At the end of the week of November 29, 2010, New York's main contract, light sweet crude for January, fell to US$83 while Brent North Sea crude for delivery in January settled at US$85.17 in London trade. The last day of the previous week saw oil prices fall as the dollar strengthened vs the euro on deepening concern over the eurozone debt crisis. However, trade was lackluster after the US Thanksgiving holiday. The euro tumbled close to 1.32 dollars, dropping to a fresh two month low. The dollar strengthened on worries about eurozone debt and Korea boosted the US unit.
In the week of November 29, 2010, naphtha prices have moved up. Open spec naphtha for H1-January rose past US$805/MT on improving demand and expectations of tighter supplies in January. Demand from South Korea is likely to stay healthy as cracker operators have no plans to cut runs yet. South Korean buyers are expected to wait until next week to buy H1-January cargoes. LG Chem and Honam bought a total of seven cargoes this week and may need to buy more. The supply of light grades has tightened due to refinery maintenance in the Middle East and lower arbitrage inflows. A surge in European naphtha prices and rising freight rates may reduce arbitrage flow to Asia in January. Market sentiments have been boosted by the restart of Formosa’s 1.03 mln tpa cracker, albeit at reduced capacity.
Ethylene prices have moved north in Asia to US$1060/MT in Asia in the week of November 29, 2010. Spot ethylene offers rose by almost US$80/ton on CFR NEA basis and US$50/ton on CFR SEA from the previous week. This firming trend is due to the better demand in China amid lower cracker operations and tight naphtha avails that caused the effects of diminishing ethylene production to be felt more intensively in Northeast Asia. Spot ethylene prices also gained ground in Southeast Asia due to better demand for prompt cargoes, but relatively smaller as compared to demand in the North East.
Prices dipped to US$1190/MT in Asia in the week of November 29, 2010. Refiners have started to produce diesel at the expense of naphtha production. With less naphtha available propylene production has been reduced, leading to downstream output cuts. However, very limited impact is expected on downstream prices because of conventional low demand for polymers during the last quarter of each year.
EDC prices have fallen in Asia in the week of November 29, 2010 to US$545/MT in anticipation of a rise in supplies in January, and lackluster downstream PVC markets.
Amid weakening demand from downstream PVC markets and falling feedstock EDC values, VCM prices have stagnated at US$910/MT in Asia in the week of November 29, 2010.
Styrene Monomer prices have steadied at last week’s US$1230/MT in Asia in the week of November 29, 2010. FOB Korea offers for spot cargoes were mostly unchanged over the past week, as the market finds support from healthy demand in other Asian countries despite discouraging demand from China. Feedstock benzene prices rose to US$925/MT for H1-January shipment.
Not much trading activity has been seen in Southeast Asia’s PP and PE markets in the week of November 29, 2010. Sellers are attempting to limit size of the current price reductions citing tight supplies, while buyers will continue to remain in the sidelines until price reductions get more significant, willing to wait as currently they hold stocks at comfortable levels. Over the past two weeks, demand has been lackluster on announcement of further government efforts in China to fight inflation at a time when sentiments in Southeast Asia are simmering down, especially as demand was not too robust at the start.
Lackluster markets have stagnated HDPE prices at US$1265/MT in Asia in the week of November 29, 2010 in Asia in the week of November 29, 2010. Buyers have deferred decisions and prefer to remain in the sidelines in anticipation of better prices. Prices are expected to correct because H1-November witnessed a major rally in the Chinese markets, as the robust markets there helped sellers unable to get better prices in SE Asia. In a bid to boost diesel production to ease the shortage in the country, China's state-owned Sinopec has been compelled to reduce production rates at downstream units. ZRCC will shut its 300,000 tpa high density polyethylene line for about 15 days and 300,000 tpa PP line in early December.
LDPE prices have steadied at US$1610/MT in Asia in the week of November 29, 2010 on lackluster markets. Distributors express interest in hand to mouth buying as most buyers are unwilling to conclude deals at the current price levels, amid expectation of further price reductions over the near term. In a bid to boost diesel production in the country, Sinopec has been compelled to announce turnarounds at downstream plants. Shanghai Petrochemical has shut a 100,000 tpa LDPE line for 28 days of maintenance since November 25, Sinopec's Maoming Company’s 360,000 tpa LDPE line will also be shut November 26 for 41 days of maintenance.
As demand in China continues to be dull for the second consecutive wee, LLDPE prices have fallen to US$1365/MT in Asia in the week of November 29, 2010.
Polypropylene prices have stayed at US$1410/MT in Asia in the week of December 29, 2010, on weak demand. Offers for next month have been raised by 25-30 dollars, but lackluster demand and weakening propylene have pulled down prices. In a bid to boost diesel production, China's state-owned Sinopec has been compelled to reduce production rates at downstream plants : ZRCC will shut its 300,000 tpa PP line in early December, Shanghai Petrochemical has shut its two PP lines, with a total capacity of 400,000 tpa since November 15; Sinopec's Maoming Company’s 170,000 tpa No. 1 PP line is to be taken offline, Sinopec Guangzhou is expected to shut its steam cracker and its 140,000 tpa PP unit late November for 40 days of maintenance.
PVC prices have stagnated at US$1015/MT in Asia in the week of November 29, 2010. Though demand has been weak, prices were not majorly impacted on account of tight supplies due to power rationing that has affected PVC output as transport of material in China.
As demand in China continues to be dull, Polystyrene prices have stagnated at US$1375/MT in Asia in the week of November 29, 2010. However, the decline has been limited due to the tight margins.