Petrochemical prices decline at a faster pace in May

Prices fell at a faster pace in the global petrochemicals market with the average daily price of Platts Global Petrochemical Index (PGPI) dropping 7.5% from US$1237/MT in April to US$1144/MT in May. The index, a basket of the most widely used petrochemicals prices published by Platts, had been falling since mid-April. The PGPI hit a six-month high of US$1262/MT on April 12 before falling to US$1064/MT by May 28. The olefin price downturn in April passed down to aromatics and polymers in May signaling lower input costs for derivatives. But short-term market action suggests market volatility appears to be the industry’s only constant in the second quarter. Only two days in May saw spot prices posting gains over the previous trading day’s close. Petrochemical pricing was prompted largely by macro-economic and geopolitical factors during a turbulent month. In Far East Asia, weak fundamentals saw most Asian petrochemical prices slump to year-lows in H2-May, and all three key aromatics suffering double-digit losses by the end of the month. Aromatics are the most actively traded petrochemicals. Between May 17 and 21, Asian benzene prices lost nearly 15% of their value, toluene dropped 15.23%. Sizable losses were also seen in the Asian olefins sector. Propylene slumped 19.3%, while the Asian ethylene market declined 23.8%. Sources described the plummet in spot prices as “inevitable,” given the phobia among end-users on holding excess feedstock. In Europe, a softer crude oil and gasoline environment initiated a pronounced decline in aromatics, but polymers held to their uptrend. May’s month-on-month loss in European benzene was the most prominent at 11. European polymers were sheltered from negative bias and finished May on the upside, aided by tight inventories, persistent supply issues, and stable demand.
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