Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended October 19, 2009

20-Oct-09
CRUDE OIL In the week of October 19, 2009, crude oil prices spiked past US$78 per barrel. Oil prices have touched these levels for the first time in the year as demand is anticipated to perk up as the global economy recovers from recession. A steady stream of new economic data coming from USA is starting to indicate signs of recovery. A report showed last month’s industrial production in USA climbed more than expected. Despite a rise in US fuel stockpiles, oil prices have climbed by over 20% in the past 3 months- triggered by a recovery in equity markets that has emboldened investors amid a weakening US dollar that has prompted investors to buy commodities. NAPHTHA Naphtha prices have spiked past US$640/MT in Asia in the week of October 19, 2009 in line with optimistic crude oil demand and prices. H2-November and H1-December delivery prices were pegged at US$640/MT CFR Japan. Prices are expected to firm up in line with optimistic crude markets. PROPYLENE Propylene markets gained strength, rising to US$975/MT in Asia in the week of October 19, 2009. Markets have gained strength from robust crude oil markets and recovering sentiments in downstream polypropylene markets. EDC EDC prices have slipped to US$335/MT in Asia in the week of October 19, 2009 despite robust upstream values. This price dip can be attributed to increased supplies in the region amid weakening demand from downstream PVC sector. Suppliers are reluctant to slash offers at a time when ethylene costs appear to be rising. Rising feedstock values have pushed up sellers offers to US$375/MT CFR China. However, buyers disinterest has kept buying intentions at the three hundred dollar mark. VCM As the market awaits offers for next month, VCM prices have dipped to US$675/MT in Asia in the week of October 19, 2009. Deteriorating downstream market sentiments and unenthusiastic end user demand has dampened demand for VCM. Prices may not pick up due to an estimated lull in derivative PVC demand. STYRENE MONOMER Styrene Monomer prices have moved up to US$1000/MT in Asia in the week of October 19, 2009, in line with rising crude and benzene values. Improving demand from China has also helped prop up FOB Korea prices past the thousand dollar mark. While the market awaits fresh quotes, seller’s offers have been evaluated at US$1025/MT CFR FE. Market prices of feedstock benzene have been up-revised to US$790/MT in line with improved oil values as well as price of US benzene. POLYMERS HDPE HDPE prices have risen to US$1140/MT in Asia in the week of October 19, 2009 in line with strengthening Chinese market sentiments. After a week long break for National Holidays, Chinese buyers bounced into the markets to start restocking. China, the world’s leading importer of polyethylene has set the global markets in momentum trade shows signs of recovery due to restocking activities in the past week. Inventory levels that depleted when China broke for its week long holidays amid rising crude oil futures past US$76/bbl over the past two weeks have driven post-holiday buying. October shipment CFR China deals were concluded at US$1150/MT from South Korea. CFR China deals were concluded for deep sea cargoes from USA for injection grades at US$1105/MT and about 15-20 dollars higher for blow molding grades for H1-November shipment. Buying will also get a thrust from the recent rises in crude oil values, expected to rise further. LDPE Propped by increasing demand from China amid rising domestic prices in the country, LDPE prices have risen past US$1200/MT in Asia in the week of October 19, 2009. After a week long break for National Holidays, Chinese buyers bounced into the markets to start restocking. October shipment CFR China deals from Malaysia were concluded at US$1205-1215/MT levels, while deals from Middle East were concluded about 20 dollars higher. Buying intentions rose to hover around US$1200/MT. Buying will be driven by escalating crude oil values, expected to rise further. LLDPE Boosted by increasing demand from China amid rising domestic prices, LLDPE prices have escalated to US$1175/MT in Asia in the week of October 19, 2009. Chinese buyers have bounced into the markets to start restocking after an eight day break for National holidays. Anticipating a further rise in prices in line with robust crude oil outlook, buying is expected to mount. POLYPROPYLENE Polypropylene prices in Asia have climbed to US$1085/MT in the week of October 19, 2009. PP prices have been driven by rising demand from China due to restocking amid anticipation of a further price hike in line with increased prices of feedstock propylene. End of month shipment CFR China offers have been hiked past the 1100 dollar mark as deals by South Koreans were concluded at US$1075-1100/MT CFR China. POLY VINYL CHLORIDE PVC prices have stagnated at US$875/MT in Asia in the week of October 19, 2009 as the market awaits fresh offers for next month. Prices are estimated to dip in line with reduced offers from Chinese makers of carbide based PVC to US$800/MT FOB CMP. The recent surge in crude values to one-year highs past US$76 is sufficient stimulus for ethylene to rise and pull PVC prices in the same direction. Despite an increase in feedstock costs, PVC prices could moderate or even reduce amid unenthusiastic demand and sharp competition among sellers. PVC prices have been on a general downward trend since mid August amid softening demand, along with weaker values of feedstock ethylene. Suppliers will be reluctant to slash offers at a time when ethylene costs appear to be rising. However, an impending seasonal downturn in PVC demand in China in the upcoming winter season is expected to force PVC pipe makers to either cut their operating rates or shut down their plants completely, which would severely dampen demand. Competition among sellers could also lead to price cuts -US PVC producers typically embark on an export drive towards year-end in an effort to lower their inventory levels. POLYSTYRENE In line with rising crude, benzene and SM values, GPPS prices rose to US$1125/MT in Asia in the week of October 19, 2009. Prices were also supported by a rise in domestic prices in China. Market was in a lull with limited deal conclusion as it awaits firm offers from key suppliers. Offers have been heard rising to levels of US$1125 till as high as US$1155/MT. ABS ABS prices have risen to US$1425/MT in Asia in the week of October 19, 2009 in line with rising upstream values. Very limited deals were concluded as the market awaits firm offers from key suppliers. Sellers’ ideas have been slack as most key players have either concluded deals for October shipment or delayed notional offers on account of low inventory levels resulting from recent cuts in run rates.
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