Petrochemical prices fall at a faster pace in May, dropping 7.5%

Petrochemical prices fell at a faster pace dropping 7.5% from US$1237/mt in April to US$1,44/mt as per the average daily price of Platts Global Petrochemical Index (PGPI). The April price downturn in olefins was passed on to aromatics and polymers in May signaling lower input costs for plastics. Short term market volatility appears to be the only constant in the next quarter. In the Far East, weak fundamentals saw majority of Asian petrochemical prices slumping to year-lows in the second-half of May, with all three key aromatics suffering double-digit losses by the end of the month. Asian benzene prices lost nearly 15% of their value between May 17-21, while Asian toluene dropped by 15.23% in the same time period. Sizable losses were also seen in the Asian olefins sector (feedstock chemicals including ethylene and propylene. Propylene slumped 19.3%, while the Asian ethylene market declined 23.8%. This price dip was inevitable as most end-users are wary of holding excess feedstock, as they are nervous about the prospect of a plunge in petrochemical prices akin to end-2008 and early-2009. In Europe, it was a softer crude oil and gasoline environment that spawned a pronounced decline in the aromatics complex, but polymers held to their uptrend, according to Ilana Djela, Platts managing editor for European petrochemicals. May's month-on-month loss in European benzene at 11%, outpaced the drop in Eurobob gasoline by 1%. However, European polymers were sheltered from negative bias and finished May to the upside, aided by tight inventories, persistent supply issues and stable demand.
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