Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of January 21, 2008

22-Jan-08
SUMMARY Crude oil prices have dipped to US$90.5 per barrel - a drop of almost two dollars in the week on mounting concerns of a global economic slowdown, indicated by a larger than anticipated rise in US crude oil inventories by a Department of Energy report. Naphtha prices have dipped in line with falling crude prices. Ethylene and propylene prices have spiked on account of unplanned plant shutdowns in the region, leading to restricted supplies. This has led to a rise in prices of EDC, VCM and all downstream polymers. CRUDE OIL Last week saw crude oil prices drop by almost two dollars to end at US$90.5 per barrel in New York. Brent crude for March settlement ended for the week at US$89.23 a barrel on the ICE Futures Europe exchange in London. Oil prices have seen a slightly positive outlook towards the end of the week on speculation that the US economy may avert a recession, pushed up by President George W. Bush's almost completed proposal to boost the economy, sustaining energy demand. Oil prices have dipped from almost hundred dollars recorded two weeks ago, on mounting concerns of a global economic slowdown, indicated by a larger than anticipated rise in US crude oil inventories by a Department of Energy report. NAPHTHA Naphtha prices in Asia plummeted in tandem with dipping oil prices to US$840/MT in the week of January 21, 2008. Open-spec naphtha values for H2 February delivery ended the week at US$840/MT CNF Japan. ETHYLENE Ethylene prices in Asia spiked to US$1450/MT in the week of January 21, 2008, as unplanned plant shutdowns continued in the region on one hand and robust demand persisted in the region, on the other hand. Adding to the supply woes have been the ongoing shutdown at Mitsubishi Chemicals' Kashima cracker, the unplanned outage at Chandra Asri's 590,000 tpa cracker (Indonesia) caused by power failure, along with reduced operating rates at PTT Chemical's 505,000 tpa cracker at Map Ta Phut, Thailand due to mechanical problems. Ethylene cargoes from Japan are currently being diverted to Mitsubishi Chemical, predictably until June, hence a supply crunch is expected to continue in the region. PROPYLENE Propylene prices in Asia have risen to US$1270/MT in the week of January 21, 2008, mainly propped by limited availability due to a series of unplanned cracker outages across the region. Mitsubishi Chemicals Kashima cracker and Chandra Asri's Anyer, Indonesia cracker are in the midst of plant outages, affecting supplies. STYRENE MONOMER Styrene Monomer prices rose to US$1325 in Asia in the week of January 21, 2008, mainly on account of rising crude prices. Prices are estimated to be pegged higher at US$1330/MT levels for March delivery. Feedstock benzene prices have risen by almost ten dollars. VCM Despite surging ethylene prices, VCM prices saw a marginal hike to US$785/MT in Asia in the week of January 21, 2008. The quieter market was a result of a gap between buying intentions at US$770/MT levels and selling intentions pegged higher by atleast forty dollars. As supplies tighten and rising feedstock ethylene price catch up with VCM values, deals for January shipment are estimated to finally settle at US$790/MT CFR China. EDC Supported by robust ethylene prices, EDC prices rose to US$435/MT in Asia in the week of January 21, 2008. Buying intention from China remain pegged at US$425/MT levels, while deep-sea cargoes ex-Brazil have bee heard at US$440/MT mt CFR Asia, and from Asia at US$465/MT CFR Asia. Despite current low buying intentions, sellers are less inclined to dispose cargoes at these low prices, and prefer to wait for better price realization on improved demand anticipated next month. POLYMERS HDPE Last weeks' sudden spurt in feedstock ethylene prices has sent HDPE prices rising past US$1645/MT in Asia in the week of January 21, 2008. HDPE prices have been persistently on the rise on sharp hike in supplier offers. Offers from sellers in Taiwan, India and Thailand have been raised to levels of US$1650/MT CFR China. Awaiting quotes from producers, South Korean traders have sold cargoes of HDPE film grade up to US$1640/MT CFR China with end of January shipment terms. LDPE Awaiting supplier offers, LDPE markets in Asia have seen limited movement. However, LDPE prices in Asia moved up to US$1695/MT in the week of January 21, 2008, mainly on the back of restricted supplies and higher feedstock prices. Prices for the next month are estimated to increase on continued tight supplies accompanied by high feedstock prices. LLDPE Propped by robust feedstock ethylene prices and a positive market outlook, LLDPE prices in Asia spiked to US$1630/MT in the week of January 21, 2008. Quotes from Taiwanese suppliers have been heard in the range of US$1650/MT CFR Asia. POLYPROPYLENE Polypropylene prices in Asia have moved up to US$1480/MT in the week of January 21, 2008. Prices in Asia have not moved up in proportion to rising feedstock prices and limited supplies, mainly due to quiet market conditions. Most sellers had concluded deals for Jan shipment at last weeks' US$1460 level. Offers from Indian producers have been heard at the current high values, while February offers from South Korean suppliers are awaited. Rising propylene values will eventually catch up with downstream prices, ending in at least thirty dollar hike from current polypropylene values. PVC PVC market remained firm in Asia in the week of January 21, 2008, mainly on account of robust demand and a rise in feedstock ethylene and VCM cost. Typical February shipment offers were sustained at the level of US$1030-1050/MT CFR China. Major offers from Japan were sustained at around US$1050/MT CFR China for February shipment against buying intentions pegged almost twenty five dollars lower. Prices in the next few weeks are not anticipated to drop, as the recent supply crunch has led to increased feedstock costs, making a price hike essential for producers who desire to recover costs against pressurized margins. GPPS Polystyrene prices moved up to US$1430/MT in Asia in the week of January 21, 2008, as feedstock costs mount. ABS ABS prices rose to US$1755/MT in Asia in the week of January 21, 2008, mainly rising in line with increased feedstock butadiene costs. After successful conclusion of deals for cargoes from South Korea for January shipment at US$1755/MT CFR China, offers from South Korea as well as Taiwan are being up adjusted. However, buyers are not willing to relent at these high prices, so faced with surging feedstock costs, producers from both the countries are working their plants at reduced operating rates.
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