August petrochemical prices rise 7% on production costs

07-Sep-12
Prices in the US$3 trillion-plus global petrochemicals market rose 7% to US$1262/mt) in August, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals. This is up from the July average of US$1175/mt, which marked a 16% increase from the prior month. Despite a second consecutive month of increase, petrochemicals prices in August continued to trade well below year-ago levels, down 10% from August 2011. “Stronger oil and naphtha prices continue to put upward pressure on petrochemical prices,” said Jim Foster, Platts senior editor of petrochemical analytics. “That trend was most obvious in the olefins markets – with both ethylene and propylene seeing a climb in production costs due to higher naphtha prices.” Along with the higher production costs for some products, there was also market anticipation of a demand increase for other petrochemicals – mostly aromatics. Renewed interested in styrene and polystyrene was expected to provide increased demand for benzene – which is a raw input for styrene. However, benzene was the only product in the PGPI to lose value in August, down 3% to US$1245/mt. Seasonally, market observers anticipate an increase in demand for paraxylene as garment manufacturers use more polyester ahead of the winter clothing season. Paraxylene can be converted into polyester. Six of the seven components of the PGPI rose in August. Ethylene had the largest gain, climbing 15% to US$1228/mt.
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