Following oil price declines, prices in global petrochemicals market fell for first time in 5 months

17-Aug-15

Prices in the US$3 trillion-plus global petrochemicals market fell for the first time in 5 months in July, following the decline in the energy complex, according to the just-released monthly Platts Global Petrochemical Index (PGPI). Petrochemical prices, expressed as a monthly average, fell US$91 per mt from June to US$1013/mt in July. The last time global petrochemical prices fell on a monthly average was January of this year, when prices fell 14% to US$850/mt The PGPI is a benchmark basket of seven widely used petrochemicals and is published by Platts, a leading global provider of energy, petrochemicals, metals and agriculture information and a top source of benchmark price references "With crude oil prices down 9% and naphtha prices down 14%, there really wasn't anywhere for petrochemical prices to go but lower," said Jim Foster, head of analysis for petrochemicals and agriculture at Platts, a leading global provider of energy and commodities information and benchmark price assessments. "Crude oil is now below $50 per barrel. That ripples through the petrochemical feedstock market, lowering the cost of production for everything from aromatics to polymers." On average, crude oil prices were down US$6 per barrel in July from June, a drop of 9%. Naphtha prices were down 52 cents/gal, or 14%. Olefins prices tend to track naphtha prices since naphtha is the most widely used cracker feedstock worldwide. OLEFINS Prices of olefins were lower last month. Propylene, which can be made at both the refinery and the cracker, slipped 11% to US$819/mt in July, down US$103 from June. Ethylene, which is primarily produced at crackers, fell 12% to US$1044/mt in July, down US$141 from June. Polyethylene and polypropylene were both lower in July. Global polyethylene prices fell 5% to US$1435/mt, while polypropylene prices fell 7% to US$1312/mt. AROMATICS Prices of aromatics were also lower last month. Toluene posted the largest drop, falling 5% to US$780/mt in July, down US$43 from June. Benzene prices fell 1% in July to US$814/mt, down US$10 from June. Paraxylene, the final aromatic included in the PGPI, was down 3% in July to US$869/mt, down $25from June Petrochemical prices moved opposite of the global equity markets in July. The Dow Jones Industrial Average advanced 1% while The London Stock Exchange Index (FTSE) climbed 3%. The NIKKEI 225 was up 2%