Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended August 24, 2009

CRUDE OIL Crude oil prices spiked to hover around US$74 per barrel in the week of August 24, 2009 amid growing optimism about a global economic recovery. An increase in energy demand is expected based on a statement by Federal Reserve Chairman that the US economy is reviving. In USA, the National Association of Realtors said that home resales posted the largest monthly increase in at least 10 years. A government report showed inventories in USA dipped to 15 month lows on reduced imports and increased refinery operating rates. In London, Brent prices increased to US$74.50 on the ICE Futures exchange. NAPHTHA Naphtha prices have shown movement contrary to oil price movement, with H2 September shipment dipping to US$645/MT CFR Japan. In the week of August 24, 2009, naphtha markets is Asia await a clear direction leading to soft demand in the region, easing Asian naphtha cracks. Naphtha prices in the region had gained momentum over the past few weeks because of reduced exports from Europe and USA. Europe has curtailed exports to Asia because of refinery run cuts and strong demand for naphtha to produce gasoline and petrochemicals. Though prices in Asia gained strength temporarily, there are many unsold cargoes in the market. As compared to August naphtha exports at 760,000 tons, India exported just about 750,000 tons of naphtha for September as the failed monsoon in the country has created a dearth of hydropower shortage and increased dependence of domestic generators on light fuel. This would add some pressure on buyers who hoped for extra supply from India, and are now looking to exports from the Middle East and China to help fill the shortfall. At current supply levels, Asia would have been short of an estimated 350,000 tons, but has managed to procure about 100,000 tons from Saudi Aramco for H1-September lifting from Ras Tanura and 60,000-62,000 tons for September lifting from China's WEPEC. Kuwait Petroleum Corp (KPC) has atleast 50,000 tons to offer for H2-September lifting. Demand is expected to revive as most South Korean petrochemical makers will need to replenish H1-October stocks. ETHYLENE Ethylene prices have moved up to US$955/MT in Asia in the week of August 24, 2009 in line with optimistic oil prices coupled with supply constraints. The region faces reduced supplies from Iran as power supply issues have compelled Iran's state-owned National Petrochemical Company to delay the restart of its Olefin-9 and Olefin-10 steam crackers with a combined capacity estimated to total to 2.32 mln tpa of ethylene. As a result, sellers from South Korea have hiked FOB Korea offers past US$975/MT. PROPYLENE Several cracker operators who had shuttered plants for scheduled and unscheduled maintenance have restarted plants, leading to increased supplies. Propylene prices in Asia have dipped to US$1095/MT in the week of August 24, 2009 on mounting supplies from Japan. Interestingly, CFR China offers from South Korean sellers that moved up to US$1200/MT was met with damp buying interest from China. This reluctance from buyers has pegged intentions down by almost hundred dollars for September shipment. EDC EDC prices in Asia have steadied at US$515/MT in the week of August 24, 2009 on constrained market movement. Propped by supply constraints, unlikely to ease shortly, sellers offers were heard at levels above US$550/MT CFR Asia. Unenthusiastic buying intentions are worsening and interest is beginning to wane. VCM VCM prices moved up to US$730/MT in Asia in the week of August 24, 2009, as market outlook gained momentum. The market awaits offers from sellers for September, but a revival in buying interest and rising PVC values have propped up prices about 5-10 dollars higher than last week. At a time when demand seems to be on a recovery path, supply may be restricted as a Japanese producer plans to shutter its 400,000 tpa VCM facility for 4 weeks maintenance. STYRENE MONOMER October shipment Styrene Monomer prices have dipped due to dipping feedstock benzene prices. FOB Korea prices have dipped to US$1120/MT in Asia in the week of August 24, 2009 as buyers and sellers prefer to wait and watch for further price correction before concluding deals. Feedstock benzene prices have dipped by almost forty dollars to US$815/MT in Asia on lackluster demand and bearish market sentiments. POLYMERS HDPE Lackluster market outlook pulled down HDPE prices in Asia to US$1305/MT in the week of August 24, 2009. CFR China offers from Taiwan for film grade rose to US$1330/MT and deals were concluded about 10 dollars lower. Subsequently, film grade material from South Korea being offered at US$1315/MT for next month, met with buyer’s pessimism that pulled down bids to hover around the 1300 dollar mark. LDPE Unenthusiastic outlook leading to dampening of markets has stagnated LDPE prices at US$1335/MT in Asia in the week of August 24, 2009. CFR China seller’s offers were pegged at US$1350 from South Korea, at US$1340/MT from the Middle East, at US$1330/MT from Malaysia. CFR China deals have been concluded at US$1325/MT. LLDPE LLDPE prices stagnated at US$1315/MT in Asia in the week of August 24, 2009. Deals for material from Taiwan were concluded at these levels, and a few deals were done about 5-10 dollars higher. Subsequently, September offers from South Korea moved up to US$1350/MT. POLYPROPYLENE Increased costs of feedstock propylene have pushed up polypropylene prices in Asia to US$1215/MT in the week of August 24, 2009. On successful deal conclusion at last weeks’ levels of US$1195/MT, most big players hiked CFR China offers to range between US$1225-1240/MT. CFR China offers for yarn grade in September from Malaysia ranged between US$1235-1255/MT, about ten dollars lower from South Korea. Buying intentions remain pegged at the 1200 dollar mark. POLYVINYL CHLORIDE PVC prices have stagnated at last week’s US$935/MT in Asia in the week of August 25, 2009 as major deals for September shipment were concluded at these levels. Waning demand from Chinese processors has pulled down domestic prices. As a result, buying intentions from China for imports have also deteriorated. Hence September shipment offers from Japan that were elevated to US$950/MT met with lackluster buying interest. POLYSTYRENE Falling SM prices failed to dip GPPS prices in Asia the week of August 24, 2009. GPPS prices stabilised at US$1225/MT on dull market sentiments and lack of movement in China. September shipment CFR China offers were elevated to US$1245-1265/MT, while deal conclusion was about 20 dollars lower. CFR China offers for HIPS grade elevated from last week’s levels to US$1340-1365/MT. ABS Rising costs of input butadiene continue to prop up ABS prices in Asia to US$1535/MT in the week of August 24, 2009. CFR China offers from Taiwan and Japan rose above US$1545/MT, and rose about 30 dollars higher from South Korea.
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