At the end of the week of November 30, 2009, light, sweet crude for January delivery plunged by over four dollars to US$73.7 on the Nymex, while Brent crude settled at US$75.3. Crude oil futures have plunged to six week lows as the Dubai crisis unveiled over the weekend. Attempt by Dubai to reschedule its debt rekindled credit concerns and sent tremors in global markets about the strength and stability of economic recovery. The crisis boosted the dollar and triggered a sell off in commodities by investors as Dubai World, the government investment company burdened by US$59 bln of liabilities, sought to delay repayments. The euro was down more than 1% against the US dollar as investors trimmed risk exposure. A stronger dollar diminishes the appeal for some investors of oil and commodities priced in the US currency.
Despite a sharp drop in oil prices, naphtha prices in Asia have moved up to US$720/MT in the week of November 30, 2009. Prices have moved up on robust demand from North Asian petrochemical makers as well as healthy downstream market in China. Naphtha prices have yet to feel the tremors of the Dubai crisis that surfaced over the weekend. H1-January open spec prices were assessed at US$720/MT CFR Japan. Assessments on Friday were notional due to market closure for a public holiday in Singapore.
Ethylene prices moved up to US$1065/MT in Asia in the week of November 30, 2009 on restricted avails coupled with optimistic derivative market outlook. Ethylene exports from Iran have plunged in 2009 to about 450,000 tons from levels less than 700,000 tons in 2008 along with the anticipated supply glut from the Middle East in H2-200 that is weak as plant start ups get delayed. Demand is anticipated to gather strength towards end of month and prices are expected to gather support from strengthening feedstock values and steady robust downstream demand in the region. Buyers in SE Asia have tried to tap supply substitution from South Korea as they await offers from their regular suppliers in the Middle East, but have been unsuccessful. This has led to the possibility of an arbitrage window between Asia and USA.
Despite weaker PP market outlook, propylene prices have climbed up to US$1110/MT in Asia in the week of November 30, 2009 on robust derivative markets and restricted supplies in the region. From levels of US$960/MT FOB Korea in H1-October, H2-December propylene prices have spiked past US$1100/MT. The key factor behind these robust gains has been restricted supplies in the region as producers in South Korea, Taiwan and Japan continue to face maintenance shutdowns and production issues. Also, healthy demand from downstream propylene oxide, acrylonitrile and acrylic acid markets continue to bolster propylene prices.
EDC prices in Asia have risen to US$415/MT in Asia in the week of November 30, 2009. EDC prices have gained strength amid strong ethylene prices, firming prices of derivatives PVC and VCM and stringent supplies. CFR Asia offers from sellers have spiked past US$450/MT, even as buying intentions remain a tad below the four hundred dollar mark.
VCM prices have moved up to US$710/MT in Asia in the week of November 30, 2009 on higher December shipment offers. Sellers have quoted offers at increased levels due on robust derivative PVC demand amid restricted avails.
Styrene Monomer prices have dipped to US$1095/MT in Asia in the week of November 30, 2009 on lackluster demand amid falling feedstock benzene costs. Market has witnessed a surge in avails on the influx of deep-sea cargoes as well as increased supplies with the restart of Samsung Total's plant in South Korea. Benzene prices have slipped to US$900/MT levels on weakening crude oil prices and waning derivative demand.
Polyethylenes: Persistently steady oil prices coupled with rising costs of inputs naphtha and ethylene has propelled polyethylene prices in Asia in the past few weeks. As a result, an increased number of sellers from Asia and Middle East are interested to offer material in markets of China and South East Asia. In their bid toward better price realization, they have pushed up PE prices in the global markets.
Propped by strengthening input costs and firm demand, HDPE prices have climbed to US$1275/MT in Asia in the week of November 30, 2009. Deals for film grade from USA were concluded for December shipment at US$1255/MT levels. Offers from the Middle East were heard at US$1265/MT levels while those from Taiwan and South Korea were heard about 20 dollars higher. High prices were supported by optimistic ethylene outlook coupled with healthy demand. Supplies are expected to get balanced shortly with the start up of a 300,000 tpa HDPE plant each of Thailand's PTT Chemical and Sinopec Tianjin.
LDPE prices have spiked past US$1425/MT in Asia in the week of November 30, 2009 as supply constraints continue amid robust demand in the region, particularly from China. CFR China December shipment deals were concluded at US$1445/MT levels by sellers from South Korea and offers from the Middle East were heard at US$1425/MT levels. Market outlook continues to be upbeat on buoyant feedstock markets.
Restricted avails in the region amid rising ethylene values have propped up prices to US$1330/MT in the week of November 30, 2009. CFR China offers for December were heard from the Middle East at US$1310/MT and about ten dollars higher from South East Asia. Supplies are expected to ease shortly with the start up of Qatofin’s world-scale linear low-density polyethylene plant with capacity to produce 450,000 tpa.
Polypropylene prices in Asia have spiked to US$1185/MT in the week of November 30, 2009 on escalating feedstock costs. Escalating propylene prices have had an adverse effect on polypropylene markets, where demand is relatively unenthusiastic. PP continues to trade with sizeable negative margins on inability of producers to recover production costs due to lackluster outlook. Sellers raised CFR China December shipment offers – Offers for yarn grade from Taiwan and South Korea have been pegged slightly below the 1200 dollar mark and at US$1165/MT from the Middle East and about ten dollars higher for deep sea cargoes. With the advent of deep sea cargoes from Europe and America, prices are expected to steady or even ease by H1-January. If prices fail to ease, the region could end up with reduced volumes on PP on cuts in operating rates by producers.
POLY VINYL CHLORIDE
PVC prices in Asia inched up to US$895/MT in Asia in the week of November 30, 2009. December shipment CFR China offers from Far Eastern suppliers were heard at the 900 dollar mark, while buying interest was seen about ten dollars lower.
Though feedstock SM prices have dipped in the week, GPPS prices have yanked up to US$1175/MT in Asia in the week of November 30, 2009. Markets have firmed up on comparatively higher costs of production. Despite deal conclusion for this month, few offers have seen yet another hike to US$1200/MT levels.
Increasing costs of feedstock has propped up ABS prices in Asia to US$11490/MT in the week of November 30, 2009. CFR China deals for December were concluded at US$1465-1490/MT by players from South Korea and Taiwan. This was followed by a hike in offers past the 1500 dollar mark in line with rising production costs.