US crude for December delivery ended the week October 26, 2009 at US$80.50, while Brent crude slipped to US$78.92. Oil prices dipped from US$82 peaked midweek as the US dollar strengthened in comparison with other currencies and doubts over the pace of economic recovery halted oil’s recent rally. Weak industrial sector earnings made investors question the pace of an economic recovery, and the decline in equities markets and a stronger dollar indicates a temporary halt in oil price uptrend. Data showed that Britain's economy unexpectedly shrank by 0.4% in Q3, shaking economist expectations for a return to growth from the worst recession in decades. US economic data showed a larger-than expected rise in workers filing new claims for jobless aid last week.
Naphtha prices in Asia have risen in line with the oil price hike in the week of October 26, 2009. Surging by over 35 dollars, naphtha prices crossed US$680/MT in Asia. H2-November prices rose to US$685/MT CFR Japan, while H1-December price were pegged a tad below US$680/MT CFR Japan.
Strengthened by improving sentiments in derivative markets amid rising crude oil and naphtha prices, ethylene prices surged by almost 100 dollars to US$925/MT in Asia in the week of October 26, 2009. Prices also found support from supply concerns on uncertainty of restart of Mitsubishi Chemical’s 357,000 tpa No.1 cracker that was recently shuttered for repairs after a leak at its naphtha cracker. This has buoyed Asian seller’s sentiments, propping up ethylene offers to US$1000/MT, in spite of anticipated advent of large cargoes from the Middle East.
Propped by strengthening downstream demand on one side and restricted avails on the other, propylene prices continue north in Asia. Prices have risen in tandem with oil and naphtha values in the week of October 26, 2009 to US$1000/MT FOB Korea. Supply concerns abound in the region on possibility of producers from Japan, Taiwan, South Korea planning shutdowns or capacity reductions. Formosa plans to shutter its No1 and No 2 crackers for about 4 weeks, while Indonesia's Chandra Asri is planning run rate cuts at its 306,000 tpa plant on poor margins.
EDC prices have stagnated at US$335/MT in Asia in the week of October 26, 2009 in absence of seller’s offers and buying interest. This deadlock between buyers and sellers continues amid deteriorating downstream PVC sentiments and increased supplies in the region. Suppliers are reluctant to slash offers at a time when ethylene costs are rising and maintain offers at US$370/MT CFR China. However, buyers disinterest has kept buying intentions about 30-40 dollars lower.
Awaiting offers for next month, a lull prevailed in VCM markets of Far East Asia. CFR China prices stagnated at US$675/MT in Asia in the week of October 26, 2009. As market outlook improved, CFR prices in South East Asia rose to US$685/MT in line with robust crude oil and ethylene market. Prices may not pick up in the Far East region due to an estimated lull in derivative PVC demand.
Market outlook for styrene monomer dampened, pulling down prices in Asia in the week of October 26, 2009, despite robust crude oil and benzene prices. December shipment prices were assessed a tad lower that the thousand dollar mark FOB Korea. Feedstock benzene FOB Korea prices inched up to US$795/MT, but faded by mid week in line with dipping SM values, but ended the week an a better note.
A further hike in November offers by key suppliers has propped up HDPE prices to US$1200/MT CFR China in Asia in the week of October 26, 2009. Offers for film grade rose past US$1215/MT, while few deals were concluded about 25-15 dollars lower. CFR China deal for injection grade was settled at around US$1165/MT with L/C usance 90 days terms, buoying up offers for deep-sea cargoes. Despite rising prices, sellers are buying to fulfill current requirements. Increased offers leading to improved market activity points to an optimistic price trend.
Rising upstream values as well as an increase in domestic demand and prices in China, have propped up LDPE prices to US$1245/MT in Asia in the week of October 26, 2009. After few November deals were heard concluded at these levels, sellers have hiked offers by 50-60 dollars in line with buoyant Chinese market outlook as well as increasing prices of November shipment LLDPE.
Driven by rising upstream values and improving demand as well as domestic prices in China, LLDPE prices have moved up to US$1205/MT in Asia in the week of October 26, 2009. After successful conclusion of November shipment deals at US$1200/MT CFR China, offers have been elevated by 25-50 dollars.
Polypropylene prices in Asia have moved north in line with input costs, to US$1125/MT in Asia in the week of October 26, 2009. As cost pressures mount, offers are being raised by producers. For yarn/injection grade, CFR China offers from Taiwan have increased to US$1180/MT and to US$1150/MT from SE Asia and South Korea.
PVC prices dipped to US$845/MT in Asia in the week of October 26, 2009 amid unenthusiastic demand even as upstream costs spiked and domestic prices in China rose marginally. Prices are estimated to dip in line with reduced offers from Chinese makers of carbide based PVC to US$825-840/MT FOB Korea. November shipment CFR China offers were down revised to US$845/MT by Asian producers as key Chinese players brought down offers. A seasonal downturn in PVC demand in China is on the cards. The upcoming winter is expected to force PVC pipe makers to either cut their operating rates or shut down their plants completely, which would severely dampen demand. Additionally supplies could rise as US PVC producers typically embark on an export drive towards year-end in an effort to lower their inventory levels.
Notwithstanding a dip in SM values, GPPS prices have risen to US$1135/MT in Asia in the week of October 26, 2009. Producers have not reduced offers despite a fall in input costs as they grapple to cope with poor production margins. Buying interest from China was muted as domestic prices steadied and buyers awaited market direction. November shipment CFR China offers for GPPS were heard at US$1155-1175/MT, however, subdued sentiments has kept CFR China deal prices at US$1135/MT for GPPS and at a higher US$1200/MT for HIPS on improved buying due to lower inventory levels of HIPS.
ABS prices have increased to US$1445/MT in Asia in the week of October 26, 2009 as feedstock costs mount and sentiments in China’s domestic market get optimistic. November shipment CFR China offers from South Korea were hiked to US$1450/MT and about 25 dollars higher from Taiwan.