Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of December 8, 2008

09-Dec-08
CRUDE OIL In the week of December 8, 2008, crude oil prices plunged to 4 year lows on increased concerns of waning energy demand triggered by release of extremely weak jobs data in the USA in which payrolls fell by 533,000 last month. As the economic recession deepens across continents, OPEC along with International Energy Agency and US Energy Department have lowered demand forecast. Light, sweet crude for January delivery settled at US$40.8 on the New York Mercantile Exchange, and in London, Brent North Sea crude for January delivery dropped to US$39.7. NAPHTHA In the week of December 8, 2008, naphtha prices have plunged by over sixty dollars in Asia corresponding with deteriorating oil prices. Open-spec naphtha values for H1 Jan shipment were at US$260/MT CNF Japan. ETHYLENE In the week of December 8, 2008, CFR Asia buying intentions continue to be pegged at US$400/MT, even as sellers are hiking their offers to range at US$450-500 on limited avails due to reduced run rates by key producers. Despite restricted supplies, sellers are finding it difficult to find takers at higher price levels and have abstained from quoting firm offers. As a result of this wait and watch policy adopted by both buyers and sellers, hardly any new deals have been concluded, despite rising downstream PE prices. PROPYLENE Propylene prices have shown little movement in the week of December 8, 2008. Despite lackluster markets, FOB Korea propylene prices edged up to US$485-500/MT. Though unenthusiastic buying has kept bids about 35 dollars lower, sellers are unable to bring down prices any further because of uneconomic production margins. STYRENE MONOMER Styrene Monomer prices have stagnated in Asia in the week of December 8, 2008, despite plunging oil, naphtha and benzene prices. CFR China Styrene Monomer prices were heard at a firm US$570/MT mainly due to reduction in run rates by several producers squeezing supply to levels sufficient for captive consumption or to implement long term contracts. Hence, despite bearish upstream and downstream markets, producers have managed to get a hold on the rapidly deteriorating markets. Interestingly, buying intentions continue to be pegged about 10-20 dollars lower. Benzene prices had a sharp fall to tank below US$300/MT FOB in line with deteriorating oil prices. VCM VCM supplies were squeezed in Asia on a sudden plant outage due to mechanical problems at Tosoh's 550,000 tpa VCM plant as well at a 400,000 tpa VCM plant at Nanyo around the third week of November. The supply scenario was worsened by a week long delay in shipments toward China. This supply crunch coupled with strengthening downstream PVC prices and fortifying feedstock EDC values. All these factors have helped firm up CFR China VCM markets in Asia to US$425/MT in the week of December 8, 2008. EDC As December shipment VCM and PVC prices elevate, CFR EDC prices have inched up to US$105/MT in Asia in the week of December 8, 2008. Recovering demand from downstream PVC makers and positive buying sentiments from China could boost EDC markets. However, the recovery in EDC could be partial, hindered by an expected arrival of huge volumes of deep-sea cargoes. POLYMERS HDPE Encouraged by strengthening demand from China, HDPE prices in Asia continue to journey north, rising to US$825/MT in the week of December 8, 2008. December shipment CFR China offers from sellers that were heard at around US$835-850/MT finally concluded in deals at US$825/MT. LDPE Limited supplies in the region have pushed up prices in Asia to US$885/MT in the week of December 8, 2008. After successful conclusion of CFR deals for December shipment at US$870 and then at US$900/MT, sellers hiked offers above US$900/MT. LLDPE Improved demand from China amid rising domestic prices has pushed LLDPE prices up by about fifty dollars to US$835/MT CFR China in the week of December 8, 2008. After successful conclusion of deals at these levels and increasing domestic prices in China, offers from South Korea were hiked by over sixty dollars. POLYPROPYLENE An upward correction in prices by most sellers has pushed up polypropylene prices in Asia to US$780/MT in the week of December 8, 2008. CFR China offers for yarn grade from India and South Korea hovered around US$800/MT, while those from Taiwan were about 20 dollars more; and 20 dollars lower from Saudi Arabia. POLYVINYL CHLORIDE PVC prices in Asia continue have climbed up to US$620/MT in the week of December 8, 2008, mainly triggered by a hike in domestic PVC prices in China and dwindling stockpiles with producers due to reduced production. Buying intentions for PVC have not been buoyed, and hover around US$585/MT CFR China. GPPS GPPS prices continue to fall in Asia amid a bearish market and weak demand from processors. CFR China prices have dipped to US$700/MT in Asia in the week of December 8, 2008. CFR China GPPS offers from Taiwan for December shipment dropped to US$720/MT with deal concluded about 10-20 dollars lower, CFR China HIPS also sunk to hover around US$800-825. ABS ABS prices have dipped to US$1205/MT in Asia in the week of December 8, 2008, as market outlook continues to be pessimistic. As lackluster market sentiments reign and unenthusiastic buying continues, most CFR China ABS offers from South Korea and Taiwan have dipped below US$1220/MT. Though few offers from select sellers were heard at US$1250/MT, majority of December shipment offers ranged about 25 dollars lower.
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