Benchmark crude for April delivery ended the week of March 9, 2009 at US$43.74 a barrel by midday in Singapore on the Nymex, despite news of bleak corporate performance. The rise can be attributed mainly to investor optimism that falling US gasoline could result in an increase in demand for crude oil. Currently, a gallon of gasoline in USA is US$1.245 cheaper than last year. The Dow Jones industrial average dropped 4.1% to a fresh 12 year low on concern General Motors Corp. may face bankruptcy and worries about Citigroup and other big banks. During the week, crude oil climbed to 5 week highs of US$45 on the Nymex, gaining as the Euro strengthened against the US dollar making commodities more attractive.
Unexpected shutdown of Formosa’s No. 1 cracker due to an explosion, along with a demand cut in Asia, has tanked prices to US$400/MT in the week of March 9, 2009. Earlier this month, Formosa had planned to restart the No. 1 unit shortly, and in turn, shutter the No. 3 unit to repair a mechanical fault. But now the restart of the No.1 unit seems unclear because of the time needed for government safety inspection. Formosa plans to continue operating its 1.2 mln tpa No. 3 unit, currently operational at 70% capacity and the No. 2 plant at 90-95%. Open-spec naphtha values for H2-April delivery has shrunk to US$400/MT CNF Japan.
Ethylene prices have stagnated at US$595/MT in Asia in the week of March 9, 2009 in the absence of offers and bids, as majority buyers and sellers have chosen to keep away from the market. The unexpected shutdown at Formosa’s No. 1 unit has had very limited effect on ethylene supplies in the continent. The No.1 plant shutdown has not lead to any major supply constraints or price hikes in Asia, as along with weak demand for petrochemicals, Formosa also plans to continue operating its 1.2 mln tpa No. 3 unit at 70% capacity and the No. 2 plant at 90-95%.
Propylene prices have shot up to US$675/MT in Asia in the week of March 9, 2009, on worries of inadequate avails in the region. Supply constraints have been triggered by an unexpected shutdown of Formosa’s No. 1 unit due to an explosion.
As demand strengthens in the region, Styrene Monomer prices in Asia in the week of March 9, 2009, have spiked to US$800/MT CFR China. Demand from China has fortified due to robust run rates at downstream PS and ABS plants and also an anticipated increase in buying on reduced inventory levels in parts of the East. Prices are estimated to sustain as improved demand from downstream ABS and PS producers is expected to continue with ramped up production rates. Feedstock benzene deals have seen a minor dip, with deals concluded at levels of US$400/MT FOB Korea.
Muted markets triggered by absence of seller’s offers have stagnated prices at US$585/MT CFR China in Asia in the week of March 9, 2009. To quote April cargoes Most key suppliers wait and watch the movement and outlook of downstream PVC markets that are currently unenthusiastic in China.
As both buyers and sellers wait in the sidelines, a lull prevails in the EDC markets of Asia, stabilizing prices at US$210/MT in the week of March 9, 2009. Very little movement has been seen in the markets as both buyers and sellers seem unwilling to relent and narrow the gap between bids and offers. After successful conclusion of March shipment deals at US$200-225/MT CFR Asia, offers from sellers have spiked by an additional 20-25 dollars. However, as outlook of derivatives VCM and PVC markets weakens, buying intentions have been heard at levels of US$200/MT.
Last week’s sudden and sharp drop in ethylene values by almost 8% has taken a toll on HDPE price in Asia in the week of March 9, 2009. A reduction in seller’s offers has moderated market sentiments in Asia to lows of US$935/MT CFR China. Offers from Taiwan have been heard at highs of US$975/MT CFR China, with deals for March shipment concluded about 25 dollars lower. Cargoes from Japan were sold at less than US$950/MT CFR China.
Although this is typically the high-demand period in Asia, LDPE markets have been lifeless in the week of March 9, 2009. Prices dipped to US$975/MT CFR China, and dullness prevailed in the markets in the absence of seller’s offers. Cargoes from South Korea were heard offered at US$1000/MT CFR China and April shipment offers from the South East were heard 25 dollars lower.
Constant and sound demand has stabilized LLDPE offers at US$985/MT in Asia in the week of March 9, 2009. Offers from Taiwan, South Korea, Middle East were heard about 10-15 dollars higher.
Despite a monotony in Polypropylene markets where prices settled at US$865/MT in the week of March 9, 2009, prices are expected to perk up. Feedstock propylene prices that have spiked on supply concerns, could lead to an increase in value of seller’s offers.
As key suppliers have concluded March shipment deals, PVC markets were lackluster in the week of March 9, 2009, and prices steadied at US$675/MT in Asia. Increased supplies by domestic carbide based PVC makers have helped in curtailing imports into China. As prices as well as demand from China falls, offers for next month will be moved in sync with prices of carbide based PVC in China.
GPPS prices have moved up in tandem with feedstock styrene monomer prices, rising to US$855/MT in Asia in the week of March 9, 2009. As feedstock SM has risen, most CFR China offers for GPPS have been heard this week in the range of US$860-890/MT and for HIPS at US$975/MT.
Rising feedstock SM prices as well as improving demand have taken a toll on ABS prices, pushing them up to US$1125/MT in Asia in the week of March 9, 2009. Key suppliers in Taiwan and South Korea have increased offers for next month by an additional 25-40 dollars, as feedstock costs increase.