Petrochemical prices plunge sharply amid falling crude and demand

22-Oct-14

Petrochemical prices in Asia have dropped sharply amid tumbling crude values due to concerns about global growth and demand, as per Platts data. Front-month NYMEX crude settled down 6 cents at US$81.78/bbl on October 15 - a level last seen in mid-2012. ICE November Brent fell by over a dollar to US$83.7/bbl, almost a four-year low. Asian paraxylene fell by US$16/mt day on day to be assessed at US$1066.50/mt CFR Taiwan/China on October 15 -- a near four-year low. Asian PX prices have been falling since late September due to new PX startups in the region -- Jurong Aromatic's 800,000 tpa plant in Singapore and ONGC Mangalore Petrochemicals Limited's 900,000 tpa plant in India -- as well as weak feedstock naphtha prices. Due to the lower naphtha prices, operation rates at reformers will likely be higher which will result in increased PX supply, said sources. Naphtha was assessed at US$710.63/mt CFR Japan October 15, down US$33/mt day on day. The last time the marker was any lower was on June 25, 2012, at 707.25/mt CFR Japan, data showed. A weak downstream purified terephthalic acid market also pulled down PX, and although the peak winter demand season when polyester buying rises for New Year is approaching it has not improved PTA prices. Better run rates at PTA plants has not supported feedstock PX prices as demand was not enough to mop up excess PX supply. The higher PTA runs instead has lengthened PTA supply, lowering its price and in turn further putting pressure on PX, sources added. FOB Korea benzene fell to 27-month low on October 15 to be assessed at US$1075/mt. The last time the marker was assessed any lower was on July 2, 2012, at US$1071.50/mt, data showed. Asian benzene has been on a downtrend since mid-August this year as demand from the US eased amid increased cargo arrivals from Asia, and softer downstream styrene monomer and phenol demand. There has been a strong connect between the Asian and US markets this year due to an open arbitrage between the regions for most of 2014. As per Platts, Asian styrene monomer prices have also come under pressure due to weak demand from China's construction sector with markers falling 17.3% since the start of the year. The FOB Korea marker was assessed at US$1398.50/mt and CFR China at US$1425.50/mt on October 15, the lowest since August 1, 2012, when CFR China was assessed at US$1422/mt, and since July 31, 2012, when FOB Korea was assessed at US$1377.50/mt, data showed.