Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended September 21, 2009

23-Sep-09
CRUDE OIL Crude oil prices continue to linger above US$70 in New York in the week of September 21, 2009, as the dollar rebound, despite demand worries that weigh on the market. Little or no sustained upward pressure on oil prices is expected until global economic recovery firms up and oil inventories shrink as oil demand augments. Midweek, oil prices spiked past US$72 on release of weekly data showing a larger-than-expected fall in US crude reserves, an indication that USA is emerging from the recession. NAPHTHA Naphtha prices have inched up as crude oil prices rise to US$635/MT in Asia in the week of September 21, 2009. Open spec prices for H2 October delivery hovered above US$635/MT CFR Japan, while H1-November prices stayed at US$630/MT levels. ETHYLENE Ethylene prices in Asia have dipped below US$915/MT in the week of September 21, 2009 due to unenthusiastic downstream demand. Demand from derivative PE and PVC makers continues to be lackluster, and is expected to be low key as China nears its week long National Holiday and India approaches its Diwali break. As supplies eased in the region, CFR Far East prices dipped to hover around US$925/MT, while CFR SE Asia dropped to US$1050/MT. PROPYLENE A downtrend continues in propylene prices in Asia on lackluster demand triggered by weak downstream PP market outlook. FOB Korea prices dipped to US$960/MT in the week of September 21, 2009 for the first time since July mainly triggered by reluctant buying in the pre-holiday season. Propylene inventories have been building up due to reduced downstream demand as well as anticipated reduction in run rates in downstream acrylonitrile, propylene oxide and phenol sectors next month. Supply in the Asian region is also expected to improve as supply in China lifts at a time when demand is fading as China and India ready for their breaks. Supply is expected to start in a month from Thai PTT Chemical’s new ethane-based steam cracker at Map Ta Phut. Market outlook remains gloomy under the strain of volatile oil and naphtha markets and reduced demand from China. EDC Deteriorating derivative demand, weakening prices of naphtha and ethylene along with advent of deep sea cargoes have pulled down EDC prices to US$410/MT in Asia in the week of September 21, 2009. Reducing offers by almost 30-40 dollars this week, sellers quoted September shipment CFR China offers at US$425-450/MT. But as the spot supply scenario improved, buying intentions tanked below US$400/MT levels. VCM Deteriorating demand from PVC makers along with weakening prices of feedstock has pulled down VCM prices to US$710/MT in Asia in the week of September 21, 2009. Despite deal conclusion for September at US$720/MT CFR China, markets have dipped further as downstream PVC prices continue to wane. STYRENE MONOMER Weakening crude oil prices, falling prices of feedstock benzene coupled with restrained buying interest from derivative ABS and PS markets have pulled down styrene monomer prices in Asia. Prices for next month shipment have dropped to US$1030/MT FOB Korea in the week of September 21, 2009. Very few discussions were heard due to deficient demand, as a weak trend continued in downstream markets. FOB Korea feedstock benzene prices dipped below the eight hundred dollar mark to US$775/MT levels for November shipment. POLYMERS Trading in Asia has significantly slowed, amid price dips as China prepares for its week long National Holidays from 1-8 October. A bearish market outlook indicates to dim prospects of demand recovery when the Chinese return in the second week of October. Polymer demand is expected to slow down in Q4 as export orders have been lower than anticipated and producers have built enough stockpiles with no channel to dispose them off. Petrochemical trading in China has also been impacted on restrained lending by the Central bank in H2-09. Additionally, a supply glut is anticipated from new capacities that will come on stream towards the end of the year, depressing market outlook further. Softening crude oil, naphtha and feedstock prices have sent polymer prices further south. HDPE As market outlook turns pessimistic, HDPE prices have dropped to US$1205/MT in Asia in the week of September 21, 2009. CFR China deal for H2-September/H1-October shipment film grade HDPE from South Korea has been concluded at the 1200 dollar mark; and about 20-25 dollars lower from Thailand for this month. CFR China deals from the Middle East were concluded even lower at about US$1100/MT for injection molding grades and at about US$1150/MT for film grade. At a time when the markets are lifeless and demand continues to be waning, supplies have started from Iran’s Mehr Petrochemical plant at Assaluyeh. LDPE Suppliers are refraining from quoting offers at a time when the markets are lifeless and demand continues to be waning. As a result, LDPE prices have dipped to US$1260/MT in Asia in the week of September 21, 2009. Very few deals have been concluded even as prices ebb to such low levels, on reluctance from Chinese buyers. Deep-sea cargoes were heard traded at US$1175/MT CFR China. LLDPE As sellers refrain from quoting firm offer price, markets have been subdued. LLDPE prices have dipped to US$1225/MT in Asia in the week of September 21, 2009 on lackluster demand from China. Most suppliers continue to avoid quotes for next month, though a few were heard at the 1200 dollar level. POLYPROPYLENE Lacklustre demand from China before the start of the week long break has pulled down PP prices to US$1125/MT in the week of September 21, 2009. October shipment CFR China offers for yarn/injection were heard from Taiwan and South Korea at US$1150/MT levels. As feedstock propylene plummeted in the week, dampening buyer’s response, few deals were concluded at the 1100 dollar mark. Buying sentiments continue to be sluggish. POLYVINYL CHLORIDE Polyvinyl Chloride prices have headed south to US$905/MT in Asia in the week of September 21, 2009 along with feedstock EDC and VCM prices. As demand from China continues to be weak and market sentiments appear drained, sellers from Thailand, Taiwan and Japan tanked CFR China offers to just above US$900 levels. Despite these low levels, prices are expected to head further south on lack of deal conclusion on inactive buying interest. POLYSTYRENE Despite falling input costs, General Purpose Polystyrene prices have steadied at US$1185/MT in Asia in the week of September 21, 2009. Few sellers continued to quote at last week’s levels despite feeble demand from China for GPPS and at US$1255-1285/MT CFR China for HIPS. ABS As feedstock butadiene heads south, ABS prices have subdued to US$1485/MT in Asia in the week of September 21, 2009 amid muted demand from China. Sellers continue to quote CFR China offers at the 1500 dollar mark, but buying intentions languish about fifty dollars lower. A further price adjustment does not seem possible as production margins will get impacted as feedstock costs continue to increase.
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