Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended August 17, 2009

CRUDE OIL Oil prices have dropped below US$67/barrel in the week of August 17, 2009, on falling equity markets in USA as investors get cautious of the slow speed of global economic recovery and possible renewal in energy demand. Additionally, data from Japan - the third largest oil consumer, indicates unsteady economic recovery. The US dollar rose against a basket of currencies as investors sought a safe haven away from commodities. August heralds the Atlantic hurricane season, but the concerns of possible damage to oil and gas production from the Gulf of Mexico, and related supply constraints have diminished due to ample crude stockpiles in the United States. NAPHTHA Naphtha prices in Asia have dipped slightly by the end of the week of August 17, 2009, as spot demand softens. Naphtha prices in Asia dipped to a week's low and naphtha crack spreads dipped to ten day lows on lackluster demand as most buyers including Taiwan's Formosa, South Korea's Honam Petrochemicals and Japan's Mitsui Chemicals have finished replenishing H2-September stocks earlier in the week, when prices spiked to about US$660/MT. Naphtha prices are expected to rise in the next few weeks as supplies from Europe have been curtailed since the arbitrage window has remained shut, as Europe struggles with limited supplies caused by refinery run cuts. Additionally, exports from India have dipped as a failed monsoon is expected to increase domestic naphtha consumption for power. ETHYLENE Ethylene prices in Asia have dipped to US$950/MT in the week of August 17, 2009 on pessimistic market sentiments. Increased supplies and anticipated arrival of cargoes from the West have brought down prices. Buyers have limited buying despite bullish downstream polyethylene markets in expectation of a price correction. PROPYLENE Restricted avails in the region coupled with robust market outlook, have pushed up propylene prices to US$1105/MT FOB Korea in Asia in the week of August 17, 2009. Sellers’ CFR China offers heard at about US$1150/MT, were met with resistance from the buyers who have pegged intentions about 10-30 dollars lower. EDC EDC prices in Asia have steadied at US$515/MT in the week of August 17, 2009 despite restricted supplies in the region. Seller’s offers for September shipment were heard at levels above US$550/MT CFR Asia as persistent supply deficiencies will not be addressed immediately on restricted advent of deep-sea cargoes. The markets is in a deadlock over deal conclusion as buying intentions are pegged lower than offers. VCM Lack of deal conclusion has stagnated VCM prices at US$725/MT in Asia in the week of August 17, 2009. A dearth of sellers offers and buying intentions have kept prices at a standstill for the fourth consecutive week. August shipment deals have been concluded and the market awaits buying for September shipment. STYRENE MONOMER As feedstock benzene prices sank by about fifty dollars, it brought down styrene monomer prices in Asia to US$1150/MT in the week of August 17, 2009. Benzene prices that spiked by robust margins over the past few weeks have dipped on unenthusiastic buying. Despite a drop in FOB Korea offers for September shipment to US$860/MT, very few deals have been concluded as buyers prefer to wait in the sidelines to observe price movement. POLYMERS HDPE Muted markets and lack of deal conclusion have steadied prices at US$1315/MT in Asia in the week of August 17, 2009. The market awaits offers from most key suppliers for September, but a few offers have been heard ranging at US$1315-1335/MT CFR China. Deal conclusion has been limited as most Chinese buyers wait for a price correction in line with dipping domestic prices. Buyers have expressed an interest to procure film grade at levels of US$1300/MT CFR China, while CFR China deals were concluded for deep-sea cargoes of injection grades at US$1205-1235/MT. LDPE LDPE prices have increased to US$1335/MT in Asia in the week of August 17, 2009. Though most key sellers have not yet quoted offers for September shipment, market outlook remains strong on restricted supplies in the region. Boosted by robust buying sentiments as agricultural film demand is near it’s peak in China, most producers are considering a hike in prices to US$1355/MT levels. LLDPE Increased demand from the agricultural sector coupled with supply constraints have propped up LLDPE prices in Asia to US$1315/MT in the week of August 17, 2009. After successful conclusion of deals at US$1310/MT for September shipment offers from South Korea have been hiked to US$1335-1355/MT CFR China. POLYPROPYLENE Persistently increasing costs of feedstock propylene have boosted polypropylene prices in Asia to US$1195/MT in the week of August 17, 2009. Seller’s offers are pegged above the 1200 mark, while deals have been concluded for end of August/early September shipment for yarn/injection grades abut 20 dollars higher. Next month offers have been hiked to range at US$1225-1240/MT CFR China. POLYVINYL CHLORIDE September shipment PVC offers were heard at elevated levels of US$925-930/MT in Asia in the week of August 17, 2009. Ethylene based CFR China PVC export price was hiked by producers from China to US$930/MT. Offers for next month from Japan were heard at about U$945-955/MT, and at US$935/MT from Taiwan. GPPS Persistently increasing feedstock values have exerted cost pressures on producers, pushing up GPPS prices to US$1225/MT in Asia in the week of August 17, 2009. Sellers from Taiwan and South Korea have up revised CFR China offers to US$1225-1245/MT, for which deals were concluded about 20 dollars lower. Even as feedstock costs have stopped rising this week, buyers may not see a drastic price revision as producers grapple to cope with tapered production margins. Offers for HIPS were heard at the 1300 dollar mark, and deals were concluded about 10-20 dollars lower. ABS Rising input costs continue to prop up ABS prices in Asia to US$1495/MT in the week of August 17, 2009. Additionally, an anticipated supply disruption due to Typhoon Morakot in Taiwan has triggered a revision of offers to US$1500-1545/MT CFR China. However, buying interest continue to be pegged lower, with deal conclusion about 30-40 dollars lower.
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