Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended January 25, 2010

CRUDE OIL Oil prices fell by almost 5% in the week of January 25, 2010. As Wall Street dropped for a third consecutive session, oil prices have fallen to US$74.5 on the Nymex and to US$72.83 on the ICE Futures exchange in London, at the end of the week. Oil prices are weakening amid ongoing concerns about weak energy demand and a third day of sell-off in US stock markets. The dollar has once again slipped against the euro and the Japanese yen. Also, fundamentally, demand has been weak throughout the year, except from China. Chinese demand is expected to dwindle as the country is introducing policies to slow down its overheated economy. NAPHTHA Corresponding with falling crude oil prices, naphtha prices have plunged by almost forty dollars to US$715/MT in Asia in the week of January 25, 2010. Asia is likely to see an influx of cargoes from Europe. Naphtha is expected to see a seasonal demand lull after the Lunar New Year, especially with many ethylene producers embarking on regular maintenance in March. ETHYLENE Ethylene prices have steadied at last week’s US$1325/MT in Asia in the week of January 25, 2010. Market activity has been limited as buyers are wary of buying at elevated prices that offer low production margins. Ethylene prices are currently pegged at very high levels despite declining naphtha prices on restricted supplies to the region amid robust demand. However the unrelenting climb in ethylene prices is beginning to have an impact on downstream demand, where derivative producers prefer to curtail production rates due to the high cost and lack of ethylene feed. Ethylene spot prices stood at 17 month highs of US$1300-1350/MT CFR NEA in mid-January. Attracted by the lucrative returns from selling ethylene, some producers in Asia have chosen to cut derivative styrene and polyethylene production and sell more of the monomer. PROPYLENE Propylene prices have steadied at US$1215/MT in Asia in the week of January 25, 2010 on lackluster buying in the region. As crude and naphtha outlook appears bearish, buyers have shown limited interest and are exercising caution to buy at such high prices that are depleting production margins. EDC EDC prices have dipped in Asia to US$430/MT in the week of January 25, 2010. Prices are moving contrary to elevated ethylene prices amid robust demand and outlook from downstream VCM and PVC markets. The reason for this dip in prices is an influx of cargoes from the Middle East and expected large volumes of US cargoes in the region. Offers have been heard at US$450/MT levels, but limited interest on the buyer’s side has weakened prices by about 25 dollars. VCM VCM prices have risen to US$855/MT in Asia in the week of January 25, 2010 on rising prices of derivative PVC for February amid supply constraints. CFR China offers from Japan have been heard about 20 dollars higher than market prices. STYRENE MONOMER Rising in line with robust ethylene and benzene prices, Styrene Monomer (SM) prices have seen a quantum rise to US$1320/MT in Asia in the week of January 25, 2010. Benzene market outlook has been optimistic despite waning crude oil prices, with prices rising to US$1050/MT levels. Demand for benzene from the SM sector (that consumes 50% of Asia’s benzene) has been robust in Asia, but is likely to fizzle out in February with slackening of demand as China proceeds for its Lunar New Year break and downstream demand wanes on a spate of shutdowns at SM units in Taiwan, Japan and South Korea. POLYMERS HDPE HDPE prices settled at last week’s US$1345/MT in Asia in the week of January 25, 2010. Offers for next month shipment have been heard at elevated levels triggered by rising cost of feedstock ethylene. February shipment CFR China offers for film grade were heard above US$1375/MT from Taiwan and a tad lower from South Korea. Offers for yarn grade by South Korean supplier have climbed to US$1445/MT. However, as deals from film grade from Iran have been concluded below US$1300/MT, very few buyers have moved in to close deals as demand is beginning to dwindle in China as the Lunar New Year Holiday approaches. LDPE LDPE prices have increased to US$1605/MT in Asia in the week of January 25, 2010 on robust ethylene costs amid restricted avails in the region market. CFR China deals for February were concluded at US$1625-1650/MT from South Korea and Middle East, and below US$1600/MT from Malaysia. February offers were heard at elevated levels of US$1650/MT from the Middle East, and about 50 dollars lower from Malaysia. LLDPE LLDPE prices have inched up to US$1455/MT in Asia in the week of January 25, 2010 for February despite rising costs of ethylene. Buying interest has started to dampen in China as the Lunar New Year Holidays draw closer amid tighter fiscal controls. POLYPROPYLENE Polypropylene prices have stagnated at US$1320/MT in the week of January 25, 2010 in Asia on reduced demand from buyers in China, where domestic prices have seen a dip. Most CFR China offers for February were heard at below US$1350/MT from South Korea, even as few offers dipped by 15-20 dollars. POLYVINYL CHLORIDE Robust demand from China amid rising input costs has propped up PVC prices to US$1015/MT in Asia in the week of January 25, 2010. Most producers from Taiwan, Thailand, Japan, have increased February shipment offers to US$1025-1045/MT levels. Offers for import PVC offers to Asia announced in mid-January were raised by US$70-90/ton vs January prices after conclusion of most February export allocation to China at US$1010-1020/ton CFR China. A Taiwanese producer has announced a further increase of US$30-40/ton on their balance February allocation to US$1050/ton CFR China, cash. The decision for the price hikes was guided by an optimistic market outlook for March post Chinese New Year holidays, along with steadily rising ethylene and VCM feedstock costs. Limited availability in Asia, rapidly rising feedstock costs and healthy buying interest in China have support these price hikes. Producers in Southeast Asia plan significant increases on their February offers to local markets in line with bullish sentiment from China and rising feedstock costs POLYSTYRENE Polystyrene prices have dipped in Asia in the week of January 25, 2010 despite a steep hike in input costs. CFR China GPPS prices have fallen to US$1425/MT, and HIPS grade have inched down to US$1525/MT. Even as lackluster demand from China has kept CFR China offers for February shipment weak at US$1450/MT, buying interest has fallen below the 1400 dollar mark. ABS Increased offers have propped up ABS prices to US$1775/MT in Asia in the week of January 25, 2010. As feedstock acrylonitrile (ACN) prices rise on the back of a supply crunch, strong demand from China and rising feedstock propylene costs, offers have been further elevated. After successful conclusion of deals at US$1770-1775/MT levels, most offers from South Korea and Taiwan for February have been increased to US$1825-1845/MT CFR China. As the Chinese aim to build inventory levels before they break for the Lunar New Year break, buying bids from China have also risen past US$1755/MT.
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