Firm start for global polyolefin prices in 2010 with bullish feedstock costs

A firm start is expected for polyethylene in global markets amid persistently rising feedstock costs. Softer demand in Southeast Asia has been seen in the last few weeks of the year. This is because of the impending implementation on January 1, of the ASEAN-6 free trade agreement, which will largely eliminate duties/tariffs on polymers. However, markets are expected to open on a higher note in January as feedstock costs firm up and buying sentiments in China remain bullish. As oil prices firm up in line with recovering economies and reduced inventory levels in USA, naphtha, ethylene and propylene are also closing the year 2009 on an optimistic note. Despite lackluster sentiments in polypropylene markets, spot propylene prices continue to rise in Asia this week. The current supply constraints expected to spill over in Q1-10 is keeping propylene offers high. Q1-10 will see maintenance shutdowns at seven crackers in Japan, South Korea and Taiwan, while most downstream polymer plants will continue to operate at near full capacity to met robust demand in the region. In Europe, January propylene contracts have moved higher to make up for poor cracker operating margins as producers also cope with increased prices of dollar denominated naphtha that has got dearer as the dollar strengthens vs the euro.
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