Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended March 8, 2010

10-Mar-10
CRUDE OIL In the week of March 8, 2010, benchmark crude for April delivery rose to US$81.50 on the Nymex while Brent crude rose to US$79.89 on the ICE futures exchange. Data from the Government’s unemployment report shows jobless claims and unemployment numbers lower than expected for February and jobless rate holding steady at 9.7% for February, elevating hopes that the economy may slowly be healing. Crude oil prices inched up on expectations of gasoline demand improvement during the year. News that China, the world’s second biggest consumer of oil seems to be on track for 8% growth this year, has also boosted oil prices. An improved economy is expected to dramatically increase personal and business consumption of petroleum-based products NAPHTHA In line with rising crude values, naphtha prices have increased in Asia in the week of March 8, 2010. H2-April cargoes were priced at US$745/MT CFR Japan. Interestingly, naphtha cracks have dipped to US$154/MT premium, lowest since Feb. 26. Cracks are dipping in Asia on expectations of weaker demand for May cargoes as compared with April. Buying interest for April parcels is expected to remain strong as Taiwan, South Korea and Japan’s till date spot naphtha purchases for April arrival have been 650,000 tons. Demand, however, is expected to soften in May when compared to April- Asia's largest naphtha buyer Formosa Petrochemical is likely to skip May purchases, due to roll-over of a minimum of 75,000 tons of naphtha shipment to May, due to ample stocks from its own refinery. This news has counterbalanced the supply tightness from ADNOC, which has deferred cargoes for Q2-10 due to a deficiency in its April 2010-March 2011 contract. India’s Indian Oil Corp has offered about 31,000 tons of naphtha for March 20-22 lifting from Dahej, totaling this month’s exports to 150,000 tons. Reliance has offered over 50,000 tons of March 26-31 loading cargo, bringing its total exports for March to some 200,000 tons. ETHYLENE The dip continues in ethylene prices in Asia as they fall to US$1135/MT FOB Korea in the week of March 8, 2010. The trend continues to be bearish on increased supplies from the Middle East on one side and persistent lackluster end user demand due to high inventory levels, on the other. PROPYLENE Restricted avails in the region continue pushing up propylene prices to US$1240/MT in Asia in the week of March 8, 2010. Spot ethylene and propylene markets are showing opposite trends in Asia, with propylene prices being propelled upwards on concerns of a possible worsening supply scenario as well as robust crude oil. The supply tightness for propylene is estimated to last until summer. EDC EDC prices have firmed to US$510/MT in Asia in the week of March 8, 2010 amid restricted avails as well as rising trend for March shipment in derivative PVC markets. VCM VCM prices have firmed to US$855/MT in Asia in the week of March 8, 2010 amid restricted avails, rising input costs as well as rising trend for derivative PVC in March. STYRENE MONOMER Styrene Monomer prices have plunged to US$1230/MT in Asia in the week of March 8, 2010 on lackluster demand and deteriorating feedstock ethylene and benzene costs. Despite robust crude oil trend, lack of deal conclusion on weak demand has pulled down benzene prices in Asia to US$870/MT. Despite reduced offers by SM sellers, buyers are unwilling to conclude deals in anticipation of a further price correction. POLYMERS Two weeks after reopening, the post-holiday market outlook in China has fallen short of sellers expectations of an upsurge in demand. Despite support from higher crude oil and naphtha prices, sellers have been unable to conclude deals at targeted price hikes, and offers have started to deteriorate in the spot PE and PS markets. Chinese markets are not devoid of demand, but total buying volumes have not matched sellers’ pre-holiday expectations. Though buyers have commenced production and started restocking, buying is limited because of existing stocks or buying is not in large quantities due to the volatile market situation. Some converters have not been satisfied with the number of orders received and hence have decided not to undertake stock rebuilding. Manufacturing activity in China continued to expand in February, although the pace of increase was slower and the overall growth rate was the lowest reported for the past four months. Reacting to fears of an overheated economy as well as inflation concerns, China’s central bank has adopted a tighter monetary policy for 2010 in an attempt to cool down the economy and restrain excess lending. Uncertainty over the direction of Chinese demand has also dampened buying interest in the Southeast Asian markets, where converters are buying in reduced amounts as they stretch their stocks so as to minimize their risks. HDPE HDPE film grade prices have fallen in line with plummeting feedstock ethylene prices to US$1325/MT in Asia in the week of March 8, 2010. Despite a decline in CFR China March shipment offers to US$1350/MT, deal conclusion was limited as buyers preferred to wait and watch in anticipation of a further price correction. CFR China March shipment film grade was offered from the Middle East at US$1325/MT levels, with deals concluded about 20 dollars lower. As demand in China has failed to live up to sellers’ optimistic predictions in the post-holiday period and a number of distributors complain of high stock levels, Chinese traders are beginning to look for alternative outlets for their excess PE cargoes. For buyers in Southeast Asia, who are trying to negotiate some discounts from their regular suppliers, re-export offers from China give them yet another option to turn to in order to meet their immediate needs while waiting for the softening price trend they expect to emerge over the next few weeks. LDPE Lackluster demand from China has pulled down LDPE prices to US$1575/MT in Asia in the week of March 8, 2010. CFR China offers for March continued to be pegged above US$1610/MT, but very few deals were concluded as buyers preferred to wait in the sidelines for a further price correction. Limited buying intentions remained pegged at US$1550/MT level. LLDPE Lack of deal conclusion due to inactivity in China has kept LLDPE prices at US$1415/MT in Asia in the week of March 8, 2010. Most buyers in these markets are conspicuous by their absence. CFR China March shipment cargoes offered from South Korea at about US$1450/MT have met with strong buyer resistance. Buying bids have plunged below the US$1400 mark. POLYPROPYLENE Despite rising feedstock propylene, polypropylene prices have stagnated at US$$1315/MT in Asia in the week of March 8, 2010 on lackluster buying in China. Most offers have been heard at US$1350/MT levels, while deals have been concluded for Middle Eastern cargoes below the 1300 mark amid slow moving demand, POLYVINYL CHLORIDE Polyvinyl chloride prices have steadied at US$1035/MT in Asia in the week of March 8, 2010. After successful conclusion of March shipment deals at US$1030/MT levels, offers have been hiked by 20-30 dollars. POLYSTYRENE In line with falling feedstock SM costs and deteriorating demand, polystyrene prices have dipped to US$1415/MT in Asia in the week of March 8, 2010. Despite CFR China offers at US$1450/MT, few deals were concluded as buying interest remained pegged at the 1400 dollar mark. CFR China offers for HIPS were reduced to US$1550/MT on lackluster buying. ABS In line with rising feedstock prices, ABS prices have spiked to US$1875/MT in Asia in the week of March 8, 2010. Increased CFR China offers from South Korea were heard at US$1925/MT, with few deals concluded at the 1900 dollar mark.
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