Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended June 14, 2010

CRUDE OIL Crude oil prices have risen to hover around US$75 in the week of June 14, 2010. Monday ushered in strong crude oil prices in Asia but high inventory levels keep market sentiments bearish. Crude-oil futures have been propped up by higher equity markets in Asia, amid a stronger euro that was seen rising to its highest level in 10 days vs the greenback. Broad gains in Asian equity markets followed Friday's mild gains on Wall Street and an improvement in US consumer sentiments. However, analysts continue to be pessimistic about the near term direction of oil prices. High oil inventories that pushed the oil market below US$75, are likely to continue unless the euro strengthens further. NAPHTHA Naphtha prices have strengthened in line with rising oil prices in the week of June 14, 2010 in Asia, amid lackluster demand and abundant supplies. Open spec naphtha prices have risen by over 20 dollars to US$670/MT CFR Japan. Weak petrochemical margins and ample arbitrage supplies have affected premiums realized by sellers. Premiums realized by Kuwait Petroleum Corp on full-range naphtha for August 2010 to July 2011 loading to Asian buyers have been lower. ETHYLENE Despite persistently falling downstream Polyethylene prices, July shipment ethylene prices have steadied at US$950/MT in Asia in the week of June 14, 2010. Spot ethylene prices in Northeast Asia and Southeast Asia were largely unchanged over the past week after posting declines of US$350-370/ton in May. Players in China and Taiwan are away due to public holidays, leading to slowdown in trading activity through the first half of the next week. Players in other countries keenly observe cracker operating rates in Asia and the Middle East to guess the likely direction of the market in the short term. Though some sellers anticipate the market to find support from lower operating rates, others predict a further downtrend as new capacities start up. Start up of Borogue 2 cracker with an ethylene capacity of 1.4 mln tpa has been delayed from mid-June to late-June. Indonesia’s Chandra Asri has reduced operating rates at their 600,000 tpa cracker in Indonesia to 80-90% of capacity for an indeterminate period of time owing to negative operating margins. Thailand's PTT Polyethylene expects to decrease run rates by 5% from May at its steam cracker in Map Ta Phut. This will bring down operating rates to an average of 60% for June at the cracker with nameplate capacity of 1 mln tpa ethylene and 25,000 tpa propylene. Mitsui Chemicals is planning to shut 450,000-500,000 tpa of ethylene capacity from June 21 to July 26 for maintenance. New capacities that have come onstream include Sinopec Zhenhai’s 1 mln tpa cracker, while South Korea’s YNCC is planning to bring its 465,000 tpa No. 3 cracker back on-line later this week following some maintenance and capacity expansion work. PROPYLENE Propylene prices have dipped to US$1070/MT in Asia in the week of June 14, 2010 amid weak derivative markets. Market outlook has softened despite planned propylene shutdowns in the region. The propylene plants scheduled for shutdown in May, June, July are Nippon Oil’s three plants in Japan, Mitsubishi’s three plants in Japan, S.Oil and SK Energy’s plant in South Korea. EDC As feedstock ethylene continues to be weak, and derivative markets continue to be lackluster, limited deals have been concluded in the region. EDC prices have fallen to US$475/MT in Asia in the week of June 14, 2010. VCM Gloomy demand outlook from downstream PVC markets has resulted in limited deal conclusion for VCM in the region. VCM prices have dropped for the third consecutive week, falling to US$785/MT in Asia in the week of June 14, 2010, after sellers refused to adjust offers throughout most of May. STYRENE MONOMER Lackluster buying sentiments have brought down Styrene Monomer prices to US$1060/MT in Asia in the week of June 14, 2010. Feedstock benzene prices have also fallen to US$810/MT levels. Despite falling July shipment offers, deals were not concluded as FOB Korea buying intentions remained pegged at US$1050/MT. POLYMERS HDPE HDPE prices have weakened amid limited deal conclusion to US$1125/MT in Asia in the week of June 14, 2010. Despite steadily reducing purchases, several Chinese traders are stuck with high stock levels they are unable to sell locally as demand weakens. On the lookout for alternative outlets for their excess stocks, some traders claim to have concluded deals with customers in South Africa, Brazil and Southeast Asia. Supply of domestic material has also been rising in China, where several large new capacities have come on-line in the first few months of 2010. May has seen the start-up of Zhenhai Petrochemical’s new 450,000 tpa HDPE/LLDPE plant and Sinopec Tianjin’s new complex with HDPE and LLDPE capacities of 300,000 tpa each. Most offers have been heard at US$1145/MT levels, but limited buying interest has kept prices about twenty dollars lower. LDPE LDPE prices have fallen to US$1335/MT in Asia in the week of June 14, 2010, mainly due to lackluster demand amid yet another fall in domestic prices in China. Despite a steady reduction in purchases, several Chinese traders seem to be burdened with high stock levels they are unable to sell locally as demand and prices weaken. Traders have suffered significant financial losses on unsold cargoes in their warehouses, as customers begin to break their own contractual agreements and have started to refuse additional deliveries. LLDPE Restrained demand amid steadily falling domestic prices in China have pulled down LLDPE prices to US$1175/MT in Asia in the week of June 14, 2010. Demand and prices are weakening in China as new capacities come onstream at a time of muted demand. New capacities that have come on stream in China in May alone are Zhenhai Petrochemical’s new 450,000 tpa HDPE/LLDPE plant and Sinopec Tianjin’s 300,000 tpa LLDPE unit. POLYPROPYLENE Polypropylene prices have fallen to US$1215/MT in Asia in the week of June 14, 2010 amid feeble demand from China. Despite successful conclusion of deals for this month at US$1225/MT levels, buying interest continued to be largely pegged at the 1200 dollar mark. This has led to yet another downward revision in sellers offers by 10-15 dollars. POLYVINYL CHLORIDE Polyvinyl chloride prices have fallen to US$940/MT in Asia in the week of June 14, 2010 as the market awaits offers for next month shipment, amid pessimistic outlook and weak demand. Demand has been particularly slothful in China where domestic prices continue to dip by over 100 yuan. POLYSTYRENE Lackluster demand leading to limited deal conclusion has softened GPP prices to US$1200/MT in Asia in the week of June 14, 2010. Most sellers quoted CFR China offers at US$1250/MT levels, but the markets lacked deal conclusion amid low buying interest. CFR China HIPS prices were evaluated at US$1300/MT. ABS A downtrend in ABS prices continues, with prices falling to US$1880/MT in Asia in the week of June 14, 2010 in line with weaker upstream costs and dull demand in the region.
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