Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended September 7, 2009

09-Sep-09
CRUDE OIL In the week of September 7, 2009, New York's main contract, light sweet crude for October delivery settled at US$68, while London's Brent North Sea crude for October delivery settled at US$66.8. Prices have turned pessimistic on concerns of slowing demand from China and reports from USA that unemployment rate climbed to 9.7% in August from 9.4% in July. The report revealed a narrowing decline in payrolls in August, pulling down oil prices. The hopeful optimism of the past few weeks has been replaced by disappointment over absence of a solid sustainable recovery. Concerns abound that a rising jobless rate could dampen consumer confidence critical to any US recovery from prolonged recession. NAPHTHA Naphtha prices continue to deteriorate in Asia in the week of September 7, 2009 in sync with falling crude prices. Open spec prices for H1 October delivery dipped to US$633/MT CFR Japan levels. The week has also seen prices easing in anticipation of a supply glut from the Middle East. The restart of Saudi Aramco's 44,000 bpd hydrocracker, after a 3 month outage brings to the markets 150,000 tons of A310 grade naphtha and 50,000-100,000 tons of A180 light grade a month. Qatar will export an extra 200,000 tons every a month from October as its new condensate splitter is to start producing light fuels in September. Cargoes are expected to continue from Kuwait as the delayed aromatic plant start up is now anticipated in October. Increased avails of natural gas have steadily demoted the status of naphtha as the preferred feedstock among power and fertilizer consumers in India, adding to quantum of naphtha exports from India. ETHYLENE Ethylene prices stagnated at US$960/MT in the Far East region of Asia in the week of September 7, 2009, on muted buying interest from China due to dampening derivative demand. CFR offers from sellers continued to be quoted at highs of US$1000-1035/MT, but were met with buyer’s reluctance as they targeted a procurement price about 50-60 dollars lower. Markets continued to firm up in South East Asia on restricted avails, pushing up CFR SEA prices to US$1085-1100/MT. Supplies in SEA continue to be limited from Iran due to continued delays in the delivery of term cargoes triggered by cracker shutdowns early this month. This supply scarcity is helping sellers get better price realization from deals concluded in the SEA region- diverting increased quantum of FE cargoes in the SE Asian market for the arbitrage. Lack of demand from China has left the northeast Asian market without direction for the fourth consecutive week. PROPYLENE Capacity addition in China has added to anticipation of abundant domestic supplies and Chinese buyers have no incentive to procure propylene cargoes. Unenthusiastic prices continued as market outlook turned gloomy under the strain of bearish crude market perspective and dwindling demand from China. Lack of demand from China has brought down prices to US$1035/MT in Asia in the week of September 7, 2009. EDC Deteriorating derivative demand coupled with weakening prices of oil and feedstock naphtha and ethylene has pulled down EDC prices in Asia to US$490/MT in the week of September 7, 2009. Propped by supply constraints that are unlikely to ease shortly, sellers offers were heard above US$500/MT CFR Asia, while buying interest waned below US$450/MT. VCM VCM prices dipped to US$730/MT in Asia in the week of September 7, 2009 in sync with falling input values as well as weakening derivative prices. Deals for September shipment were concluded at these levels against offers increased to US$750/MT CFR China. As China’s domestic PVC prices continue to dip, buying interest lingers around the 700 dollar mark. STYRENE MONOMER Styrene Monomer prices continue on a downtrend- FOB Korea prices dipped to US$1050/MT in Asia in the week of September 7, 2009. September shipment CFR China deal was concluded at levels of US$1070/MT in sync with falling feedstock prices and depressed derivative market. Feedstock benzene prices continued to dip, falling to US$790/MT as pessimism persisted in feedstock markets. POLYMERS: In the earlier weeks, the market witnessed demand improvement from South Korea, China and Japan as processors and manufacturers restocked inventories which had been at lows since Q4-08. With the recovery in stock levels in major Asian regions, demand eased this week. Demand this week was also lacklustre on subdued petrochemical