Petrochemical prices continue 2Q declines on lower oil prices

Continuing the decline begun in early second quarter, prices in the US$3 trillion plus global petrochemicals market fell in June to an average of US$1104/mt for the month. June's average price is down US$175 or 14% from the May average, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals. June's 14% month-on-month price drop is the largest one-month percentage decline in global petrochemical values since November 2008, when prices fell 38% following the start of the global recession in mid-2008. It follows an 11% decline in the monthly average in May and is down 20% from the June 2011 average. "The price drop in crude oil and naphtha that began in March triggered a knock-on decline in global olefins prices, with propylene and ethylene both dropping about 30% since mid March," said Jim Foster, Platts senior editor of petrochemical analytics. "While the rebound in crude oil and naphtha the last two weeks appears to be helping olefins bottom out, any olefins price rebound will be tempered by continued weak demand and rising inventories." During the last week of June, the Platts global naphtha index climbed 10%, while crude prices climbed 7%. During that same period, global ethylene and propylene prices gained less than one percent. All seven components of the PGPI were lower in June on a month-on-month, average monthly price basis. Ethylene showed the largest loss, falling 21% from May. Paraxylene prices were down 16% compared to the May average, while propylene prices fell 14%. In the polymer markets, low-density polyethylene values fell 13% and polypropylene prices were down 10%. The global toluene index in June fell 8% and benzene values fell 2%. June's PGPI components continued to fall despite slight gains in global equity markets. Through June, the Dow Jones Industrial Average (DJIA) climbed 4%, while the Nikkei 225 and London Stock Exchange Index (FTSE) both climbed 5% during June.
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