Crude oil prices rose to record prices as the US dollar dropped to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation. Naphtha prices moved in line with rising crude values. Ethylene prices plummeted as supply exceeds demand in an overstocked market. Propylene prices stagnated on reluctance on the part of the suppliers to yield to lower buying intentions. SM prices moved up. VCM prices rose, as EDC prices stagnated.
Price of all polymers, except GPPS, rose. GPPS prices stagnated as raised offers by sellers were met with lukewarm buying intentions.
A sharp decline in the US dollar following a weak report on US economic growth, has taken oil prices to a new high. At the end of the week of March 3, 2008, crude oil for April delivery settled at US$101.84 a barrel on the New York Mercantile Exchange. The fresh record prices coincide with the flow of investor money into commodities. US dollar dropped to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation. The surge in crude oil futures has little to do with market fundamentals now. A report by the US Commerce Department states that the US economy expanded at a sluggish 0.6% annual pace in Q4, in a report that left its prior estimate of output growth unrevised. Additionally, concern that OPEC could reduce output has been one of the factors driving prices above 100 dollars this week.
Naphtha prices in Asia gained in strength in line with record oil prices. Open-spec naphtha prices for H2-April delivery spiked past US$890/MT in the week of March 3, 2008.
Ethylene prices plummeted in Asia to US$1250/MT in the week of March 3, 2008. Prices seem to be on a continuous drop as the Asian region continues to remain amply supplied, coupled with high inventory levels. Influx of cargo from the Middle East region has led to oversupply in the South East region, plummeting prices of spot cargoes to US$1250/MT CFR SE Asia. In the Far East region, few talks were heard as the market remained in a state of lethargy. An unexpected failure could lead to a week long closure of Taiwan's Formosa Plastics Corp.'s 900,000 tpa No.2 cracker in Mailiao.
Propylene prices that dipped last week, stagnated at US$1180/MT in the week of March 3, 2008. Buyers continue to seek lower offers, but faced with squeezed production margins, sellers have shown little interest. The price stability can be attributed to reluctance on the part of the suppliers to yield to lower buying intentions.
Styrene Monomer prices gained strength, rising to US$1440/MT in the week of March 3, 2008. SM prices rose even as feedstock benzene steadied at last weeks' levels.
As supplies across the region tighten, VCM prices moved up to US$830/MT in Asia in the week of March 3, 2008. Buyers' opposition to prices has brought down prices by almost forty dollars from the initial offer by Japanese producers. Robust naphtha values are expected to keep VCM prices afloat.
Little change was seen in EDC markets as prices stagnated at US$425/MT in Asia in the week of March 3, 2008. Despite low buying intentions, price stability was evident in the Far East region where most offers stagnated at US$450/MT CFR China. Offers in South East Asia have also been heard at US$450/MT CFR.
HDPE prices moved up to US$1670/MT on higher seller offers, in Asia in the week of March 3, 2008. Producers from Thailand and Malaysia raised offers for CFR China material this week. However, as feedstock ethylene prices dip, the twenty dollar hike was met with some resistance from buyers, forcing deals to be concluded at lower levels. Buyers from China seem willing to hold on, as plummeting ethylene prices are expected to affect downstream polymer prices shortly.
Firm seller's outlook prevailed in the LDPE markets of Asia, moving prices up to US$1790/MT in the week of March 3, 2008. Restricted supplies is expected to continue in some regions of Asia. Absence of offers from key sellers has seen very few deals concluded in Asia this week. Despite absence of firm offers, selling intentions moved upto US$1800/MT CFR China.
LLDPE prices edged up to US$1640/MT in Asia in the week of March 3, 2008, moving in tandem with rising HDPE offers. Regular sellers' bids were heard at higher levels. However, deals for March shipment were heard done at least twenty dollars cheaper at US$1630/MT CFR China levels.
Polypropylene prices in Asia moved up to US$1500/MT in the week of March 3, 2008, on rising demand from China. Demand from China grew in strength as the buyers find low stockpiles at their end, and seem eager to restock. However, the Chinese buyers prefer to import, refusing to accept domestic PP prices that have been higher after the Lunar New Year holidays. PP offers from South Korea, India as well as Taiwan held at US$1520/MT CFR China for yarn as well as injection grades
Triggered by tight supplies, poly vinyl chloride prices spiked by almost forty dollars to US$1090/MT in Asia in the week of March 3, 2008. An unplanned outage at Mitsubishi Chemical's No. 2 Naphtha Cracker, has led to reduced production from several producers. As Japans' PVC production reduced by almost 300000 tons this year, Japanese suppliers have hiked March PVC offers up to US$1100/MT CFR China.
Material from China as well as Taiwan was also heard being offered at raised levels.
Lackluster market sentiments kept GPPS prices stagnant at US$1440/MT in Asia in the week of March 3, 2008. The market was almost immobile, as sellers offers pegged at US$1470/MT were met with lukewarm response by buying intentions at lower level. Demand from China has not recovered post-lunar holiday period. This dull demand has kept buyers willing to wait and watch, notwithstanding higher upstream SM prices. As a result, producers from Asia plan to increase cargoes to outside the continent.
ABS prices rose to US$1790/MT in Asia in the week of March 3, 2008. Rising upstream values have kept ABS prices under pressure in Asia in the week of March 3, 2008. ABS market in Asia persisted in strength, as burdened by cost pressures, sellers announced price hikes for March offers. Most offers from South Korea and Taiwan spiked past US$1810/MT CFR China. Despite signs of revival in buying interest, buyers are still to start restocking actively. March and April will definitely witness resurgence of demand.