trading in China as the Central bank started to restrain lending in the second half of the year. With this step, companies and traders have been left with limited spending power after the massive round of Government spending in the economic stimulus package of H1-09. The stimulus package pushed up domestic demand as well as polymer prices since the start of the year, in part due to restocking. Manufacturing reaches a frenzy in July to September period in China every year in preparation for the surge in export orders for Christmas. Though major economies seem to be on a recovery path, increasing unemployment figures leading to contracting purchasing power, has negatively impacted petrochem demand in China prior to the Christmas season. A strong rebound in demand for exports is unlikely this year as consumers continue to restrict spending. To add to this, a supply glut is anticipated from new capacities that will come on stream towards the end of the year, depressing prices further. Hence prices of all polymers has fallen in Asia this week. HDPE HDPE prices dipped to US$1285/MT in Asia in the week of September 7, 2009. Market outlook continues to be gloomy on lackluster demand from China. Demand has been dull due to depressed domestic prices, falling feedstocks, plentiful stocks, weakening export orders and tightening of lending in China. Even as sellers reduced CFR China offers for film grade to US$1290-1315/MT, buyers have expressed interest to buy below US$1275/MT as domestic prices dipped further on depressed demand. LDPE LDPE prices fell to US$1325/MT in Asia in the week of September 7, 2009 on unenthusiastic buying in China coupled with deteriorating domestic prices. Demand has been dull due to depressed domestic prices, weakening feedstock prices, tightening of lending in China. Very few deals were concluded as both sellers and buyers preferred to wait in the sidelines. In line with the cynical market outlook, few CFR China offers for this month dropped to US$1335-1350/MT. LLDPE LLDPE prices caved in to US$1290/MT CFR China in the week of September 7, 2009 on unenthusiastic buying. Demand has been dull due to depressed domestic prices, weakening feedstock prices, abundant inventories and tightening of lending in China. POLYPROPYLENE Polypropylene prices have subsided to US$1185/MT in Asia in the week of September 7, 2009 due to lifeless markets in China. Demand has been dull due to depressed domestic prices, weakening propylene prices, ample stockpiles and tightening of lending in China. Sellers from Taiwan and South Korea offered CFR China yarn/injection grades for this month at the twelve hundred dollar mark, but have met with damp buying interest about 30-50 dollars lower. Homopolymer from Middle East and South America was offered below US$1200/MT CFR China, deep-sea cargoes at this level was met with unenthusiasm from buyers concerned about further price adjustment. POLY VINYL CHLORIDE Polyvinyl Chloride prices have sunk to US$920/MT in Asia in the week of September 7, 2009 on depressed domestic prices, weakening feedstock values, abundant stockpiles in China. Most buyers prefer to refrain from deal conclusion in anticipation of a further price correction. Though offers in the region hovered around the thousand dollar mark, buying intentions were pegged at US$900/MT in China, at US$950/MT in India. POLYSTYRENE General Purpose Polystyrene prices have dwindled to US$1215/MT in Asia in the week of September 7, 2009 on dipping prices in the domestic market and falling feedstock values. Feeble export orders from USA and Europe in the Christmas season on restricted consumer spending has depressed demand in China. Demand for toys has been negatively impacted, weakening demand for polystyrene and ABS. Conventionally, September is the tail-end month of the peak of China’s production. But export orders this year are barely at 50-70% of previous years. CFR China offers tracked falling SM prices, and have been reduced to US$1225-1245/MT – However, buying interest hovers around the twelve hundred dollar mark. CFR China HIPS prices were evaluated in the low thirteen hundred. ABS ABS prices collapsed to US$1510/MT in Asia in the week of September 7, 2009. Though ACN and butadiene markets firmed up, crude and SM values have dipped as toy exports this year are barely at 50-70% of previous years. CFR China sellers offers were heard at US$1525-1550/MT, met with dull buying interest at the 1500 dollar mark .
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