Spot monomer markets ended the year 2011 on a steady to slightly firmer note in Asia. Values were flat for ethylene and styrene but there were gains for propylene when a weekly comparison is made, as per Chemorbis. At the same time, the most recent spot levels for ethylene and styrene represented cumulative increases since early December. Spot propylene costs recorded consecutive decreases since the beginning of December mainly due to slower downstream demand at the year end. However, the decreasing trend lost pace in the latter part of last month due to relatively stronger crude oil and naphtha prices. Spot naphtha costs surged by over US$20/ton on CFR Japan basis during December. Over the past week, spot propylene offers gained around US$15/ton on FOB South Korea basis, which was attributed to revived demand from the PP market. However, some end users believe that the rebound may not last long since Chinese players will be out of the market during the Lunar New Year Holiday which will take place from January 22 to 29, 2012.
In the ethylene market, spot prices didn’t show any significant changes on the week. Chinese buyers started to go to wait in the sidelines ahead of the upcoming holidays which hampered overall buying interest. Nevertheless, spot ethylene values indicate a total increase of US$45/ton on CFR Northeast Asia basis with respect to early December. Spot styrene costs increased by around US$40/ton on FOB South Korea basis since early December in tandem with the European market. The increase was not only triggered by high energy prices but also spot benzene costs which rose $95/ton during the month in Asia.
Despite higher upstream costs, some analysts highlight the gloomy macroeconomic outlook along with the crisis in Europe and possible cash constraints in global polymer markets for the new year. Some players are concerned about an expected slowdown in the Chinese construction sector which could hinder demand for some applications. On the supply side, several naphtha crackers in Asian countries including Japan, South Korea and Taiwan will undergo maintenance shutdowns late in the first quarter of 2012. Although demand will shape the future market direction, these turnarounds will reduce monomer availability in the upcoming months which could push monomer prices up across the region if crude oil prices remain high.