Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of December 3, 2007

04-Dec-07
SUMMARY Crude oil prices have dipped by almost 10% this week, on report that supplies have recorded a less than expected decline. Naphtha prices have dipped in line with robust crude prices. VCM has stagnated at levels where prices are perceived to have bottomed out due to diminishing downstream PVC demand, while EDC prices have dipped on continuing bearish market sentiments. Ethylene prices have risen due to limited availability of spot prices. Propylene prices have risen on robust demand from downstream PP makers. Styrene Monomer prices dipped on bearish upstream benzene markets. Propped by strong demand, HDPE prices continued to rise and LLDPE rose in line with optimistic HDPE market. LDPE and PP markets have gained strength on the back of limited availability. PVC prices stagnated on the lack of movement in the market. GPPS and ABS prices have dipped in line with falling Styrene Monomer prices. CRUDE OIL Crude oil prices that touched an all time high of near hundred dollars last week, plummeted halfway through the week of December 3, 2007. Mid-week, a US government report showed that supplies have recorded a less than expected decline. Oil prices have dropped, but continue to linger below US$90 per barrel in anticipation of a decision by OPEC to raise output at a meeting this week. NAPHTHA Naphtha prices in Asia dipped to US$845/MT in the week of December 3, 2007 - recording a 10% drop from last weeks' levels. This dip in naphtha prices is in line with the drop in crude oil values. FEEDSTOCK VCM VCM prices remained at last weeks' level of US$740/MT in Asia in the week of December 3, 2007. A lack of market movement was witnessed after Japanese suppliers closed deals for November shipment at US$740/MT levels - at levels where VCM prices are perceived to have bottomed out. A recovery in downstream PVC market sentiments will lead to an improvement in VCM markets over the next few weeks, from rock bottom prices of November and December prices. India's Reliance Industries had to shut down its 200,000 tpa VCM plant mid week, at Gandahar due to a fire- resulting in partial influence on downstream PVC production. EDC Compelled by lingering bearish market sentiments from end users, EDC price in Asia maintained its downtrend in the week of December 3, 2007 - dipping to US$400/MT. Few deals were done at US$400/MT CFR levels, as sellers tried to maintain offers at these levels, against the flow of buying intention pegged lower by over ten dollars. Buying intention continues to drop further for end of December shipment. ETHYLENE Ethylene prices have seen a robust hike of almost twenty dollars, touching levels of US$1210/MT in Asia in the week of December 3, 2007. Limited availability of spot cargoes has kept ethylene prices firm, coupled supply interruptions due to a shutdown at the naphtha-cracking unit of South Korea's Samsung Total Petrochemicals Company Ltd. Interestingly, the bullish downstream PE market has failed to support upstream ethylene demand. Ethylene demand from China has weakened as SM producers seem to be well stocked and due to stockpiles with most end users PROPYLENE Propylene prices in Asia spiked to US$1130/MT, on robust demand from downstream Polypropylene producers. Limited availability in the region also supported the price hike. End users were on the lookout for cargoes to replenish low inventories. SM Styrene Monomer prices slipped to US$1360/MT in Asia in the week of December 3, 2007, corresponding to falling upstream benzene values. Buying intentions for January shipment were pegged even lower at US$1340/MT FOB Korea. Upstream benzene prices in Asia fell to US$1010/MT in line with a sharp drop of crude oil values and also relatively weak demand from buyers. POLYMERS HDPE HDPE prices in Asia maintained the northward march, as prices rose to US$1510/MT in the week of December 3, 2007. Prices rose this week as market demand maintained its strength. Offers from South Koreans were heard suspended after offers for December shipment were heard as high as US$1540-1550/MT CFR levels. This follows the recent deals done at between US$1500-1510/MT CFR China. LDPE LDPE prices rose to US$1650/MT in Asia in the week of December 3, 2007. Persistent robust market sentiments on the back of restricted avails have caused this price rise. Sellers' offers for LDPE have now gone above US$1650/MT, but few firm offers were heard as several suppliers continue with official offers. LLDPE Restricted availability have led to firm market sentiments, triggering LLDPE prices to rise to US$1490/MT in Asia in the week of December 3, 2007. Strong support from HDPE market has also kept LLDPE prices rising. Few transactions were concluded as limited offers were heard in the market. PP Polypropylene prices in Asia rose to US$1430/MT in the week of December 3, 2007, supported by very tight supply across the region. Tight supplies can be attributed to limited availability of deep-sea cargoes. The latest offers from South Korean suppliers were heard at US$1420/MT CFR China for yarn/injection grade and at US$1450/MT CFR China for block copolymers. However, currently most Korean suppliers have suspended fresh offers. PVC PVC markets in Asia were lackluster as prices stagnated at last weeks' US$955/MT in Asia in the week of December 3, 2007. A lull prevails in the stagnant PVC market as several suppliers have preferred to hold back firm offers for January shipment. Most major suppliers have been planning a hike of almost forty dollars in January in anticipation of rising demand from Chinese buyers ahead of the Lunar new year holidays. Buying interest from non-Asian countries has also been firm. GPPS GPPS prices in Asia dipped to US$1460/MT in the week of December 3, 2007, on bearish market sentiments from the buyers from China, as well on dropping feedstock SM values. Most buyers were unwilling to stockpile and build up their inventories, so bids were indicated at more than US$20/MT lower than offer prices. ABS ABS prices in Asia have dipped to US$1760/MT in the week of December 3, 2007. Softer prices this week have been influenced by falling feedstock SM rates, notwithstanding a rise in butadiene values. Few deals concluded even at lower offers heard for December shipment, reflecting weak market demand. Few producers in S.Korea and Taiwan have reduced plant operation rates to cope with slow sales.
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