Global petrochemicals price slip nearly 1% in December

Prices in the US$3 trillion plus global petrochemicals marketplace slipped nearly 1% to US$1161/mt in December, as per the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals. This compares to a November PGPI monthly average price of US$1162/mt. The somewhat sideways price trend is largely attributed to the typical end-of-year slowdown in the petrochemical markets. Historically, liquidity tends to thin ahead of the holiday season. On an annual basis, the December 2011 PGPI average was down 6.9% from the same period in 2010. The largest drop was seen in propylene, which fell 6% to US$1057/mt, down from US$1125/mt in November. That drop in propylene was felt in polypropylene prices, which fell 5% to US$1350/mt, down from US$1420/mt in November. The largest gain in December was in the global benzene index, which climbed 10% to US$1033/mt, up from US $940/mt in November. Ethylene prices also were significantly higher, climbing more than 4% to US$1121/mt, up from US$1074 /mt in November. In December, global petrochemical markets traditionally see a drop in liquidity ahead of the holiday season. This is due to US inventory levels typically being reduced ahead of the New Year as companies try to decrease their end-of-year inventory taxes. In Asia, petrochemical converters also work through their inventories ahead of the Lunar New Year holiday, which this year starts on January 23, 2012. Despite the December lull, the January PGPI monthly average price has historically been stronger as companies restock following the New Year. Since the PGPI was introduced in 2007, the January PGPI price has averaged 10% greater than the previous December.
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