The week of July 7, 2008 saw crude oil futures rise from US$140 to past US$145 mid week, on supply concerns. Supply constraints are anticipated as global demand, particularly from China, increases, along with a further weakening of the US dollar. US markets were closed Friday for the Independence Day holiday. The week ended with oil prices dipping to US$144 on Monday after Iran offered to negotiate on its nuclear drive over the weekend.
Record high oil prices have propped up naphtha values to US$1245/MT in Asia in the week of July 7, 2008. Open-spec naphtha prices H2-August delivery closed at US$1245/mt CNF Japan.
Escalating demand from downstream polyethylene producers in Asia has kept the market outlook for ethylene very strong. Ethylene prices pushed further north to US$1640/MT in Asia in the week of July 7, 2008 on robust spot demand from Asian PE makers. As supply constraints continue, selling intention from Korea has spiked by almost fifty dollars after successful conclusion of deals for July shipment at US$1640/MT FOB Korea.
Edged down by dull demand from China, movement of propylene prices in Asia contrasted with movement of crude and naphtha. Propylene prices moved down to US$1800/MT in Asia in the week of July 7, 2008. Sellers from South Korea are targeting a price above US$1800/MT FOB Korea, but have been met with resistance from the buyers in China who are keen on a lower price range.
Stagnancy crept into the VCM markets of Asia as deals for July shipment remain unconcluded due to a wide mismatch between buyer's bids and selling intentions. Both buyers and sellers refuse to budge, hence VCM prices continue at US$1000/MT in Asia in the week of July 7, 2008. Sellers are interested in price realization at US$1100/MT CFR levels, but buyers indicate no inclination to move unless offers dip to US$1000/MT CFR China. Buyers from China are also not in any urgent need to stockpile as they may be required to operate their PVC plants at reduced rates due to the forthcoming Olympic Games.
EDC markets were lackluster in the week of July 7, 2008 in Asia, stagnating at US$530/MT. This seems like a lull period for EDC, especially after prices had spiked by over sixty dollars since the early weeks June. As price of feedstock ethylene continues to rise in Asian markets, sellers have not relented and have maintained their offers above US$550/MT CFR CMP. On the buyers side, there are no signs of weakening of demand from China. However, as several downstream producers are operating plants at reduced rates due to a power supply shortage, buying intentions persisted at US$550/MT CFR levels.
Styrene Monomer price rose to US$1660/MT in Asia in the week of July 7, 2008. SM markets gathered strength on buoyant demand from downstream buyers, as August delivery deals in CFR market were heard concluded thirty dollars higher, near the 1700 mark. Feedstock benzene values were unmoved despite rising upstream costs, as deals for August shipment concluded at around US$1340/MT.
Improving demand from China has led to a recovery in domestic HDPE prices, restoring prices by almost thirty dollars. This recovery along with robust oil and feedstock markets has pushed up prices to US$1835/MT in Asia in the week of July 7, 2008. CFR CMP offers from Taiwan were up adjusted to US$1900/MT, from Middle East to US$1850/MT and from Asia to US$1870/MT. Deals were concluded above US$1925/MT CFR in the markets of West Asia, even as offers were hiked to US$1950 levels.
Restricted availabilities saw LDPE offers rise past US$1950/MT in Asia. However, LDPE markets were sustained firm as July shipment deals were concluded at US$1930/MT in Asia in the week of July 7, 2008.
LLDPE markets continued to firm up, rising to US$1840/MT in Asia in the week of July 7, 2008. This price hike corresponds with rising PE prices. In fact, few deals were heard concluded at about US$1850/MT CFR China. A producer from Taiwan is heard to have hiked CFR China offers by over sixty dollars past US$1930/MT, while a producer from Singapore has announced a price hike, pushing prices to US$1870/MT CFR China.
Polypropylene markets received a healthy thrust forward, as price moved up to US$2040/MT in Asia in the week of July 7, 2008. As demand from South East Asian buyers got healthier, and crude oil prices continued to rise, key Asian suppliers up adjusted July offers. In fact, producers from South Korea and Singapore raised July shipment offers upto US$2100/MT CFR CMP, encouraging traders to suspend offers below US$2000/MT CFR China. After successful conclusion of deals at US$2050/MT CFR China, a producer from Taiwan has hiked offers upto US$2100/MT CFR China.
Polyvinyl Chloride market of Asia steadied at US$1250/MT in the week of July 7, 2008. Deals for July shipment were concluded at these levels, as typical offers from major producers persisted at US$1240/MT FOB FE. As feedstock costs improved and overseas demand gained strength, PVC offers from Chinese producers were up-adjusted to US$1250/MT FOB CMP. Cargoes to non Asian countries including India, were heard traded at above US$1300/MT CFR levels. In fact, on robust demand from West Africa, a South Korean producer has sold July shipment upto US$1400/MT CFR level.
GPPS prices steadied at US$1765/MT in Asia in the week of July 7, 2008, despite weaker demand from China. Rising feedstock Styrene Monomer prices in the last week have kept sellers offers at above US$1800/MT levels, seeming unhampered by softening sentiments in China, where buying intentions were heard at US$1760 levels. Rising feedstock prices continue to exert pressures on production margins, hence producers in Taiwan and South Korea continue quoting July offers above US$1800/MT CFR.
As buying sentiments continued to soften, lackluster ABS markets showed little movement, stagnating at US$2180/MT in Asia in the week of July 7, 2008. Under duress from rising input cots, sellers from South Korea and Taiwan increased offers for July shipment about thirty dollars.