News that China is to take steps to cool the economy has pulled down oil prices to below US$85 in the week of November 15, 2010. Investors shifted focus from commodities to the dollar amid renewed fears about a debt crisis in Europe and worries that Beijing will move to cool growth in China's overheating economy. Recent weeks have seen oil prices climb steadily as the dollar has weakened against other currencies due to the Federal Reserve's decision to infuse US$600 billion into a bond-buying program to stimulate the US economy.
Naphtha prices in Asia spiked to US$810/MT CFR Japan in the week of November 15, 2010. Firm demand from China for naphtha has kept Asian markets bullish. Prices in Asia have peaked to two year highs, spurring an almost threefold increase in shipments from Europe. After buying 90,000 tons, China is seeking additional quantities of naphtha for Q4-2010, probably extending the bull-run until Q1 2011. Unipec is importing naphtha to fill shortfalls in China, a rare move that will sustain the bullish sentiments in the naphtha market driven by ramped up run rates at North Asian crackers. Integrated crackers such as Maruzen Petrochemical's 520,000 tpa cracker in Chiba, Japan, continue to run at 100%. Mitsubishi Chemical is operating its three naphtha crackers, with a total capacity of 1.278 mln tpa at near full tilt. Thailand's Integrated Refinery & Petrochemical Complex (IRPC) is currently running its 350,000 tpa naphtha cracker in Rayong at 95% of its nameplate capacity. China is plagued by a diesel crisis - The Chinese government cut power supplies to meet a self-imposed end-2010 deadline to save energy. As a result, factories rushed to buy naphtha to fire up electricity generators. This prompted major refineries there to optimise diesel yield at the expense of naphtha, tightening supplies as they run their oil plants at full blast. China is already net short of naphtha. The region is expected to be net short of naphtha in the next two months, as currently the market has been buoyed by low shipments from the Middle East and India where a raft of refinery maintenance is under way. India is expected to export around 700,000 tons of naphtha in November versus the monthly average of 800,000-900,000 tons.
The downward trend continued in ethylene, pulling FOB Korea ethylene prices down to US$955/MT in Asia in the week of November 15, 2010, mainly due to rising supply levels in both China and the Middle East amid lackluster demand. China’s production of ethylene soared 32% in October to 1.3 million tons. Petrochemicals producers in Japan, Taiwan and South Korea are also running near full capacity. Although cracker operators complained that their operating margins have slipped into negative territory owing to stronger spot naphtha prices, most of them have not moved to reduce operating rates yet as they continue to enjoy good margins on propylene production.
Propylene prices continue to soar on robust demand, rising to US$1255/MT in Asia in the week of November 15, 2010.
Amid tumbling ethylene values, EDC prices have softened below US$$570/MT in Asia in the week of November 15, 2010. Buying intentions have been assessed at US$570/MT mark amid offers pegged at US$600/MT.
Despite deteriorating ethylene and EDC values, VCM prices have firmed to US$900/MT in Asia in the week of November 15, 2010. Offers have found support from strengthening PVC offers for December, and are quoted at US$935-950/MT against buying interest pegged at the 900 dollar mark.
Styrene monomer prices have propelled to US$1260/MT in Asia in the week of November 15, 2010 amid resurgent buying interest. Stronger buying interest for December revived prices to US$1255/MT mark as sellers maintained offers a tad higher. Feedstock benzene stagnated at US$940/MT at the end of the week, despite spiking by 25-30 dollars mid week.
Amid lackluster markets, HDPE prices have stagnated at US$1295/MT in Asia in the week of November 15, 2010. However, CFR China offers for yarn grade were hiked up to US$1400/MT. Markets have seen very limited deal conclusion as sellers hiked offers that await acceptance from buyers. Most buyers prefer to defer purchases as they not willing to buy beyond their immediate needs on concerns of passing the rising input costs onto their end product.
Robust buying sentiments have pushed up LDPE prices to US$1620/MT in Asia in the week of November 15, 2010 amid limited supplies. In addition to the ongoing general tightness, shutdowns on the part of several Southeast Asian suppliers have intensified the regional shortage. After successful conclusion of CFR China deals at US$1625-1650/MT levels, some offers for December from Malaysia have been hiked by 50-60 dollars.
Decent demand has propelled LLDPE prices to US$1425/MT in Asia in the week of November 15, 2010. Deals for December shipment from Korea were heard concluded at US$1450-1475/MT CFR China.
Propelling propylene prices have pushed up polypropylene prices to US$1425/MT in Asia in the week of November 15, 2010. After successful settlement of CFR China deals from Taiwan at levels of US$1450/MT, offers were hiked by fifty dollars.
PVC prices have risen to US$1015/MT in Asia in the week of November 15, 2010, amid sound market sentiments. Asian producers re-emerged in China with further increases on December import offers, though some sellers had started to lose confidence in the market direction for the medium term due to the imminent winter season along with the upcoming year-end. Tight domestic availability in China amid good demand along with rising domestic prices, as well as the bullish market trend in other polymer markets are the factors supporting December price hikes. As several PVC plants in North China were shut due to the government’s measures to meet the country’s emissions targets for plants performing in polluting and energy-intensive industries, prompt availability was reported to tighten further, thereby providing a firmer ground for sellers. A major Taiwanese producer is now seeking US$30/ton increases from November on offers for December allocation to China on the back of tight supplies due to reduced run rates at their plant. A Thai producer also reported issuing US$20/ton increases on December offers due to similar reasons, even as the company is pleased with current sales performance. Traders also followed a similar pricing strategy as they raised prices for Asian origins by US$20-40/ton for December, with most sellers voicing their confidence that their new offer levels will find acceptance on the buyers’ side given bullish market dynamics overshadowing the slower performance of end-product businesses.
Polystyrene prices have remained high at US$1405/MT in Asia in the week of November 15, 2010. Against offers at US$1450/MT, GPPS markets saw deal conclusion at US$1410/MT levels for December on a CFR China basis. Offers for HIPS were hiked to US$1540/MT levels.
Amid robust input costs, ABS prices have strengthened to US$2120/MT in Asia in the week of November 15, 2010. December offers from Taiwan and South Korea have been hiked by about 100 dollars.