Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended February 23, 2009

25-Feb-09
CRUDE OIL Crude oil prices have risen by over a dollar to end the week of February 23, 2009 at US$39 a barrel. Earlier in the week, prices moved up marginally on release of data in a weekly report indicating an unexpected decrease in inventory levels in USA. Crude prices ended the week on news that OPEC has made good on a pledge to cut production by over 4 mln bpd. However, this has failed to have significant impact on prices as the world markets are faced with an unprecedented plunge in demand and slashed consumer spending. NAPHTHA Demand in Asia has spiraled downward, bringing down naphtha prices by over fifty dollars to hover below the 400 dollar mark in the week of February 23, 2009. Open-spec naphtha prices for H2-March delivery closed at US$395/MT CNF Japan. ETHYLENE A slump in downstream demand, particularly from China has brought down ethylene prices to US$635/MT CFR China in the week of February 23, 2009. As the polyethylene market outlook turns gloomy, processors are unwilling to stockpile, flattening demand as well as buying intentions. Currently, sellers seem unwilling to lower offers, and a wide price gap of over fifty dollars exists between buying bids and offers. PROPYLENE A supply abundance has been caused in Asia as most Japanese crackers have increased run rates in tandem with recovering demand in the region. As demand in the region has once again slumped, CFR China propylene prices in Asia have fallen to US$670/MT in the week of February 23, 2009. A wide gap of almost 40 dollars exists between buyer’s bids and selling intentions for March shipment. VCM Lack of movement from buyers and sellers have stagnated VCM prices at US$600/MT CFR China in the week of February 23, 2009. A wide gap of almost 40 dollars exists between buying bids and seller's offers for March at US$615/MT. Stringent supplies makes the sellers unwilling to relent, while PVC offers by domestic producers that have dipped in China on local supplies, keeps buyer’s bids muted. Recent rise in PVC prices and the decline in feedstock costs have buoyed carbide-based PVC makers to restart facilities, ramp up operating rates. The increased supplies have helped in curtailing imports. As a result, prices as well as PVC demand in China have plunged. EDC Stringent supply scenario has kept EDC prices a tad higher at US$210/MT in Asia in the week of February 23, 2009. Trading has been lackluster as a wide gap of over 40 dollars exists between bids and sellers offers. The market waits to watch who will relent first. STYRENE MONOMER As most players abstained from deal conclusion, Styrene Monomer prices in Asia have stagnated at US$725/MT in the week of February 23, 2009. A more than 50 dollar drop in feedstock benzene values has set off a degree of uncertainty in SM market outlook, as buyers and sellers both prefer to wait and watch. Benzene prices have dipped below the 400 dollar mark, with a slight rebound in line with crude values. POLYMERS HDPE A surge in demand from China that was witnessed post-Lunar New Year holiday has subsided as most buyers have completed restocking. HDPE prices have dipped to US$955/MT in Asia in the week of February 23, 2009 as demand from China drops along with domestic offers. Despite a 30-40 dollar dip in CFR China offers to US$985/MT, very few deals have been concluded. Traders had stockpiled in a bid to gain from post Lunar New Year demand recovery from processors who had depleted inventories. In the absence of demand recovery, they have been compelled into selling, down-revising prices. LDPE Dipping domestic LDPE prices in China have had a cascading effect on demand as well as prices in Asia. As market sentiments become pessimistic, LDPE prices have dropped to US$975/MT in Asia in the week of February 23, 2009. Seller’s offers continue to float above the thousand dollar mark, but are being doused by weak demand from China. In the absence of demand recovery, traders who had stockpiled have been compelled into selling, down-revising prices. The Asian markets seem to be in a scenario of marginal speculative demand, very limited end-user demand amid high selling interest. LLDPE A sharp drop in prices by domestic producers in China have brought down LLDPE prices in Asia to US$985/MT in the week of February 23, 2009. As buyers wait for Asian prices to correct themselves in line with domestic prices, markets in China have turned towards lethargy. Despite a drop in offers for March shipment, buying interest has been expressed about fifty dollars lower. The markets seem to be in a scenario of marginal speculative demand, very limited end-user demand amid high selling interest. POLYPROPYLENE Like the PE markets, Polypropylene markets have also turned bearish in Asia in tandem with plunging domestic prices and demand in China. CFR China PP prices have plummeted to US$895/MT in Asia in the week of February 23, 2009. PP prices are unlikely to rise in the next few weeks as sellers lower bids, demand from China turns bearish and deep-sea cargoes for April delivery are being offered at less than 900 dollars CFR China. The Asian markets seem to be in a scenario of limited end-user demand and marginal speculative demand, amid high selling interest. POLY VINYL CHLORIDE Recent rise in PVC prices and the decline in feedstock costs have buoyed carbide-based PVC makers to restart facilities, ramp up operating rates. The increased supplies have helped in curtailing imports. As prices as well as demand in China plunges, PVC prices in Asia have stagnated at US$695/MT in the week of February 23, 2009, despite higher priced offers. As an uptrend in input EDC and VCM costs continues, March shipment CFR China PVC offers from Taiwan and Japan have crossed US$700/MT. Reluctance on part of the Chinese buyers has stalled bids almost 40-50 dollars lower. GPPS Despite a plunge in feedstock SM values, GPPS prices have shot up to US$845/MT in Asia in the week of February 23, 2009, mainly due to mounting production costs that makes it unfeasible to reduce offers. A revival in demand from Chinese processors running their plants at reduced rates continues to keep demand under check. ABS Despite a lull in market movement, ABS offers have climbed up to US$1115/MT in Asia in the week of February 23, 2009. Offers from South Korea and Taiwan continue to be on an uptrend, even as demand from China waits to perk up.
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