Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended May 4, 2010

04-May-10
CRUDE OIL Light, sweet crude futures for delivery in June traded at US$85.7 on the Nymex, while June Brent crude stood at US$88.4. Earlier in the session, the benchmark contract touched $US87.15 –it’s highest level since October 2008, on news of an increase in US consumer spending and improved manufacturing outlook. News poured in that the US manufacturing sector grew at the fastest pace in six years, growing in April for the ninth consecutive month. Prices recoiled slightly as traders re-examined market fundamentals, and fears eased that a Gulf of Mexico oil spill would soon disrupt U.S. refinery operations. NAPHTHA As crude oil prices continue to rise, naphtha has seen a corresponding price hike in Asia in the week of May 4, 2010. Open spec naphtha for H1-June stood at US$775/MT CFR Japan. ETHYLENE Restricted avails have propped up ethylene prices in Asia to US$1245/MT in the week of May 4, 2010, despite lackluster demand from derivative PE sector. The ongoing cracker turnaround season and outages at Japanese crackers in March and April have pushed up CFR NE Asia spot prices to a two-month high of US$1270-1310/MT. Supply in the region has also been affected by issues with heavy naphtha at some crackers in South Korea that impacted ethylene yields in the previous two months, resulting in delays and cuts in term exports. Prices could see a drop on a possible arbitrage from USA where increasing supply caused by cracker restarts as well as weak derivative polyethylene (PE) demand have tanked ethylene prices. The recent plunge in US ethylene spot prices is opening up arbitrage opportunities from the Americas to Asia. But the long 6-7 week voyage and lackluster demand for spot material from selected derivative sectors might be a stumbling block in negotiations. PROPYLENE Propylene prices for June shipment have dipped to US$1300/MT in Asia in the week of May 4, 2010. However, since the beginning of April, Asian spot propylene prices have risen by US$45/MT. Dwindling supply levels and maintenance shutdowns at 21 plants in Asia over the next few months are expected to give support to propylene costs over the near term. The region was previously suffering from extended supply problems in Japan due to production problems which occurred in Mitsui and Mitsubishi’s plants. This situation plus stronger demand coming from Latin America pushed propylene in April. EDC Lackluster demand has stagnated EDC prices in Asia at US$545/MT in the week of May 4, 2010 as demand from derivative PVC continued to be lackluster. CFR offers continue to be quoted at US$565/MT while buying intentions have been pegged about 25 dollars lower. VCM VCM prices stagnated at US$860/MT in Asia in the week of May 4, 2010 amid dull markets. Markets have been quiet and demand was relatively weaker. STYRENE MONOMER Styrene Monomer prices have inched up to US$1270/MT in Asia in the week of May 4, 2010, despite a drop in downstream prices and steady feedstock prices. Feedstock benzene prices steadied at US$995/MT for June shipment. POLYMERS HDPE HDPE prices have softened to US$1300/MT in Asia in the week of May 3, 2010 along with weakening prices in China’s domestic markets. 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. Hence 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 longer before making their next move. Reluctance of converters and traders to accept producers’ newest price targets has generated a considerable gap between the producer price level and the highest offers reported on the traders’ side. LDPE LDPE prices have steadied at US$1485/MT in Asia in the week of May 3, 2010 amid dull markets due to the Labour Day weekend. May shipment offer from the Middle East were heard above US$1500/MT but met no deal conclusion, as market was lackluster and demand was stagnant in China’s domestic markets. Weak demand in Asia’s PE markets is incapable of supporting higher prices as producers raise offers in a bid to cover theoretical costs based on spot ethylene values. LLDPE LLDPE prices have stagnated at US$1385/MT in Asia in the week of May 3, 2010 amid lackluster markets due to Labour Day weekend. May shipment CFR China offers have been heard at US$1420/MT from South East Asia, and at US$1360/MT levels from the Middle East. POLYPROPYLENE Polypropylene prices have steadied at US$1365/MT in Asia in the week of May 3, 2010. Last week saw PP prices spike in Asia due to higher propylene costs. This led to squeezed seller’s margins, hence Asian producers have started to announce higher May PP offers to Southeast Asia and China, despite slower demand coupled with the Labor Day holiday. POLYVINYL CHLORIDE PVC prices continue to be steady for over 2 weeks at US$1035/MT in Asia in the week of May 3, 2010 amid slothful demand in China’s domestic market. Offers from Thailand and South Korea were heard at around US$1040/MT CFR China. Most Asian market players are predicting stable to firmer prices in May, owing to high upstream costs. While demand in the region has been relatively disappointing for this time of the year, sellers are finding support from upstream markets, where spot ethylene feedstock costs have been trending higher over the past few weeks. Concerns abound about comparatively cheaper US PVC- as falling spot ethylene prices in the US drive down the theoretical production costs for American producers. Demand in the region is described as normal for May following a month of relatively weaker demand on the week-long Thai New Year holidays in mid-April. POLYSTYRENE Polystyrene (General Purpose) prices have fallen to US$1375/MT in Asia in the week of May 3, 2010 on lackluster demand from China. Sellers CFR China offers for GPPS remained pegged above US$1400/MT for May shipment, and above US$1525/MT for HIPS. However, offers remained pegged lower. ABS ABS prices are stagnant at last week’s US$1945/MT in Asia in the week of May 3, 2010. Sellers from South Korea and Taiwan hiked CFR China offers past US$2000/MT as sellers attempt to increase prices to cope with poor production margins.
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