Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended September 20, 2010

22-Sep-10
OIL Restart of the Enbridge pipeline, which carries Canadian crude into the US, has led to a fall in crude oil in the week of September 20, 2010. Oil dropped to US$73.5 on the Nymex, while Brent crude on the ICE futures exchange fell to US$77.8. Brent crude contract remains higher amid relatively tight crude supplies and healthy refining margins there. The fall in prices follows last week’s 5% drop as traders' refocused on already high crude inventories amid concerns of the US economy. This week’s housing data reports could add to fears about slowing growth in USA, which could push down oil demand. As Typhoon Fanapi passed through the South China Sea, where much of China's offshore oil infrastructure is located, and on to Hong Kong, it could result in shutdowns of platforms. This could prompt China to raise crude imports. NAPHTHA Naphtha prices have slipped below US$685/MT, amid weakening oil prices, surplus stock and dwindling demand in Asia in the week of September 20, 2010. Demand has been impacted as Asia’s top spot naphtha buyer Formosa Petrochemical has issued no tender ahead of a major cracker shutdown. September cargoes on offer have no takers and demand will slow down further as the prompt market is long in supply. Currently, the arbitrage window from Europe to Asia is shut, but the earlier cargoes of 100,000-150,000 tons of Mediterranean naphtha, due to land in Asia in October, will have to deal with a dearth of buyers. Saudi Aramco seems undecided about selling 60,000 tons of naphtha for mid-October loading to Asia due to a weak market, as the premiums made on recent deals have seen a sizeable drop compared to previous sales for parcels lifting in H2-September. Open-spec prices for H2-October delivery dipped below US$685/mt CFR Japan. ETHYLENE Despite falling crude and naphtha values, limited availability has pushed up ethylene prices to US$1010/MT in Asia in the week of September 20, 2010. Prices in the Far East region have been evaluated at US$1050/MT, while offers were heard about 50 dollars higher. PROPYLENE Propylene prices have fallen to US$1115/MT in Asia in the week of September 20, 2010, mainly due to limited buying interest in the region. Also, the region has very limited supply concerns due to rising availability of deep sea cargoes. Downstream PP and ACN makers plan not to replenish stocks as demand from China is expected to weaken with the approaching holidays in late September-early October. EDC EDC prices have inched up to US$485/MT in Asia in the week of September 20, 2010 amid firm derivative PVC prices for October shipment. Sellers continue to offer at US$520/MT. VCM VCM prices have inched up to US$815/MT in Asia in the week of September 20, 2010 amid firm October shipment PVC. October shipment sellers’ offers have been heard at US$825. STYRENE MONOMER Styrene Monomer prices have steadied at US$1135/MT in Asia in the week of September 20, 2010. Prices have found support from rising ethylene and benzene values. Notwithstanding falling crude oil values, feedstock benzene prices have seen a spike to US$655/MT amid strong buyers demand. POLYMERS Typhoon Fanapi, the first major storm to strike Taiwan this year, had dumped 1120-1140 mm of rain in the Kaohsing-Pingtung area. Torrential rains caused by Typhoon Fanapi has devastated southern Taiwan and led to shut down of major petrochemical complexes in the county. All the factories in the county's Renwu and Dashe petrochemical parks, including CPC Corp. Taiwan, USI Corp., TSRC Corp., China Petrochemical Development Corp., China Man-Made Fiber Corp. and Grand Pacific Petrochemical Corp., were closed on Sunday. The power transmission system shut down automatically when floodwaters reached the warning levels at the Renwu-Dashe petrochemical complexes. Ten of the transmission lines will automatically connect with other power transmission systems, while the other ten lines will require help from the military to be restored. Even then the petrochemical makers will be unable to resume normal operations until completion of safety inspections. The industrial zones in Luchu, Gangshan and Ciaotou have also been flooded. Petrochemical production levels are not expected to return to normal immediately because of power cuts and flooding. This has caused concerns about possible price fluctuations and the up- and mid-stream supply of petrochemicals. Formosa Plastics Corp. and Nan Ya Plastics Corp. are among more than 30 petrochemical makers in Kaohsiung that have halted production. Formosa Petrochemical Corp., has no plants in the Kaohsiung parks, and was not majorly impacted by Fanapi. However, shipments from Taiwan's Formosa Petrochemical Corp were disrupted by the closure of a seaport near its 540,000 bpd Mailiao refinery complex. HDPE Reduced offers from the Middle East amid lackluster demand have pulled down HDPE prices to US$1165/MT in Asia in the week of September 20, 2010. Suppliers from the Middle East have reduced CFR China offers to US$1155/MT. Few deals were heard concluded about 20 dollars lower than these reduced offers amid dull market sentiments, as the Chinese prefer to avoid buying as they prepare to break for the upcoming National holidays. LDPE LDPE prices have spiked to US$1415/MT in Asia in the week of September 20, 2010. Most sources attribute this strength to comparatively tight supplies. CFR China October shipment deals have been concluded at US$1415/MT, after which offers have been spiked by about 15-30 dollars in the region. In Asia, LDPE film continues to trade at a premium when compared with LLDPE film and HDPE film, because of a relatively larger number of new LLDPE and HDPE film capacity coming on-line for the past two years. LLDPE LLDPE prices have dipped to US$1185/MT in Asia in the week of September 20, 2010, amid jaded buying sentiments. Demand from Chinese buyers is expected to be dull as they prepare to break for the upcoming National holidays. POLYPROPYLENE Amid plummeting propylene values, polypropylene prices have fallen to US$1265/MT in Asia in the week of September 20, 2010 on dull market sentiments and weak demand outlook in China. Cargoes from Taiwan found buyers at US$1285/MT CFR China after which offers from the Middle East dipped to US$1255-1270/MT. Current buying interest is pegged at US$1250/MT levels, as trading activity has dropped, as the National Day holidays draw nearer in China. This has combined with an anticipated increase in supply levels; that has led many buyers to conclude that they will be able to obtain some discounts on their purchase prices over the near term. Buyers in China also anticipate easing of domestic supplies with the restart of some domestic plants as well as the start up of some new capacities-Sinopec Tianjin Co.’s 450,000 tpa PP plant, Shenhua Baotou’s 300,000 tpa PP plant. POLYVINYL CHLORIDE PVC prices have steadied at US$970/MT levels in Asia in the week of September 20, 2010, as most deals have been concluded at these levels for the month. Offers have been heard about 5-10 dollars higher, but in general, the demand outlook continues to be lackluster in China. POLYSTYRENE As deal conclusion continues to thin down, GPPS prices have stagnated at US$1260/MT in Asia in the week of September 20, 2010. CFR China offers continue to be pegged at US$1275/MT, but have been met with weak demand sentiments that have kept buying intentions about 30-40 dollars lower. ABS ABS prices have steadied at US$1945/MT in Asia in the week of September 20, 2010. Buying sentiments continue to be weak in the region, particularly from China amid October shipment offers that have been hiked past the US$2000 mark.
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