After dropping below US$114 over the weekend, as OPEC lowered its forecast for oil demand growth due to weak global economy, oil prices rose to US$114.51 in Asia on August 18, 2008, on concerns of perils posed by a tropical storm to oil facilities in the Gulf of Mexico. Brent North Sea crude rose to US$113.40, after a US$1.13 dip on Friday. OPEC revised its global demand growth forecast for 2008 down to 1.17% from previously forecast 1.2%.
Dipping by twenty dollars, naphtha prices in Asia have dropped to below US$1000/MT in Asia in the week of August 18, 2008. Naphtha price movement has been in tandem with falling crude values. Open-spec naphtha for H2-September delivery ended at US$999/MT CNF Japan.
Consistently unenthusiastic polyethylene and polypropylene market outlook continues to exert pressure on upstream ethylene values. Ethylene prices sunk to US$1360/MT in Asia in the week of August 18, 2008. Even as weakening HDPE prices have brought down buying intentions for ethylene to lower than US$1350/MT CFR Asia, sellers continue to maintain offers at US$1400/MT FOB Korea levels.
A hundred dollar drop was seen in propylene prices in Asia in the week of August 18, 2008. Prices have dipped to US$1480/MT; below the 1500 dollar mark as downstream market of polypropylene and ACN continue to maintain a gloomy outlook. This downbeat trend is expected to continue until the close of the Olympic Games, on slow user industry demand from China. Sellers have dropped September shipment offers to US$1500/MT FOB Korea levels, but are faced with resistance from damp buying sentiments pegged fifty dollars lower.
Prices for VCM stabilized at US$950/MT in Asia in the week of August 18, 2008, despite waning demand from Chinese buyers. Buyers from China are resisting buying at these levels, seeming comfortable with prices atleast twenty dollars lower, as downstream domestic PVC market continues on a pessimistic note. In addition, as feedstock naphtha has dipped below the thousand dollar mark, and oil continues to weaken, buyers prefer to wait in the sidelines.
EDC markets in Asia remained devoid of movement as buying interest waned in the region, with prices stagnating at US$505/MT in the week of August 18, 2008. Derivative markets of VCM and PVC have witnessed a further price deterioration in China, on virtually non existent demand due to production and transportation curbs in several regions. Sellers continue to maintain offers at US$520/MT CFR China, while reluctant buyers have expressed willingness about fifteen dollars lower. The market has been dull in this tussle between buyers and sellers.
Deteriorating upstream markets have exerted pressure on Styrene monomer prices, causing them to drop to US$1480/MT in Asia in the week of August 18, 2008. Oil, ethylene as well as benzene prices have declined significantly this week. Benzene price that has dipped lower than US$1150/MT FOB Korea for October shipment has found few serious buyers.
Limp demand from China on account of production and transportation restrictions in several regions, has kept HDPE prices down. Sellers cut offers by another twenty dollars, as prices slid to US$1745/MT in Asia in the week of August 18, 2008.
LDPE market outlook has been sluggish in the absence of seller's offers and buyer's bids, dunking prices to US$1940/MT LDPE. As LDPE market sentiments continue to be lackluster, producers in Asia, have switched to EVA production at their swing plants. LDPE supply has been curtailed, restricting availability of cargoes- typical offers hovered in the thirty dollar price range above US$1920. Few suppliers from Middle East and SE Asia have dipped their August shipment CFR China offers upto US$1880/MT levels.
LLDPE prices were down adjusted to US$1835/MT in Asia in the week of August 18, 2008. Despite a down adjustment in offers by sellers from South Korea and Taiwan, lack of movement prevailed in the markets. Very restricted movement was witnessed as most buyers from China prefer to adopt a wait and watch policy in anticipation of further price correction as input costs continue to decline.
Speculative Polypropylene offers for August shipment to China witnessed a severe price reduction by over hundred dollars to US$1760/MT in Asia in the week of August 18, 2008. Interestingly, despite this sharp dip, buying interest in China withdrew by another fifty dollars. Few low priced cargoes were learnt to have been sold at lows of US$1660/MT BWT China, compelling most suppliers in Asia to hack offers ranging within fifty dollars to lows of US$1700/MT CFR CMP.
Absence of offers for September from key suppliers has maintained a hush in the PVC markets of Asia. Prices dipped marginally to US$1280/MT in the week of August 18, 2008, as falling domestic prices of PVC has kept demand from China lackluster. Production rate at several processors continues to be curtailed until the Olympics draw to a close. Estimation of pessimistic market outlook and trend in China through September is expected to keep demand low- triggering a possible price correction from sellers by yet another forty dollars.
GPPS prices have dipped to US$1645/MT in Asia in the week of August 18, 2008. A gloomy market outlook prevails as downstream demand from Chinese buyers has been sluggish on plunging input costs. Though offers were revised downwards, buyers are targeting acceptable prices in the range grade below US$1640/mt CFR China.
Persistent drop in demand from China has plunged ABS prices to US$2125/MT in Asia in the week of August 18, 2008, coupled with falling feedstock SM and butadiene costs. Though an effort has been made by few suppliers to maintain offers at the 2200 mark, the market has already witnessed many offers to as low as US$2150/MT. Demand has failed to pick up even with such levels, and few deals were concluded as demand from China continues to be passive.