Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of September 22, 2008

23-Sep-08
CRUDE OIL Crude oil prices that were hovering around the hundred dollar mark last week, have recoiled by around 4% in the week of September 22, 2008. The reason for this has been an increased safety sensed in commodity investment after the turmoil witnessed in US financial market. Mid week saw crude dip to hover around ninety dollars but then rose on mixed reactions as investors responded to steps taken by the US to help investment banks Goldman Sachs and Morgan Stanley survive a financial crisis. At the end of the week, in New York, crude for October delivery settled at US$104.5 a barrel, and Brent North Sea crude at US$100. Oil has touched its highest level since Sept. 9 and is likely remain volatile in the short term while investors wait for more details of the US government's unprecedented US$700 bln financial rescue plan for the economy. NAPHTHA As demand in downstream ethylene and propylene markets deteriorated, naphtha prices sunk by almost 100 dollars in the week of September 22, 2008. Recovering a little by end of week, open spec naphtha stood at US$820/MT CNF Japan - the lowest levels since early February. ETHYLENE Ethylene prices have dropped to US$1110/MT in this week in Asia. A persistent fall is being witnessed in ethylene and propylene prices in Asia as demand continues to deteriorate from downstream sector, leading to inventory build up. Sellers have offered ethylene for October shipment at US$1150/MT CFR Asia. However, they continue to be faced with reluctance from unenthusiastic buyers in the continent, who have pegged an interest to buy atleast 50-100 dollars lower, in line with falling downstream PE and PVC values. In a bid to cope with this drastic cut in demand, key players have decided to reduce operating rates. PROPYLENE A further drop was witnessed in propylene prices, as they shrunk by almost hundred dollars. Subdued demand has lowered seller's offers to US$1100/MT CFR Asia in the face of buyer's interest at least hundred dollars lower. CPC has shut its 650,000 tpa propylene plant and Formosa has shut its 1200,000 tpa propylene plant for annual turnarounds. STYRENE MONOMER Market outlook for Styrene Monomer remained bleak in Asia on unenthusiastic buying. October shipment FOB Korea prices dipped to US$1365/MT in Asia in the week of September 22, 2008. In the face of plummeting ethylene and benzene values and deteriorating demand, prices for next month have been gauged atleast twenty dollars lower. Benzene prices have fallen below the $1100/MT mark as crude oil markets continue to be unstable, and are estimated to dip next month. VCM PVC producers in China have scaled back operating rates at several plants, causing deterioration of VCM demand in Asia. VCM prices have fallen to US$800/MT CFR China in the week of September 22, 2008. EDC Several Chinese PVC producers have cut back operating rates affecting demand for VCM and EDC in Asia. EDC prices have fallen to US$405/MT in the week of September 22, 2008 on restrained demand from buyers along with ample supplies in the region. Despite lowered offers, sellers continue to face dampened buying on subdued VCM and PVC markets. In line with extreme dips in input costs, EDC prices are estimated to fall further. POLYMERS HDPE Buyers in China have brought their activities to bare minimum, affecting demand and prices in the continent. HDPE prices have dipped to US$1535/MT in the week of September 22, 2008. Most sellers have lowered offers to US$1560/MT levels, but, as upstream prices collapse, buyers are not keen to conclude deals and are scouring for prices at the 1500 dollar mark. LDPE Pessimistic market outlook and lackluster buying has pulled LDPE prices down to US$1740/MT in Asia in the week of September 22, 2008. Sellers offers were indicated at less than US$1750, but, faced with buyer's reluctance, few CFR China deals have been heard concluded as low as $1700. Though buyer's bids hovered around the 1700 mark, restricted availability has kept firm offers at bay. LLDPE Gloomy market outlook has demolished LLDPE prices to US$1555/MT in Asia in the week of September 22, 2008. LLDPE prices have witnessed a drastic fall this week as demand remains lackluster in the continent. Seller's offers have moved down to US$1575/MT levels, while buying intention has dipped to hover around the 1500 mark. POLYPROPYLENE Polypropylene prices in Asia for this week have dipped to US$1470/MT. Offers have receded to US$1500/MT CFR China - falling to 6 month lows on lackluster buying in the continent. PP producers in Taiwan have brought down production rates by 30%. Buyers continue to abstain from concluding deals in anticipation of a further price drop in line with deteriorating propylene values that have fallen by over US$350 in the fortnight. Few deals for CFR China cargoes from Saudi Arabia were heard concluded at low 1400 levels, and from Iran in low 1300s. POLY VINYL CHLORIDE Most PVC producers from Taiwan, Korea and Japan are delaying firm offers for October due to ambiguity in the market direction, and several Chinese PVC producers have cut back operating rates. Hence lack of activity reigned in the PVC markets of Asia, where prices prevailed at US$1080/MT in the week of September 22, 2008. But weaker buying intentions and falling domestic prices in China continue to pull prices down to US$1050/MT CFR China. GPPS Erratic crude and SM prices have dampened market sentiments fro GPPS in Asia in the week of September 22, 2008. Falling by fifty dollars, GPPS prices were heard at US$1525/MT CFR China in this week. Sellers are reluctant to lower speculative offers due to wide changeability in last weeks' feedstock prices. ABS As buyers in China abstain from buying, ABS prices have fallen to US$2010/MT in the week of September 22, 2008. On successful conclusion of deals at around US$2030, offers from South Korea and Taiwan hovered around the 2000 mark.
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