from Middle East, with deal conclusion below US$1720/MT. Offers have risen in line with stronger upstream costs but have failed to attract much buying interest. By end of week, rate of deal conclusion recovered as buyers started to restock on unrelenting high crude and ethylene values. LLDPE LLDPE prices have steadied at US$1410/MT in Asia in the week of March 7, 2011. Higher offers have failed to attract much buying interest, and sellers struggle to conclude deals even at current price levels. However, limited deal conclusion was seen. POLYPROPYLENE Polypropylene prices have inched up to US$ 1620/MT amid limited avails and rising feedstock propylene in Asia in the week of March 7, 2011. Limited deal conclusion was seen as buyers prefer to buy only need- based and are hesitant to stockpile at the current prices. In regions of Asia, a recovery was seen in deal conclusion as buyers returned to restock in anticipation of a further rise in prices in line with runaway feedstock values. The region will witness a spurt of PP plant shutdowns for maintenance: Honam Petrochemical’s 380,000 tpa plant and Polymirae’s three plants with a combined capacity of 470,000 tpa, all at Yeosu next month for 15 days, Formosa Chemicals and Fibers Corp’s 450,000 tpa Mailiao facility to run at 60% this month, Kuwait's Petrochemical Industries Co (PIC)’s 150,000 tpa plant for about six week in March, PetroRabigh’s 700,000 tpa plant in end April for two months. POLYVINYL CHLORIDE Polyvinyl Chloride prices have inched up to US$1100/MT in Asia in the week of March 7, 2011. Offers were heard at higher levels in line with unrelenting upstream costs amid limited deal conclusion on lacklustre buying. Markets were lacklustre as a result of muted sentiments from processors in China operating at low rates. 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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