Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended September 6, 2010

08-Sep-10
CRUDE OIL Crude oil prices firmed above US$75 in New York, towards the end of the week of September 6, 2010 on a better-than-expected payrolls report in the United States indicating that the US economy lost 54,000 jobs in August, far better than market expectations for a larger loss of 120,000 jobs. This spurred European and US stock markets higher. Mid week, prices rose on better-than-expected US figures on housing, benefits and factory orders that suggested the outlook was better than feared. The market has been responding to positive signs of economic activity in the Asian and US markets. Oil prices escalated by almost two dollars on Wednesday on surprisingly strong US and Chinese manufacturing data. The first two days of the week witnessed a fall in prices on concerns over the pace of the US economic recovery and growing fuel inventories. NAPHTHA Open-spec naphtha for H2-October ended the week of September 6, 2010 at US$680/MT. At least 115,000 tons of African/Mediterranean naphtha will land in Asia between H2-September and H1-October despite a well supplied market. No significant volumes are expected to arrive in Asia in October. Formosa's 700,000 tpa cracker, shut since early July due to a fire, is expected to resume operations by next month. Higher arbitrage volumes are expected in November as Europe may have to sell its excess supplies, when maintenance at its oil and gas fields end by late September, allowing petrochemical companies to switch back to cheaper liquefied petroleum gas (LPG) from naphtha as feedstock. Naphtha cracks have risen to US$110/MT premium. Stronger cracks could be a result of crude losses, as demand is unlikely to grow. This was because naphtha crackers in South Korea are already running at their maximum rates, capping their feedstock ETHYLENE Ethylene prices have risen to US$980/MT in Asia in the week of September 6, 2010, propped by a recovery that commenced mid-month, as end-users actively started seeking spot cargoes for downstream production, especially monoethylene glycol (MEG). The market became more bullish this week, on restricted supplies in the spot market due to multiple unplanned steam cracker outages - Mitsui Chemicals shut its 600,000 tpa naphtha cracker at Chiba due to a mechanical problem. Shell’s 800,000 tpa Singapore naphtha cracker that was shut for a day in the week continues operating at low run rates. Mitsui Chemicals’ shutdown tightened ethylene supplies in the Chiba area, and is expected to impact exports. Shell could scout the market to buy spot ethylene cargoes to maintain high MEG plant operating rates. The market is expected to balance itself amid rising spot supplies from the Middle East, especially from Iran. PROPYLENE Propylene prices spiked to US$1200/MT in Asia in the week of September 6, 2010. Total increase has touched almost US$100/ton since the beginning of August. The main reason driving prices up despite sliding crude oil prices has been tight availability, which was triggered by unexpected shutdowns at several plants. Towards the end of the week, Buying intentions slid by about 25 dollars on reduced demand from derivative markets. EDC EDC prices have steadied at US$475/MT in Asia in the week of September 6, 2010. Offers continue to be heard at the 500 dollar mark, but buying interest has subdued as downstream PVC markets remain stagnant. VCM Amid rising feedstock ethylene costs and restricted avails, September shipment VCM prices have inched to US$805/MT in Asia in the week of September 6, 2010. Fresh offers for this month have been heard about 20 dollars higher from South Korea. STYRENE MONOMER Styrene Monomer prices have seen a marginal dip to US$1110/MT FOB Korea in Asia in the week September 6, 2010. Though sellers hiked October shipment offers past US$1115/MT, FOB Korea deals were concluded a tad below last weeks’ levels. Feedstock benzene prices persisted at US$850/MT for October shipment. POLYMERS POLYOLEFINS September import deals for PP and PE have been concluded with sizeable increases when compared with August done deal levels. Several producers from the Middle East have achieved price increases in excess of US$100/MT on the month, as per Chemorbis, despite weaker than expected demand for September. This has been mainly due to reduced supplies on account of several plant shutdowns in the region as well as stronger ethylene and propylene prices. In Asia, the impending holidays in China, Southeast Asia, as well as the Ramadan holidays in Indonesia and Malaysia have limited demand. Buyers are unwilling to purchase beyond their immediate needs, on concerns of the uncertainty regarding the direction of the global economy. Electricity rationing inside China has also contributed to lower overall demand, along with lower than expected demand for agricultural film in the current high season. Many producers claim to have nearly sold out their September allocations to China. HDPE HDPE prices have increased to US$1180/MT in Asia in the week of September 6, 2010, amid rising ethylene values. A Middle Eastern producer sold September allocations to China at prices which were up US$70-110/MT since the start of August. A Taiwanese producer, who announced initial September offers with increases of $65-105/ton towards the end of August, concluded September business at US$20/ton below initial offer levels. LDPE LDPE prices spiked up to US$1365/MT in Asia in the week of September 6, 2010 on restricted avails in the region amid rising input costs. Fresh CFR China offers were hiked by 10-15 dollars. LLDPE Amid rising input costs and limited supplies, LLDPE prices have moved up to US$1180/MT in Asia in the week of September 6, 2010. CFR China deals for cargoes from South East Asia were concluded around the 1200 dollar mark. Deals by Middle Eastern producers were concluded US$70-120/MT above August deal levels. A Middle Eastern producer concluded deals to SE Asia about US$100-140/MT higher than August done deal levels. POLYPROPYLENE Robust demand from China has propelled PP prices to US$1285/MT in Asia in the week of September 6, 2010. CFR China offers from South Korea have been hiked to US$1340/MT levels, amid conclusion of September shipment deals from Taiwan at US$1300/MT. Middle Eastern producers have concluded deals for homo-PP injection and raffia with increases of US$50-110/MT above their August offer levels. In China, a major Middle Eastern producer concluded September deals for homo-PP over US$100/ton above August done deal levels. Petro Rabigh has restarted its 700,000 tpa polypropylene (PP) plant, taken off line in early August because of a shortage of feedstock propylene. The Saudi producer has slashed export cargoes in September to build inventory, slashing allocations for the month by 60-70%, as per ICIS. Only key customers are being supplied, as the company has very limited stocks at present. Currently, the company is ramping up operating rates at the plant and expects to achieve full output by the end of the week. Exports of PP are expected to resume in October. Indonesia’s Tri Polyta’s polypropylene plant, shut for debottlenecking since March 2010, will see a delay in restart. Restart will be delayed by three months to April 2011, mainly on concerns on global economic recovery, as per Platts. The debottlenecking will boost PP capacity -- across three production lines in west Java from 360,000 tpa to 480,000 tpa. POLYVINYL CHLORIDE Upon conclusion of most September shipment deals, a lull in the markets stagnated PVC prices at US$955/MT in Asia in the week of September 6, 2010. Demand from both China and India has been strong over the past few weeks. Slightly sagging demand in India is predicted to pick up again over the coming weeks with the end of the monsoon season that will lure additional buyers to return to the market to replenish their stocks. POLYSTYRENE Amid a lull in market activities, GPPS prices have steadied at US$1245/MT in Asia in the week of September 6, 2010. Markets are lackluster as buyers anticipate a price correction amid weakening crude oil and benzene prices. ABS ABS prices have steadied at US$1940/MT in Asia in the week of September 6, 2010 on weak buying sentiments, particularly from China. CFR China offers from Taiwan and South Korea have been heard at US$1975/MT even as buying bids remain 25-35 dollars lower.
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