Price trends of oil, polymer feedstock and commodity polymers in Asia for the week ended November 9, 2009

CRUDE OIL A marginal rise was seen in crude oil prices past US$77 per barrel in New York in the week of November 9, 2009. Prices rose mid week on release of data by the Energy Department showing a drop in crude-oil stocks in USA. But prices dipped to end the week a tad above last week’s levels. On Friday, crude for December delivery settled at US$77.4 on the Nymex, while Brent crude for December delivery dipped to US$75.8 in London. Oil prices plunged on figures of 10% unemployment rates reported in USA. Unemployment rate has crossed 10% for the first time since 1983. Even news of a likely interruption in oil production to be caused by forecast of tropical storms sweeping through the Gulf of Mexico over the weekend has not been able to lift oil prices. This is because of general sentiment that if job market is not strong, then the economy is not strong. Since millions of jobless no longer commute to work, gasoline demand has plunged in USA. NAPHTHA Naphtha prices have dipped marginally in Asia in the week of November 9, 2009 as crude oil markets weakened. Open spec prices for H1-December delivery dipped to US$685/MT CFR Japan. In an interesting development this week- Despite deal conclusion at premium of US$14/ton with CPC, Kuwait Petroleum Corp (KPC) has brought down premiums on term naphtha to US$13/ton. This is the first time the company has reduced premium to this level, despite being in a position to conclude deals at higher premiums. The latest offer has been accepted by three buyers. This unparalleled move could affect rival Abu Dhabi National Oil Co's (ADNOC) ongoing term talks, as it usually takes its cue from KPC. Despite a firmness in naphtha sentiments vs last month, buyers are on guard, as they will be bound into a 12 month deal at a time of uncertain demand and supply dynamics. ETHYLENE Limited avails have propelled ethylene prices in Asia to US$965/MT levels in the week of November 9, 2009. The region is faced with supply constraints due to a delay in arrival of cargoes from the Middle East along with the sudden outage at the 1100,000 tpa ethylene cracker at Marun Petrochemical. This cracker in Iran supplies to SE Asia and the sudden shutdown has affected supplies to this region. Buying intentions in the Far East remained at levels of US$900/MT, and sellers decided to move material to SE Asia in a bid for better price realization. Some FOB Korea deals were concluded at US$965-980/MT levels as a few cargoes from the Far East region were diverted towards this region. Overall, sellers hiked FOB Korea offers to the thousand dollar mark in SE Asia. PROPYLENE Propylene prices have dipped to US$1005/MT FOB Korea in the week of November 9, 2009. Prices have moved in line with falling crude and naphtha prices. EDC Supply constraints in Asia as deep-sea cargoes have started drying up; as well as rising costs of feedstock ethylene have pushed up EDC prices to US$395/MT in the week of November 9, 2009. FOB offers were hiked to hover around US$400/MT as buying intentions remained pegged about fifty dollars lower. VCM VCM prices have inched up to US$685/MT in Asia in the week of November 9, 2009 on limited avails in the region. The supply scenario is expected to ease somewhat on the restart of a 300,000 tpa VCM plant that was urgently shuttered for over 10 days in Taiwan. STYRENE MONOMER Styrene Monomer prices have spiked to US$1040/MT in Asia in the week of November 9, 2009 as feedstock benzene prices strengthened on optimistic demand and bullish market outlook. December shipment FOB Korea prices feedstock benzene rose by fifty dollars to US$825/MT and SM prices have risen correspondingly. POLYMERS HDPE HDPE prices moved up marginally to US$1225/MT in Asia in the week of November 9, 2009. Most November shipment CFR China offers for film grade rose to US$1225-1245/MT as the markets stabilized. Deals were concluded by sellers from Taiwan and South Korea about 10 dollars lower for film grade and at US$1205/MT for injection molding grade. Markets have begun to feel the effects of supply constraints in Thailand and Malaysia. Compounding this situation will be the planned shutdown for expansion of Haldia Petrochemicals’ PE plant in India and maintenance shutdown at Sharq in Saudi Arabia. LDPE As supply tightens, LDPE prices gained strength to US$1295/MT in Asia in the week of November 9, 2009. Amid supply constraints, outlook in the region continues to be firm on demand from agriculture and packaging sectors. Few November shipment deals were heard concluded by sellers in Singapore and Middle East in the range of US$1295-1325/MT CFR China. CFR China offers from Singapore were heard at US$1310/MT levels, while those from South Korea were heard about 20 dollars higher. LLDPE Tight supplies persisted in the region, pushing up CFR China prices to US$1250/MT in Asia in the week of November 9, 2009. Demand in the region continues to be robust. CFR China deals were concluded from the Middle East and USA at US$1240/MT levels, while offers from Singapore and South Korea were heard about 25 dollars higher. PE offers from USA have been very competitive on lowered prices of feedstock ethylene. POLYPROPYLENE Polypropylene prices moved up to US$1145/MT in Asia in the week of November 9, 2009 on robust market sentiments. CFR China offers from South Korea for yarn/injection grade moved up to US$1165/MT while buying intentions inched up to US$1130/MT levels in China. POLY VINYL CHLORIDE Polyvinyl Chloride prices have stabilized at US$845/MT in Asia in the week of November 9, 2009 as key sellers concluded November shipment deals amid weak buying sentiments in the region, particularly from China. Buying interest in China remained pegged at a pessimistic level below US$830/MT as domestic prices witnessed a marginal dip and CFR China offers for deep-sea PVC cargoes lingered around the 800 dollar mark. The market holds a cautious short term view in view of weak demand. POLYSTYRENE Despite rising feedstock SM prices, GPPS prices stagnated at US$1145/MT in Asia in the week of November 9, 2009 on lackluster buying. The markets await offers for next month that seem to have been held back on unenthusiastic buying sentiments in China. Sellers intentions have been pegged at US$1160-1165/MT levels, as buyers from China preferred to adopt a wait and watch attitude. There is a dearth of buyers inquiries that could pressure sellers to negotiate prices to ramp up sales. Hence prices could be pressured downwards. ABS Weak demand in the region, particularly from China, moderated prices to US$1445/MT in Asia in the week of November 9, 2009. In the absence of robust demand from China, limited CFR China deals were concluded at levels less than US$1450/MT. As feedstock costs have escalated pressurizing prices, sellers are looking to hike offers by 15-20 dollars for better realization. Despite low inventory levels, buying intentions seem to be pegged at US$1425/MT.