Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended November 16, 2009

CRUDE OIL Oil prices have ended the week of November 16, 2009 at US$77.4. After dipping to US$76 mid-week, oil prices ended the week on a high note as a weaker dollar supported hedging activities, while better-than-expected US consumer spending data also buoyed hopes of energy demand recovery in the world's largest oil consumer. Oil slid on Friday to its lowest price in a month as investors increased focus on a yearlong slump in American energy demand. Through the year, oil prices surged as investors increasingly invested into crude contracts to safeguard from a weakening dollar, in anticipation of a demand surge next year. However, though crude prices doubled from March to October, consumers and businesses continued to use less gasoline and diesel and refiners reduced run rates. In parts of the Midwest this week, gasoline was selling at a cheaper price than the oil used to make it. NAPHTHA Naphtha prices have moved up to US$695/MT in Asia in the week of November 16, 2009 amid yo-yoing crude oil prices. Mid week, naphtha prices in Asia crossed US$700, peaking to their highest level in over a year. Open spec naphtha prices for H2-December shipment ended the week at US$695/MT CFR Japan on improved markets. Market conditions have improved at a time when conventionally, petrochemical production declines on weak seasonal demand. ETHYLENE Ethylene prices have spiked to US$1025/MT FOB Korea, in Asia in the week of November 16, 2009 on restricted avails in the region accompanied by optimistic derivative market outlook. December shipment CFR FE buying intentions were assessed at US$1000/MT and about 50 dollars higher for CFR SE Asia. Most sellers prefer to adopt a wait and watch strategy in anticipation of a further price revision. Mounting prices in Asia can be attributed to increased demand from the South East buyers who are facing supply constraints on a sudden shutdown of the region’s key spot supplier Iran's Marun Petrochemical’s 1.1 mln tpa cracker. Ethylene supplies from the Middle East have been further curtailed on delay of a maintenance shutdown at Saudi Arabia's Yansab’s 770,000 tpa MEG plant. Better-than-expected outlook of the region’s PVC market has also increased concerns of ethylene exports from Taiwan in the coming weeks. PROPYLENE Propylene prices have increased to US$1030/MT FOB Korea in the week of November 16, 2009 in Asia. A dearth of deep-sea cargoes as well as low cracker run rates in the South East have been propping up prices in this region. Demand has been steady in the North East on robust demand from derivative propylene oxide. Sellers have hiked their offers past US$1050/MT on supply constraints. However, prices are expected to be under control since demand for the key propylene derivative – PP continues to be weakening at a time when supplies could increase from China with the increased gasoline production. EDC EDC prices have steadied at US$395/MT in Asia in the week of November 16, 2009 on stable downstream PVC demand and prices. After successful deal conclusion of November shipment EDC at around US$410/MT CFR China, few offers were hiked past US$400/MT CFR Asia. However, buying interest has been heard about 25-30 dollars lower. VCM VCM prices have lifted up to US$695/MT in Asia in the week of November 16, 2009 on sound demand from polyvinyl chloride makers in the region and firming feedstock prices. CFR prices have been assessed at US$690/MT in the Far East region, and have been assessed firmer by 20-25 dollars in the South East Asian region. STYRENE MONOMER Styrene Monomer markets steadied at US$1040/MT in Asia in the week of November 16, 2009. Mid-week saw a few deals concluded above the US$1050 mark in line with rising feedstock prices. However, prices settled down as market sentiments toned down and demand trimmed down. Feedstock benzene prices rose to US$850/MT in Asia this week. POLYMERS HDPE HDPE prices rose to US$1235/MT in Asia in the week of November 16, 2009 on increased offers by sellers for next month. Film grade was heard offered from Taiwan at US$1245-1250/MT CFR China and few cargoes from South Korea were heard traded at US$1255-1260/MT levels for H1-December shipment. However, buying interest from most players in China remained pegged about 20-25 dollars lower. Injection molding grade from USA was sold at US$1175/MT CFR CMP as sellers divert stocks towards better priced exports to Asian markets from the comparatively duller domestic markets. Prices will also begin getting pressurized as the effects of supply constraints in Thailand and Malaysia get more pronounced. Compounding this situation will be the planned shutdown for expansion of Haldia Petrochemicals’ PE plant in India and maintenance shutdown at Sharq in Saudi Arabia. Supplies could get balanced shortly as towards end of the month, as Thailand's PTT Chemical is scheduled to bring onstream its 300,000 tpa HDPE plant at Map Ta Phut, and by end of next month- Sinopec Tianjin plant with similar HDPE capacity is expected to come onstream. LDPE LDPE prices spiked to US$1345/MT in Asia in the week of November 16, 2009 markets amid tight supplies on one hand and rising domestic prices in China by about RMB500/MT on the other. Outlook in the region continues to be firm on demand from China’s agriculture and packaging sectors. After successful conclusion of CFR China deals at US$1335-1345/MT, offers were hiked from South Korea by about ten dollars. LLDPE Tight supplies persisted in Asia, pushing up CFR China prices to US$1260/MT in the week of November 16, 2009 amid increased prices in China that were hiked by domestic players. Sellers in South Korea increased CFR China offers to about US$1275/MT even as CFR deals were concluded in South East Asia below US$1300/MT. The market anticipates easing of supply at Sinopec Tiajin gets its 300,000 tpa plant onstream by end of next month. POLYPROPYLENE Polypropylene prices steadied at US$1145/MT in Asia in the week of November 16, 2009 on limited deal conclusion. Though feedstock propylene prices spiked in the week, markets are lackluster as they await seller’s offers for December. Even as few CFR China deals were heard concluded at US$1130-1140/MT for H2-November/H1-December shipment, prices are estimated to move north. Taiwanese selling interest for yarn/injection grade was heard at US$1160-1165/MT and for homopolymer grade at US$1180-1195/MT CFR China, in line with higher propylene costs. Prices were also hiked by sellers in China’s domestic markets. POLY VINYL CHLORIDE Polyvinyl Chloride prices have increased to US$855/MT in Asia in the week of November 16, 2009. This increase is quite surprising as end of year is conventionally a lower demand period. Increased costs of feedstock ethylene could be the key factor behind the bullish sentiments even as the markets await offers for December shipment. PVC makers in China have increased prices in domestic markets by about US$15-25/MT for December offers and by about ten dollars for exports to about US$840/MT FOB CMP as demand from India continues at a healthy level. Producers in Asia are expected to hike offers in line with these increases and also to cope with increased production costs as feedstock naphtha, ethylene and VCM costs increase. POLYSTYRENE Polystyrene prices moved up in Asia in the week of November 16, 2009 to US$1165/MT FOB Korea. Sellers have increased offers in line with a twenty dollar increase in feedstock SM prices. After successful conclusion of CFR China deals at US$1150-1160/MT levels, CFR China offers for GPPS have been hiked to US$1175/MT levels for next month. Buyers continue to express an interest about 20 dollars lower. CFR China offers for HIPS grades rose to US$1265-1275/MT levels. ABS ABS prices have inched up to US$1455/MT in Asia in the week of November 16, 2009. Demand has been lackluster particularly from China and buyers prefer to wait and watch as most CFR China offers for H1 December shipment were pegged at above US$1465/MT-1500/MT. Despite lackluster buying, prices are estimated to move up in line with rising input costs.
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