Crude oil prices have dipped by over a dollar in the week of August 31, 2009. Several factors were responsible for the dip: a drop in China's key stock index that fanned concerns about the pace of economic recovery and a revival in energy demand, as well as rising stockpiles in USA. Crude stockpiles in USA rose in the week indicating wavering crude oil demand amid concerns of weak global economic recovery. Last week’s report showed a large and unexpected draw on oil, which sent prices soaring, but this week, investors are cashing out as the latest US data indicates bearish fundamentals in the oil market.
Naphtha prices in Asia stagnated at US$645/MT CFR Japan for H1 October delivery as crude oil prices dipped. Mid week, unenthusiastic spot demand for open-spec naphtha and a possible supply increase pulled down naphtha prices in Asia by 10-15 dollars. Prices slackened to a week's low, while cracks fell to their lowest in 3 weeks. Demand has remained muted as the expected buying by traders from South Korea for H1 October has not materialized. Supplies in Asia are expected to ease with an additional 200,000 tons/month from Qatar starting October.
As buying sentiments improved in Asia, ethylene prices rose to US$960/MT in the week of August 31, 2009. September shipment CFR NE Asia offers stood at US$1025/MT levels. Prices were assessed ten dollars higher than last week at US$965/MT CFR FE and about 100 dollars higher in S Asia as the region had deficit supply on non arrival of cargoes from Iran due to continued delays in the delivery of term cargoes triggered by cracker shutdowns early this month. Mid week, trading activity was at a virtual standstill in NE Asia on weak ethylene demand from China as talks had lapsed due to a wide buy-sell gap. Cargoes intended for this region have been diverted to SE Asia in a bid for better price realisation. Expected capacity addition in China has added to anticipation of abundant domestic supplies and Chinese buyers have no incentive to seek spot cargoes. Lack of demand from China has left the northeast Asian market without direction for the third consecutive week. Spot supply from Korea was limited due to healthy domestic demand on increased exports but Japan has cargoes available due to turnarounds at downstream plants in September and October.
Saturation of the market with spot cargoes has cast an unenthusiastic shadow on propylene markets of Asia, bringing down prices to US$1065/MT in the week of August 31, 2009. As producers supplied excess spot cargoes to the markets and plants started production in the region, September shipment FOB Korea propylene prices dipped to US$1065/MT and below US$1100/MT CFR FE Asia. Several cracker operators who had shuttered plants for scheduled and unscheduled maintenance have restarted plants, leading to increased supplies. Earlier this month, prices rose as supplies were tight in the first couple of weeks of August due to several maintenance turnarounds and rising propylene and PP prices in China that permitted higher prices to be absorbed.
EDC prices appear to be steadying in Asia as prices inched up to US$520/MT in the week of August 31, 2009. Propped by supply constraints that are unlikely to ease shortly, and livening up demand, sellers offers were heard above US$550/MT CFR Asia. Demand has enhanced this week on strong demand from processors that has propped up demand from derivative poly vinyl chloride makers. Buying intentions are expected to look up in the coming weeks.
A hike in September offers has pushed up VCM prices to US$740/MT in Asia in the week of August 31, 2009. CFR China offers from Japan for September exports have been hiked to US$750/MT levels. Prices are expected to be bullish on a revival in buying interest, rising PVC values and restricted supplies from Japan.
Restrained activities have muted styrene monomer prices to US$1090/MT in Asia in the week of August 31, 2009. As buyers prefer to wait and watch for yet another anticipated price dip, very few deals were concluded this week. FOB Korea prices for October shipment were evaluated about 15-20 dollars lower at US$1070-1090/MT, as feedstock benzene continued to dip to below US$800/MT.
Lackluster demand from China where the market is loaded with stockpiles, has weakened HDPE prices to US$1295/MT in Asia in the week of August 31, 2009. CFR China offers for film grade continued at US$1290-1310/MT. After sellers from Taiwan and South Korea concluded deals above US$1290/MT, offers dipped by ten dollars on lethargic buying and pessimistic outlook. Interestingly, demand and prices steadied in SE Asia, pushing up CFR offers for film grade to levels of US$1315/MT.
Restricted avails in the region exerted pressure on supply, pushing up LDPE prices to US$1340/MT in Asia in the week of August 31, 2009. CFR China offers for September that inched up to US$1350/MT from the Middle East and South Korea, encountered weakening buying interest from China. September offers from South Korea were heard at US$1390-1400/MT CFR SE Asia.
In the week of August 31, 2009, CFR China LLDPE prices continued to stagnate at US$1315/MT. Flimsy demand from China kept CFR offers from Taiwan and South Korea at US$1325/MT levels. September offers firmed at US$1350/MT CFR SE Asia.
Polypropylene prices inched up to US$1220/MT CFR China in the week of August 31, 2009 despite steep falls in feedstock propylene prices for two straight weeks in Asia. This can be attributed to increased values of seller’s offers for yarn/injection grades for September shipment. Typical CFR China offers were pegged at US$1225-1250/MT while deals were concluded about 20-25 dollars lower, resulting in offers for North American cargoes increasing in sync with these levels. Deals for few cargoes from India and Middle East were concluded at comparatively lower levels, pegging down general buying interest from China at the twelve hundred dollar mark.
Polyvinyl chloride prices continued to stagnate at US$935/MT CFR China in the week of August 31, 2009 in Asia due to a lull in the markets. Deals have not neared completion due to a wide price gap between seller’s offers and buying intentions. Waning demand from Chinese processors leading to weakening domestic prices has resulted in muted demand for higher priced imports. Hence September shipment offers from Japan that were elevated to US$950/MT met with lackluster buying interest. Seller’s offers are not anticipated to dip much further as an uptrend continues in feedstock VCM prices. Sellers from Taiwan and South Korea have diverted cargoes to better demand regions of Middle East, Turkey and India, realizing better prices at the thousand dollar level.
General Purpose Polystyrene prices have tempered down to US$1220/MT in Asia in the week of August 31, 2009 on deteriorating feedstock SM values, dull market sentiments and lackluster demand in China. As the downtrend continues, the market is in an inert state as buyers prefer to wait and watch. Typical offers were quoted at US$1255-1275/MT CFR China CFR China offers from Taiwan for HIPS grade was quoted at US$1360/MT.
Rising costs of input butadiene and ACN have persisted in pushing up ABS prices to US$1545/MT in Asia in the week of August 31, 2009. Optimism continues in the market outlook, but processors are opposed to higher prices. CFR China deals were concluded at US$1535-1555/MT for September in response to sellers offers elevated to US$1565-1580/MT. It seems unlikely that a further price hike will be absorbed by the buyers.