Crude oil prices lost over eleven dollar in the week of May 10, 2010, settling at US$75.1 last Friday before showing a slight rebound on Monday after the EU and the IMF pledged nearly US$1 trillion to help defend the burdened euro. The European Union Commission and International Monetary Fund pledged a €750 bln loan package that has calmed financial markets for now. The drop in crude futures was triggered by debt troubles in Europe and renewed efforts to tighten monetary policy by China’s Central Bank.
Plunging oil prices pulled naphtha values down, with prices falling by over 35 dollars in Asia in the week of May 10, 2010. Naphtha prices stood at US$745/MT CFR Japan. As per current status, Asia is expected to receive 200,000 tons of Western naphtha. This is less by 100,000 tons from May levels, and seems insufficient to meet healthy demand at a time when India is expected to lower its June exports. Propped by robust demand from China, demand in Asia has been strong, as crackers are operating at high rates since 2009. Additional crackers that have recently come onstream in South Korea, Singapore and Thailand have also added to the supply shortfall. Players remain wary over the sustained strength of the naphtha market.
In line with plunging oil and naphtha values, ethylene prices have fallen to US$1230/MT in Asia in the week of May 10, 2010. The falling prices have also been tanked by pessimistic outlook of downstream polyethylene markets. Despite weakening prices, most buyers have preferred to wait in the sidelines in anticipation of a further price correction as an increasing number of ethylene crackers come onstream.
In first few days of May, the market has seen two major crackers coming onstream- Shell Chemicals’ 800,000 tpa ethylene cracker in Singapore followed by Ras Laffan Olefin Cracker in Qatar with a production capacity of 1.3 mln tpa of ethylene- the world’s largest ethane based cracker; and Sinopec Zhenhai’s 1 mln tpa ethylene cracker in China. CNOOC-Shell (CSPC) expanded ethylene capacity from 800,000 tpa to 1 mln tpa while Sharq Petrochemicals started commercial operations of a 1.3 mln tpa capacity ethylene cracker. In Iran, Morvarid Petrochemicals is to restart its cracker with 500,000 tpa ethylene capacity while Kavian Petrochemical Company is conducting test runs at its Olefin No. 11 complex, which consists of two large olefin plants each with a capacity of 1,200,000 tpa. All these new capacities are expected to hit the ethylene markets in the medium term as well as the downstream polymer markets. In Europe ethylene supply is tight for May, contrary to earlier market expectations that supply would be long as cracker rates were high and scheduled maintenances almost at an end for the spring season.
Propylene prices have steadied at US$1300/MT in Asia in the week of May 10, 2010 despite plunging oil and naphtha values.
Lackluster demand has stagnated EDC prices in Asia at US$545/MT in the week of May 10, 2010 as demand from derivative PVC continued to be lackluster. Prices have stagnated at these levels for the past couple of weeks.
VCM prices stagnated at US$860/MT in Asia in the week of May 10, 2010 amid dull markets. Markets have been quiet and demand was relatively weaker.
Styrene Monomer prices have dropped to US$1250/MT in Asia in the week of May 10, 2010 in line with plunging crude values. Feedstock benzene prices also tumbled to US$965/MT on lackluster demand and lack of firm bids.
HDPE prices fell to US$1280/MT in Asia in the week of May 10, 2010 on restrained demand from China since the Labour Day weekend. CFR China deals were heard concluded for material from the Middle East at US$1275/MT levels for May. Some low end cargoes were heard traded about 30-40 dollars lower. Demand continues to be subdued amid buyer’s resistance, who anticipate the impact of new capacities very shortly that will push prices lower by the beginning of the summer.
LDPE prices have steadied at US$1485/MT in Asia in the week of May 10, 2010 amid dull markets that have continued to be slow since the Labour Day weekend. An LDPE plant in Malaysia has seen a sudden outage for about 15-20 days. May shipment CFR China offers have been heard at US$1495-1500/MT.
LLDPE prices have decreased to US$1355/MT in Asia in the week of May 10, 2010 on muted demand in the region, particularly from China. Buyers are restricting purchases to the minimum amounts, while traders are in no rush to rebuild their stock levels as they wait and watch market developments in anticipation of a further price drop.
Polypropylene prices have stagnated at US$1365/MT in Asia in the week of May 10, 2010. Asian producers had initially revealed May offers with increases of US$20-90/ton from last month. But weaker crude oil prices have brought some price cuts this week for the first time since early March. Asian producers had announced US$20-75/ton increases to Southeast Asia for May on increased costs, encouraging domestic producers to increase offers by up to US$35/ton. Current prices of Asian PP sellers are well supported due to restricted supplies triggered by the ongoing propylene turnarounds in the region, along with marginally decreased spot propylene prices in Asia. The recent plunge in the oil market overshadowed the viability of a firm market trend as sellers’ sentiment is reversing after beginning the month on a bullish trend.
Polyvinyl chloride prices have fallen to US$1020/MT in Asia in the week of May 10, 2010 as the market awaits offers for June shipment. Amid passive demand from China the markets have turned pessimistic due to the advent of cheaper deep-sea cargoes from USA. Buyers are looking to settle deals at the 1000 dollar mark.
Polystyrene (General Purpose) has stabilised at US$1375/MT in Asia in the week of May 10, 2010 amid a huge disparity between buying intentions and sellers offers. CFR China selling intention for GPPS has been heard at US$1400-1415/MT while buying interest is pegged about 40-50 dollars lower. CFR China offers for HIPS grade have been heard at US$1515-1525/MT.
ABS prices have inched up to US$1965/MT in Asia in the week of May 10, 2010 as sellers attempt to increase prices to cope with poor production margins. Sellers have offered material at levels above US$2030/MT in line with the high input costs, but buying interest remains pegged about 30-35 dollars lower.