Petrochemicals plunge in Asia, declines likely to continue on destocking amid lacklustre markets

Amid falling crude oil prices, Asian petrochemical prices have plunged partly due to destocking activities. The declines are likely to continue due to high inventory levels amid lacklustre market sentiments, as per ICIS. Concerns are mounting over Europe’s debt crisis that has resulted in austerity measures, which could continue, threatening to restrict exports from Asia to Europe. Propylene spot prices dropped below US$1300/ton CFR NE Asia this week, with offers at US$1250-1280/ton CFR China, as demand from derivative polypropylene sector continues to deteriorate. June propylene cargoes are being sought to be offloaded at US$1200/ton CFR China. Propylene imports are coming to a standstill because the sharp fall in prices has led to uncertainty about a further fall in prices. Chinese converters prefer to wait on the sidelines amid concerns that propylene prices may weaken further, and also due to the availability of competitively priced domestic material. High levels of inventory abound in the polyethylene market with PetroChina and Sinopec currently holding a total of 750,000 tons. Fearing a repeat of the 2008 crisis scenario, when polyolefin prices had a US$100-200/ton weekly decline, traders are currently rushing to liquidate cargoes (mostly of Middle East origin), even at a loss. Iranian film-grade high density polyethylene (HDPE) is being offered by Chinese sellers at US$1170-1180/ton CFR China this week for prompt lifting at the bonded warehouse. Benchmark HDPE was assessed at US$1180-1240/ton CFR China last Friday. Paraxylene spot values tumbled to near seven-month lows at US$960-975/ton CFR Taiwan.
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