Price trends of oil, polymer feedstock & commodity polymers in Asia for the week of November 19, 2007

20-Nov-07
SUMMARY Crude oil futures dipped to US$95.1 per barrel from last week's US$96.32 a barrel on the New York Mercantile Exchange on unexpected rise in US weekly stockpiles amid speculation of reduced demand. Naphtha prices dipped in line with robust crude prices. VCM prices dipped in line with diminishing downstream demand, while EDC prices stagnated due to a supply glut from USA and Brazil. Ethylene markets stagnated on weak buying sentiments from South Korea and Taiwan. Propylene prices rose as demand from downstream Polypropylene producers intensified. Styrene Monomer prices rose on the back of emergent demand. Propped by strong demand from China, HDPE prices continued to rise. LDPE market has gained strength on the back of limited availability. PP prices rose as most big suppliers hiked offers for December shipment. PVC prices dipped on the back of weak demand from China. GPPS prices stagnated on slow market movement as the Chinese buyers adopted a wait and watch policy. ABS prices rose on rising cost pressures. CRUDE OIL Crude oil prices dipped to mid US$95 levels this week from last week's US$96.32. An unexpected rise in US weekly stockpiles amid speculation of reduced demand has triggered a crude oil price dip to US$95.1 a barrel for December delivery on the New York Mercantile Exchange. NAPHTHA Naphtha prices in Asia dipped in line with falling crude values to US$825/MT CNF Japan for the week of November 19, 2007. In fact, naphtha values dipped as low as US$815/MT earlier this week, before they settled at US$825/MT. FEEDSTOCK VCM Weak demand from downstream PVC markets of China have led VCM prices to dip to US$760/MT in Asia in the week of November 19, 2007. Strong price resistance from Chinese PVC makers has led to downward adjustment of VCM prices. Despite this, the gap widened between sellers offers and buying bids that continue to remain at US$700/MT levels. EDC Arrival of deep sea cargoes form USA and Brazil have caused an EDC supply glut in Asia. This has pressured prices to stagnate at US$415/MT in Asia in the week of November 19, 2007 as buying interest from Chinese vinyl producers remained sluggish due to low domestic PVC prices. ETHYLENE Ethylene prices in Asia stagnated at last week's US$1190/MT in the week of November 19, 2007, despite higher bids from Chinese buyers that rose concurrently with growing demand from China. Markets did not move much as buying sentiments from South Korea and Taiwan remained weaker at US$1200/MT CFR level. Buying sentiments in Taiwan were dampened by operation of Formosa's no.2 naphtha cracker at near full rate. Optimistic demand from domestic downstream producers has led to a cutback in exports by South Korean suppliers. Ethylene supply has also been affected by two shutdowns: The unplanned shutdown at PT Chandra Asri's PE plant due to which the Indonesian company has kept run rates at 75-80% capacity at its recently expanded 590,000 tpa naphtha cracker in Anyer Japan's Nippon Petrochemicals Co. Ltd. 404,000 tpa cracker at Kawasaki that is closed due to outage on Nov 9. PROPYLENE As demand from downstream Polypropylene producers intensified in Asia, propylene prices rose to US$1105/MT in the week of November 19, 2007. Demand from downstream PP producers was seen firm last week and FOB Korea prices went up to above USD1090/MT FOB Korea level. Propylene supply across Asia remained tight due to short supplies despite the restart of Taiwan's Formosa 900,000 tpa no.2 naphtha cracker at Mailiao as demand from downstream PP producers was seen firm. STYRENE MONOMER Styrene Monomer prices firmed up to US$1390/MT in Asia in the week of November 19, 2007 on the back of emergent demand. Prices witnessed a dip by about ten dollars midweek, but was boosted on robust buying sentiments. Meanwhile, benzene prices in Asia dipped to US$1040/MT in line with dipping crude oil and naphtha prices. POLYMERS HDPE Propped by strong demand from China, HDPE prices continued on their march northwards, rising to US$1480/MT in Asia in the week of November 19, 2007. Offers for late December shipment from Taiwan, Thailand and South Korea have hovered around the US$1500 mark. If the upstream ethylene market continues to gain in strength, HDPE prices will cross US$1,500/MT in December. LDPE LDPE market has gained strength on the back of limited availability, pushing prices up to US$1620/MT in Asia in the week of November 19, 2007. Offers for December shipment from South Korea as well as Middle East have seen a rise. Anticipation of a further price hike has led suppliers to hold on, causing a scarcity of deals in the absence of supplier quotes. LLDPE LLDPE markets remained strong at US$1470/MT on the back of tight availabilities in Asia in the week of November 19, 2007. A sharp hike of over twenty dollars was seen in offers by Taiwan's Formosa, as well as for Saudi Arabian cargo. Some Chinese traders sharply hiked LLDPE offers to US$1480-1510/MT at a bonded warehouse in Tianjin port. BWT offers for Canadian LLDPE lots were recently quoted at US$1480/MT PP Polypropylene prices rose to US$1410/MT in Asia in the week of November 19, 2007, as most big suppliers hiked offers for December shipment. Offers from South Korea's Daelim were twenty dollars higher for yarn/injection grade. No offers were heard from Honam Petrochemicals, though a selling bid was indicated at US$1400 level CFR China for yarn/injection grade, coupled with tight supplies for IPP grade. A suspension of PP offers for December shipment was announced by the Indian players after conclusion of few deals at around US$1380/MT BWT China, in anticipation of a hike in for fresh offers. PVC PVC prices dipped to US$955/MT in Asia in the week of November 19, 2007, triggered mainly by a dip in offers from Taiwan's Formosa, on the back of weak demand from China. Interestingly, increasing cost pressures have cornered the Japanese players into hiking December PVC quotes to US$990/MT CFR China. Japanese PVC producers usually buy feedstock ethylene on a naphtha-based pricing formula hence surging naphtha values have set off cost pressures. GPPS GPPS prices stagnated at US$1480/MT in Asia in the week of November 19, 2007, on slow market movement as the Chinese buyers adopted a wait and watch policy. Buyers from China prefered to exercise caution as domestic demand is maintained at weaker levels. However, increasing gains in feedstock styrene monomer prices is anticipated to trigger a rise in supplier offers. Demand in China is anticipated to elevate in the month of December, just before the advent of the Lunar New Year holidays. ABS ABS prices in Asia rose to US$1770/MT in the week of November 19, 2007, caused by rising cost pressures. Offers for December are anticipated to see a rise despite lackluster buying interest from China on strengthening demand. This demand is expected to pick up as processors will replenish currently low levels of stocks before the Lunar New Year holidays.
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