Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended November 8, 2010

CRUDE OIL Crude oil prices surged past US$86 in the week of November 8, 2010- its highest level the highest settlement price since Oct. 8, 2008, on encouraging figures from USA. Employment in USA rose in October for the first time in five months, a sign businesses may be starting to gain confidence in the prospects for a faster pace of growth. Stocks and the dollar rose as earnings added to optimism that an improvement in the labor market will boost household spending. Federal Reserve policy makers announced a second round of large-scale asset purchases in a bid to boost growth, even as recent reports showed larger-than-forecast gains in retail sales and manufacturing. Oil for December delivery settled at US$86.8 a barrel on the New York Mercantile Exchange. NAPHTHA In line with rising crude oil values, an upward trend in naphtha prices continues in Asia in the week of November 8, 2010. Open-spec prices for H1-December delivery rose by over twenty dollars to US$790/MT CFR Japan. Naphtha prices in Asia slip to a two-session low after reaching more than a two-year high on the previous day. Cracks were reported to have fallen on expectations of slower spot demand. Demand has slowed down because Taiwan's CPC and Formosa are unlikely to buy any further December parcels while South Korea's LG Chem is expected to buy one more cargo for H2- December arrival. Demand from European market was seen cooling off as the strike at refineries and ports in France ended late last week. ETHYLENE Ethylene prices plunged to US$985/MT in Asia in the week of November 8, 2010. Spot offers have fallen below the US$1000/ton mark for the first time since late August due to rising supply levels in both China and the Middle East amid lackluster demand. Although cracker operators complained that their operating margins have slipped into negative territory owing to stronger spot naphtha prices, most steam cracker operators have not moved to reduce operating rates yet as they continue to enjoy good margins on their propylene production.In anticipation of a correction in prices, most buyers preferred to wait and watch before concluding deals, despite further gains of downstream PE prices. PROPYLENE Strengthened by robust demand, an upward trend in propylene prices continues in Asia. Prices have risen to US$1175/MT levels in the week of November 8, 2010. EDC Despite tumbling ethylene values and weakening PVC market sentiments, EDC prices have stabilized at US$570/MT in Asia in the week of November 8, 2010. Offers from sellers were heard at the six hundred dollar mark amid restricted avails. PVC buyers are hesitant in purchasing beyond their needs due to sufficient stocks amid fewer orders coming from their end-product customers. VCM Amid tight supplies, VCM prices have edged up to US$890/MT in Asia in the week of November 8, 2010 despite weakening ethylene values and weaker PVC market outlook. PVC prices are expected to dip as sales are slowing down due to the approach of the low season. STYRENE MONOMER Despite a rise in feedstock benzene, Styrene monomer prices have dipped to US$1220/MT in Asia in the week of November 8, 2010, on lower offers from sellers. Some sellers have tried to liquidate cargoes at lower prices. Strong crude oil values have pushed up benzene prices to US$1240/MT in Asia for December shipment. POLYMERS POLYETHYLENES Despite plunging ethylene values, spot PE prices posted significant increases in China and gained ground in Southeast Asia, as per Chemorbis. Spot ethylene prices have lost US$170/ton over the past month on a CFR Northeast Asia basis. Spot offers have fallen below the US$1000/ton mark for the first time since late August due to rising supply levels in both China and the Middle East. Although cracker operators complained that their operating margins have slipped into negative territory owing to stronger spot naphtha prices, most steam cracker operators have not moved to reduce operating rates yet as they continue to enjoy good margins on their propylene production. The reduction in ethylene prices over the past two weeks has not prevented spot PE prices in China from posting rapid increases as traders and distributors build up their stocks in anticipation that the US Federal Reserve's decision to maintain a loose monetary policy will generate further inflation across the world economy. Limited PE supplies in China have also contributed to the run-up in prices, as traders and distributors exacerbate this supply shortage by restricting sales amounts in anticipation of firmer prices in the days ahead. HDPE HDPE prices have increased to US$1295/MT in Asia in the week of November 8, 2010 amid firm offers at the 1300 dollar mark. Limited PE supplies in China have also contributed to the hike, as sellers aggravate this supply shortage by restricting sales amounts in anticipation of firmer prices ahead. After concluding some deals at prices equal to their initial November offer levels, several Middle Eastern producers uprevised their November offers by US$30-50/ton as good demand from regular customers persists. Inside China, offers for domestic HDPE rose, but await acceptance from converters, who prefer to wait in the sidelines and are not willing to purchase beyond their immediate needs on concerns of passing the rising raw material costs onto their end product prices. LDPE Amid robust demand, LDPE prices have risen to US$1600/MT in Asia in the week of November 8, 2010. In addition to this ongoing general tightness, shutdowns on the part of several Southeast Asian LDPE suppliers have intensified the regional shortage. Inside China, offers for domestic LDPE film posted increases US$45-120/ton over the same period. However, converters are reluctant to conclude deals and not willing to accept these prices increases as they are concerned about their ability to pass rising raw material costs onto their end product prices. This has limited the rally in spot PE prices in Southeast Asia. LLDPE LLDPE prices have spiraled to US$1375/MT in Asia in the week of November 8, 2010 amid robust buying sentiments. Sellers have hiked offers to the 1400 dollar mark after successful conclusion of deals at US$1375/MT CFR China. POLYPROPYLENE Bullish input costs have propped up PP prices to US$1405/MT in Asia in the week of November 8, 2010. POLYVINYL CHLORIDE Amid lackluster market sentiments, PVC prices have stagnated at US$1000/MT in Asia in the week of November 8, 2010. In China, PVC prices have been following an upward trend for the last three months driven by tight supplies and rising production costs, as per Chemorbis. As the high season is fading, sentiments in China’s PVC market are beginning to shift, with some players, including a couple of producers, already admitting that they expect to see some softening in prices in December. The medium-term outlook is unclear especially after the Chinese Central Bank’s recent decision to raise interest rates. However, with the imminent winter season, as well as the upcoming year-end, which have already started to weigh down on end-product demand. PVC buyers are hesitant in purchasing beyond their needs due to sufficient stocks amid fewer orders coming from their end-product customers. POLYSTYRENE Despite falling SM prices, polystyrene prices have remained high at US$1375/MT in Asia in the week of November 8, 2010, amid raised offers from sellers. Local PS prices in China and Southeast Asia have moved higher over the past few days in line with rising styrene feedstock costs, as per Chemorbis. In the region's import markets, strong resistance from buyers has prevented PS prices from rising so far, with some sellers offering at the upper end of the import range even agreeing to price reductions of US$20-30/ton to speed up sales. However, with the most recent increases in feedstock styrene prices pushing theoretical GPPS production costs above the prevailing offer levels for GPPS, import sellers are likely to take a firmer stance on their offer levels in the days ahead. ABS As sellers raise offers, ABS prices have spiked past US$2100/MT in Asia in the week of November 8, 2010. December shipment ABS offers have been hiked by major suppliers in South Korea and Taiwan to hover below the 2200 mark.