Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended September 28, 2009

CRUDE OIL Crude oil prices have dipped by about 5 dollars in the week of September 28, 2009. Prices plummeted midweek as the US dollar weakened, and as a report released data of unexpected increase in inventory levels in USA. Oil prices rose on Friday to US$66.4 a barrel on the NYMEX, while in London, Brent crude rose to US$65.41. This rise was supported by evidence of improving consumer sentiment and increased tension around Iran's nuclear program. Crude oil ended the week at US$65.83/barrel in New York; softening on Monday morning. However, growing tensions over Iran’s nuclear programme following missile tests over the weekend limited downside movement. NAPHTHA Naphtha prices in Asia have plunged by over 50 dollars to US$585/MT levels in the week of September 28, 2009. This fall has been in line with falling crude oil values amid easing supply constraints and a demand drop in the region. Demand continues to be limited as China prepares for its week long National holiday break. Supplies have eased in Asia on added volumes of exports from India in September, continuous spot exports from Kuwait and unusual spot exports for October lifting from China's WEPEC and Saudi Aramco. Prices could ease further as supply increases from the Middle East. Fresh naphtha supplies from Qatar will start from next month to the tune of 200,000 tons per month as its new condensate splitter comes online. ADNOC is expected to have an additional 1.3 mln tpa of naphtha from a new condensate splitter in Ruwais that comes online next year. ETHYLENE Ethylene prices have plunged to US$865/MT FOB Korea in the week of September 28, 2009 on lackluster demand from derivative PE and PVC makers in Asia. Even at such low levels, very few deals were concluded due to restrained demand from China. Demand from downstream producers is expected to be low key as China nears its week long National Holiday and India approaches its Diwali break. The chances of ethylene prices falling further are high amid abundant supply and weak demand. PROPYLENE FOB Korea prices dipped to US$945/MT in the week of September 28, 2009 due to reluctant buying in China in the pre-holiday season amid increased supplies from South Korean producers. A downtrend continues in propylene prices in Asia on lackluster demand triggered by weak downstream PP market outlook and anticipated reduction in run rates in downstream acrylonitrile, propylene oxide and phenol sectors next month. Thai PTT was to start up a new 800,000 tpa ethane cracker in Q4-09, but has delayed start up to Q1-2010. Market outlook remains gloomy under the strain of volatile oil and naphtha markets and reduced demand, particularly from China. EDC After last week’s dive of 30-40 dollars, EDC prices stabilized at US$410/MT in Asia in the week of September 28, 2009. CFR China seller’s offers that ranged between US$420-445/MT were met with buyer’s resistance. Passive buying interest pegged intentions at a tad below the 400 dollar mark amid deteriorating derivative demand; weakening prices of naphtha and ethylene. VCM VCM prices witnessed a marginal dip to US$705/MT in Asia in the week of September 28, 2009. After deal conclusion for September at US$715/MT levels, muted buying interest subdued market outlook. Prices were evaluated downwards at the 700 dollar mark on deteriorating demand from PVC makers and enhanced supplies across the Asia. STYRENE MONOMER Styrene Monomer prices plummeted to US$985/MT in Asia in the week of September 28, 2009 on limited deal conclusion. Markets were at a standstill, as buyers; particularly from China, have preferred to adopt a wait and watch strategy on weakening crude oil and feedstock benzene prices coupled with restrained buying interest from derivative ABS and PS. Price pressures were aggravated by deep-sea cargoes from USA and the Middle East over the past several weeks. Feedstock benzene prices toppled to US$710/MT FOB Korea triggered by weakness in the US and European markets. POLYMERS Asia has witnessed a drop in petrochemical and polymer prices this week on sluggish demand from China ahead of the week-long national holidays. Along with this, anticipated skepticism about a pick up in demand post-holidays and volatile crude markets; could lead to a prolonged fall in the absence of unclear market direction, even after the Chinese return. Everyone is uncertain of the Chinese demand post-holidays, hence buyers are hesitant to purchase in recent weeks. Buying activity came to a virtual standstill as processors continued with their wait-and-watch stance, despite strong demand fundamentals and very low inventory levels. Petrochemical trading in China has also been impacted on restrained lending by the Central bank at a time when a supply glut is anticipated from new capacities towards the end of the year, depressing market outlook further. HDPE HDPE prices have dropped to US$1175/MT in Asia in the week of September 28, 2009 as trading in Asia slowed significantly amid price dips as China prepares for its week long National Holidays from 1-8 October along with softening crude oil, naphtha and feedstock prices. Even as the market awaits offers for next month, CFR China film grade has dipped. CFR China offers from the Middle East have slipped to US$1200/MT, while offers are awaited from Taiwan, amid bearish buying sentiments that have dipped to US$1150/MT. LDPE A dearth of seller’s offers and buying interest has rendered LDPE markets lifeless in Asia. CFR China selling interest being hinted at US$1250/Mt for October, has met with lack of enthusiasm from buyers, pegging interest about fifty dollars lower. Lack of movement from both buyers and sellers has resulted in a deadlock on LDPE markets, pulling down prices to US$1210/MT in the week of September 28, 2009. Markets are lifeless and demand continues to be waning. LLDPE Passive deal conclusion due to restrained selling and buying has pulled down LLDPE prices to US$1175/MT in Asia in the week of September 28, 2009. Markets are lifeless and demand from China continues to deteriorate. Chinese buyers prefer to be in the sideline as several cargoes arrive at the country’s ports. POLYPROPYLENE Lackluster buying in Asia has subdued market sentiments, pulling down Polypropylene prices to US$1075/MT CFR China in the week of September 28, 2009. The Chinese are refraining from buying ahead of the week long National Day holiday in China. This dearth of buying interest has caused most suppliers to hold on to offers. Markets for yarn/injection grades have been assessed at the 1100 dollar mark, amid offers lowered from the Middle East by an additional 30-40 dollars. Post-holiday October shipment offers are being anticipated below US$110/MT POLYVINYL CHLORIDE PVC prices have dipped to US$895/MT CFR China in the week of September 28, 1009, on a persistent lull in demand in Asia, particularly China. CFR China offers from Taiwan and Thailand that have already been lowered to hover around US$890-900/MT are being met with lack of enthusiasm as buyers scout for further price dips. October offers from South Korea are conspicuous by their absence due to the pessimistic market outlook, while offers from USA have been dropped due to ample domestic avails amid feeble buying interest from abroad. POLYSTYRENE Polystyrene prices have dipped by about ten dollars in the week of September 28, 2009; in line with falling feedstock SM prices, weak export orders and dull demand from China. October offers for GPPS have been lowered below US$1185 mark from South Korea as well as Taiwan. Despite falling prices, limited buying from China keeps interest pegged at US$1150/MT. CFR China offers from the two countries for HIPS have lowered by 20 dollars to hover below US$1290/MT ABS ABS prices have plummeted to US$1460/MT CFR China in the week of September 28, 2009, triggered by frail demand from China and weakening feedstock prices. Sellers continue to quote CFR China offers US$1460-1480 in anticipation of a pick up in inventory restocking pre-holiday season. Fragile buying and pessimistic outlook, keeps buying intentions at lows.
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