Crude oil prices rose in the week of September 14, 2009 after a more than expected decline in US crude inventories, a weaker US dollar, OPEC's decision to maintain production levels and a new report stating that the slump in global oil demand will not be as bad as initially feared. Crude oil settled above US$69 on the Nymex at the end of the week. This week the US dollar dipped to its lowest level in the year- and since crude is priced in the U.S. currency, it becomes cheaper when the dollar falls. OPEC has pledged, at its meeting in Vienna, to will keep crude production levels the same due to weak market fundamentals. The IEA has said that the slump in global oil demand in 2009 will be less severe than previously forecast and predicted consumption would rise in 2010 as the world economy stabilizes.
Naphtha prices dipped to US$627/MT CFR Japan in the week of September 14, 2009 in Asia. This movement is contrary to the rise in oil prices as naphtha prices ease in anticipation of a supply glut. Sellers are realizing lower premiums on naphtha cargoes. Oman Refineries and Petrochemicals Co. (ORPC) has sold its first light naphtha cargo from its new petrochemical plant at a premium of US$2-4/ton to Middle East spot quotes on a free-on-board (FOB) basis. As tight supply scenario eases, Asian naphtha cracks have been negatively impacted. Currently, crack spreads are at their lowest in two weeks at US$103/ton premium. India's MRPL and ONGC have realized lower premiums for naphtha sold this week - a total of 65,000 tons of naphtha was sold at premiums 20-25% lower than previous shipments. Delayed monsoon is set to trigger increased naphtha exports from India adding to the supply glut.
Ethylene prices have steadied at US$960/MT in Asia in the week of September 14, 2009. CFR China offers from sellers continued to be quoted at highs of US$1000/MT, but were met with buyer’s reluctance as they targeted a price about 50-55 dollars lower. As the disparity between offers and buying intentions continues to widen, market activity has been unenthusiastic in the Far East. Markets continue to firm up in South East Asia on restricted avails and CFR prices are assessed a tad lower than US$1100/MT. Hence, in a bid for better price realization, sellers prefer to move FE cargoes towards this part of the continent for the arbitrage business. Lack of demand from China has left the northeast Asian market without direction for almost a month now.
Lack of downstream demand from China has impacted propylene prices in Asia, pulling them down to US$1020/MT in the week of September 14, 2009. Market outlook remains gloomy under the strain of volatile oil and naphtha markets and reduced demand from China in anticipation of abundant domestic supplies. As very few deals have reached the conclusion stage, prices are expected to dip further.
Limited deal conclusion has subdued EDC markets, stagnating prices at US$490/MT in Asia in the week of September 14, 2009. Deteriorating derivative demand coupled with weakening prices of naphtha and ethylene has pulled down buying interest to US$450/MT. Propped by supply constraints that are unlikely to ease shortly, sellers offers remain about fifty dollars higher.
Lackluster downstream demand and waning domestic prices in China have pulled down VCM prices to US$725/MT in Asia in the week of September 14, 2009. As local PVC prices in China continue on a downtrend, CFR China bids from China have further dipped to US$700/MT.
Styrene Monomer prices increased to US$1060/MT in Asia in the week of September 14, 2009 in line with rising crude and feedstock benzene values. October shipment offers were hiked by about ten dollars amid unenthusiastic buying as few CFR China deals were heard concluded at US$1080/MT mark. Feedstock benzene prices have risen past the eight hundred dollar mark for next month shipment.
Price of all polymers has fallen in Asia this week on waning demand. Demand in Asia has ebbed as stock levels in major Asian regions have recovered, and as petrochemical trading dips in China on restrained lending by the Central bank in H2-09, and exports weaken, with unlikely rebound due to limited consumer spending in recovering economies. Additionally, a supply glut is anticipated from new capacities that will come on stream towards the end of the year, depressing market outlook further.
HDPE prices have crashed by almost 50 dollars to US$1235/MT in Asia in the week of September 14, 2009 on weak demand from China. Demand has been feeble due to depressed domestic prices and falling feedstock prices amid abundant inventories. CFR China deals for film grade were concluded at US$1235-1240/MT in response to seller’s quotes about 20 dollars higher. Buying intentions continue to be pegged below US$1250/MT in response to October shipment CFR China offers for film grade that were pegged at 1300 dollars from Taiwan, at US$1250/MT from the Middle East and about 100 dollars lower than this level from USA.
As demand from China continues to deteriorate amid huge stockpiles, LDPE prices have toppled to US$1280/MT in the week of September 14, 2009. Demand is very limited as processors use their stocks and prepare to halt manufacturing at plants for about a week starting from October 1 for National Holidays in China. In a bid to liquidate cargoes held ahead of the week long break, traders have dropped offers, but petrochem trading continues to be limited on depressed demand and restrained lending by the Central bank in H2-09.
LLDPE prices slumped to US$1245/MT in Asia in the week of September 14, 2009 on limited buying amid robust stock levels. Buying intentions have slipped further to US$1200 levels due to an anticipated halt in production in about a fortnight for the National Holidays, and depressed petrochemical trading in China on restrained lending by the Central bank. CFR China offers for prompt delivery have dipped to US$1245/MT levels and CFR China October shipment cargoes from Japan were sold at US$1220/MT.
Polypropylene prices have dropped to US$1145/MT in Asia in the week of September 14, 2009 on unenthusiastic buying amid robust stock levels, depressed petrochemical trading in China. Amid lacklustre buying, CFR China offers for yarn/injection grade moved south to US$1150/MT levels for this month shipment.
Polyvinyl Chloride prices have moved down to US$915/MT in Asia in the week of September 14, 2009 on muted sentiments in China. As local PVC prices continue to be bearish in China, buyers have adopted a wait and watch stance in anticipation of a further price dip. Hence, CFR China buying intentions have subdued to the 900 dollar mark. Domestic PVC is being offered by Chinese producers at US$865-875/MT FOB CMP as demand continues to ebb locally and from abroad.
General Purpose Polystyrene prices have dived to US$1185/MT in Asia in the week of September 14, 2009 on dipping prices in the domestic market and falling feedstock values. Export orders from USA and Europe in the Christmas season have tumbled by almost 40-50% on restricted consumer spending. Demand for toys has been negatively impacted, weakening demand for polystyrene and ABS. CFR China offers were corrected to a lower level of US$1200/MT on lackluster buying in China. CFR China deals for HIPS were concluded at about US$1255-1285/MT.
A rise in feedstock butadiene price persists on restricted avails. Despite this, ABS prices in Asia have moved south to US$1500/MT in the week of September 14, 2009 on subdued buying from China. Export orders, particularly for toys from USA and Europe in the Christmas season have tumbled by almost 40-50% on restricted consumer spending. Demand for toys has been negatively impacted, weakening demand for polystyrene and ABS. Limited deal conclusion and a lacklustre market has compelled sellers to quote October offers to US$1520/MT- a further price adjustment does not seem possible as production margins will get impacted as feedstock costs continue to increase.