Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended April 12, 2010

CRUDE OIL Oil prices spiked to an 18 month intraday high of US$87 at the beginning of the week, rising after reports showed growth in US jobs and service sectors. Prices then dipped to levels close to last weeks’ on speculation that US stockpiles will surge as refineries augment rates, crude oil prices have settled at US$84.9 on the Nymex in the week of April 12, 2010. The downturn has wiped off all the past gains triggered by economic optimism and a weak dollar. From among the many reasons pulling down oil prices, one is weak demand, another is a weak dollar in comparison to the euro. NAPHTHA In line with rising crude oil values, naphtha prices in Asia have risen in the week of April 12, 2010. Open-spec prices rose to US$755/mt CFR Japan for H1-May delivery. Prices could be adversely affected as European naphtha arbitrage exports to Asia will rise in April after slowing in March. The increase in export volumes can be attributed to reduced demand in Europe as a result of maintenance shutdowns at petrochemical plants that has led to reduced prices. Supplies will reduce in Asia as crackers come into operation- Shell started production at its new 800,000 tpa ethylene plant in Singapore on March 22. Indian Oil Corp could cut naphtha exports as it is to use over 2 mln tons of naphtha at its 857,000 tons cracker when it is running at full capacity. ETHYLENE Ethylene prices have strengthened to US$1155/MT in Asia in the week of April 12, 2010, on rejuvenated demand from derivative sector as well as rising crude oil prices. Additionally, the region is faced with limited supplies on maintenance turnarounds at several plants, as well as due to run rates that have been reduced to less than 70% at some other plants. PROPYLENE Propylene prices have propped up to US$1275/MT in Asia in the week of April 12, 2010. Spot propylene prices continue to rise due to export opportunities to Latin America and plant shutdowns in Asia, prompting increased initial May offers from sellers vs April offer levels. Spot offers on an FOB Korea basis gained US$40/ton over the course of the last week. Healthy import demand has allowed a few major Asian producers to pare down excess propylene inventories. Japan’s Mitsui experienced an unplanned outage at two propylene plants with a combined capacity of 420,000 tpa over the weekend while another Mitsui facility with 150,000 tpa of propylene capacity was unable to restart as planned last week. EDC EDC prices have been boosted by healthy crude oil prices. Prices have risen past US$525/MT in Asia in the week of April 12, 2010. However, price hikes were met with buyers hesitation due to lackluster derivative markets. This has resulted in limited deal conclusion. VCM Rising in line with robust crude, ethylene and EDC markets, VCM prices have edged up to US$850/MT. Downstream PVC markets have been lackluster with limited price movement. STYRENE MONOMER As upstream ethylene and benzene costs rise, styrene monomer prices have inched up to US$1275/MT in Asia in the week of April 12, 2010. May shipment offers rose past US$1280/MT as benzene prices continued rising, moving to US$995/MT. POLYMERS HDPE HDPE prices have firmed up to US$1245/MT in Asia in the week of April 12, 2010 in line with the recent rally in upstream markets. The low end of the price ranges firmed up by US$20-30/ton in the import market and by CNY100-200/ton (US$15-29/ton) in China’s domestic market. However, sellers offering at the upper end of the ranges continue to complain of slow sales as demand has not picked up in proportion with rising costs. In Southeast Asia, both import and local PE prices continued to move lower this week due to a lack of buying interest. Converters in the region are currently holding a cautious attitude on concerns that the market may become oversupplied soon as capacities come onstream in the Middle East and China. LDPE LDPE prices have inched up to US$1450/MT in Asia in the week of April 12, 2010, in line with rising input costs. However, markets were dull as sellers offers were awaited in the region. April shipment cargoes from the Far East were traded at US$1465-1475/MT CFR China. Buyers have also been reluctant, preferring to buy hand to mouth in anticipation of a supply glut. LLDPE In line with strengthened feedstock values, LLDPE prices inched up to US$1325/MT in Asia in the week of April 12, 2010. Most sellers hiked offers by about 20-30 dollars, with deals concluded in the range of US$1325-1350/MT. In Southeast Asia, both import and domestic PE prices continued to move lower this week due to a lack of buying interest. While firmer upstream costs provided some support to prices on the lower end of the range, import prices declined US$20-40/ton at the upper ends this week. Towards the end of the week, news of firmer prices in China and rising upstream costs led some sellers to withdraw prices offered at the lower end of the range in anticipation of a price correction. POLYPROPYLENE Polypropylene prices have firmed up to US$1315/MT in Asia in the week of April 12, 2010. Spot PP markets in Asia are facing some upward pressure from the rally in spot propylene and crude oil costs. Suppliers are taking an increasingly firm stand on pricing due to higher feedstock costs, and buyers in China elected to buy limited quantities on fears that stronger propylene costs could lead to additional price increases over the near term. This week has seen the return to markets of a large number of mega sized Chinese biaxially oriented (BOPP) film producers who had not been buying for several months. PP supply from North America is no longer available for delivery to China because of a sharp decline in avails as a result of rising propylene costs in North America. Also, supplies from the Middle East don't seem to be able to fill the gap for now. However, the current supply and demand dynamics may not allow sellers to push prices much beyond their present threshold. Accordingly, spot PP prices in Southeast Asia have gained some ground. A Thai producer announced initial May offers for homo-PP injection and raffia with increases of US$30-40/ton from April offer levels. Few deals have been concluded at prices close to new offer levels in the Philippines. While the short-term outlook for the Asian PP market is bullish, many buyers are not in any rush to conclude deals at the current price levels as they expect to see lower prices in May. The markets are expected to witness an oversupply effect in May, caused by the large new capacity additions. POLYVINYL CHLORIDE PVC prices have stagnated at US$1015/MT in Asia in the week of April 12, 2010. Markets have been dull as offers for May are awaited from most key suppliers. May FOB offers were heard in the domestic Chinese markets at US$960-970/MT for carbide based PVC and about 20 dollars higher for ethylene based PVC. A Thai producer reported to have concluded most April business in the local market this week, with their done deal for April about US$30-45/MT below March done deal level. In view of the week-long Thai New Year holidays, Thai producers have offered attractive prices to conclude their monthly business ahead of the holidays. The holidays have also taken a toll on the wider Southeast Asian market, as the week long absence of Thailand and some of its neighbors from the market is projected to result in lower regional PVC consumption in April. POLYSTYRENE The general rise in energy prices coupled with firm styrene prices at US$1270-1275/MT FOB Korea, gave ground to PS producers to raise their polystyrene prices to US$1375/MT in Asia in the week of April 12, 2010. In China, import prices rose by US$5-25/ton for dutiable GPPS and by US$20/ton at the low end of the range for non-dutiable origins. HIPS prices gained US$15/ton at the high end for dutiable origins and US$20/ton at the low end of the range for non-dutiable origins CFR/FCA, cash basis. The approaching high season created some recovery in demand as Chinese converters ramped up operating rates by another 10%. In Southeast Asia, a global producer lifted GPPS and HIPS prices by US$10/ton while traders reported receiving offers with increases of US$10-20/ton for GPPS. If demand continues to improve during the approaching high season for PS applications and energy prices continue with their firm trend, further gradual increases are likely to be observed in Asian PS prices. ABS ABS prices have increased to US$1915/MT in Asia in the week of April 12, 2010 in line with elevated input costs. In a bid to recover mounting costs of production, most CFR China offers have been climbed past US$1950/MT from sellers.
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