From last week's record highs of US$145, oil prices plunged to levels below US$130 in the week of July 21, 2008. This translates to a 11% drop in one week, supported by diminishing tensions between USA and Iran, a strengthening dollar and rising crude inventories. Other factors of slowing global economy, dipping US crude demand and mounting supplies have also aided this price plunge. US gasoline demand dropped last week for the thirteenth week in a row. Demand fell 3.3% compared with the same week a year ago. The US dollar rose sharply against the euro after president of the Federal Reserve Bank of Philadelphia said the central bank will probably need to boost interest rates "sooner rather than later." The dollar's decline has been a major factor in oil's ascent, as investors bought dollar-denominated crude contracts as a hedge against inflation and a weakening greenback. The week ended with a drop to around US$128 - further evidence that investors are now quickly pulling money out of the market. Currently, with traders turning bearish, the absence of major news can push the market down.
Naphtha prices slumped by over $75 in the week of July 21, 2008 in Asia. This drop was in line with the 11% drop in crude oil prices witnessed this week. Open-spec naphtha values for H2-August delivery closed at US$1130/MT CNF Japan.
Ethylene prices dipped to US$1645/MT in Asia in the week of July 21, 2008. Plunging oil and naphtha values coupled with subdued user demand have compelled a drop in ethylene prices. As most downstream users had acquired substantial material for August delivery, demand was sluggish due to existing stockpiles. In fact, buyers intentions were heard as low as US$1600/MT.
As downstream demand waned, propylene prices plummeted by more than $50 to US$1725/MT in Asia in the week of July 21, 2008. Buying activity was put on hold and the market mood was restrained as downstream Polypropylene markets witnessed initial signs of a price drop. As a manifestation of this dampened mood, sellers dropped offers to US$1800/MT CFR China. Despite a $50 slash in prices by the sellers, buyers were unenthusiastic, and expressed an interest about $10-15 lower.
VCM prices moved up to US$1000/MT in Asia in the week of July 21, 2008. The market derived its strength from improving buying sentiments in downstream poly vinyl chloride markets that pushed PVC prices up by $10. After successful conclusion of end of July shipment deals at US$1000/MT CFR China, sellers from Japan pegged intentions $100 higher. VCM markets firmed up in line with a hike in August offers in the South East, where prices were estimated at US$1030/MT CFR.
Lackluster sentiments kept EDC market in Asia fairly steady at US$540/MT in Asia in the week of July 21, 2008. Sellers targeted a price of US$550/MT CFR China, but were met with reluctance from buyers who were seeking offers ranging almost $20 lower. Few insignificant deals for non-vinyl production were concluded at the sellers asking rate, but most buyers continued to express interest at US$530/MT CFR.
Subdued market sentiments prevailed in the styrene monomer markets of Asia dropping prices to US$1610/MT in the week of July 21, 2008. Buyers seem uncertain of buying at these prices after a sharp drop in oil as well as feedstock benzene prices. The market prices for benzene ebbed to the lowest point this month, closing at US$1280/MT. Lukewarm reaction from buyers who preferred to wait and watch has kept the markets subdued as FOB Korea prices for August delivery settled at US$1600/MT. This restrained mood has kept September FOB Korea price estimates ranging between US$1610-1625/MT.
HDPE prices were down adjusted to US$1830/MT in Asia in the week of July 21, 2008. Prices waned because of dwindling buying interest from China, on account of somewhat high levels of stockpiles with the local Chinese buyers and sliding domestic prices. Buying interest for both film grade as well as injection grade was as low as US$1800/MT CFR China. This lackluster demand from China has forced the Asian sellers to divert cargoes to the robust demand region of Latin America. Deals for Korean film grade material in Latin American region were heard concluded at US$1900/MT FOB-a handsome price realization compared to the dull Asian markets.
Dual forces of weak demand from China and restricted supplies in the region tugged at LDPE prices, stagnating them at US$1965/MT in Asia in the week of July 21, 2008. In fact, propped by supply constraints, Asian markets remained solid as deals were concluded at US$2000/MT CFR SE Asia. But chunk of the continents demand from China remained weak stagnating July shipment prices at US$1960/MT CFR China. Most Chinese players are in a mood to wait and watch for speculative offers from the Middle East, expected to range at US$1900/MTCFR China. If Middle East offers do dip to these lows, the Chinese buyers wait will be well worth.
LLDPE prices inched up to US$1860/MT in Asia in the week of July 21, 2008. Riding on restricted supplies, market outlook continued to be firm in Asia, but a hush prevailed in the markets due to a dearth of seller's offers. As this scenario continues, most sellers intend to raise August offers by about twenty five dollars.
Persistently sinking local prices in China have driven down polypropylene prices in Asia to US$2020/MT in the week of July 21, 2008. In fact, in the wake of the pessimistic market outlook and sluggish demand from China, few traders have cleared stocks at US$1950/MT CFR China. But most key players from South Korea and India are reluctant to accept such harsh lowering of offers in the current scenario, and target CFR China prices for August shipment at US$2050/MT.