Oil prices, that started the week at US$40, spiked as high as US$50 towards end of week. After briefly topping US$50 a barrel, oil prices dipped by almost five dollars on December 15, 2008, despite threats of production cuts from OPEC. After postponing a decision to reduce output earlier this month, OPEC members are sure to reduce output at a scheduled meet this week in Algeria. Few members are keen to cut production by 2 mln bpd - about 5% of OPEC production to boost prices, which have slumped from a peak of US$147 a barrel in July.
As crude oil prices gained, naphtha prices also moved in tandem in the week of December 15, 2008. Spiking by almost fifty dollars, open-spec naphtha for H1 January delivery closed at US$310/MT CFR Japan.
Ethylene prices propped up to US$430/MT in line with rising crude and naphtha values in Asia in the week of December 15, 2008 as well as on restricted supplies. Compounding the supply scenario is an unplanned shutdown at Lotte Daesan's 1,000,000 tpa naphtha cracker in South Korea.
Arrival of sizeable quantity of cargoes from USA and Europe has pulled propylene prices down to US$475/MT in Asia in the week of December 15, 2008. As news of more cargoes being loaded towards Asia form USA and Europe seeps in, the markets expect propylene prices to correct accordingly in the remaining weeks of the month.
Despite falling downstream prices, styrene monomer prices inched up in line with rising crude, naphtha and benzene values to US$545/MT in the week of December 15, 2008. Benzene prices spike by almost forty dollars in the week to US$330/MT in line with optimistic oil prices.
Decreased supplies due to reduced run rates at several key producers as well as increase in demand from China have propelled VCM prices to US$450/MT in Asia in the week of December 15, 2008. As demand continues to be dull in the region, VCM producers have slashed output in a bid to create supply constraints and prop up prices. Additionally, faced with higher input costs, carbide based PVC producers in China have reduced capacities, exerting demand on VCM based producers, resulting in enhanced demand from the region. After few deals were done at US$450/MT offers from Japan have increased by over sixty dollars.
As downstream VCM as well as PVC demand picks up in the region, and deep sea cargoes have currently dried up, EDC prices improved to US$115/MT in Asia in the week of December 15, 2008. If the invasion of cargoes from the West, particularly USA eases, EDC prices could be expected to recover in the remaining weeks of December.
HDPE prices have seen marginal movement since last week to US$835/MT in Asia in the week of December 15, 2008. Deals for this month shipment have already been concluded by most key sellers, hence a lack of transactions in the region have kept HDPE markets lackluster. CFR China offers continue to be heard at around US$835-850/MT. Prices are expected to pick up for January shipment as offers from Taiwan were heard about 25 dollars higher and from USA at approximately this week's levels. The market awaits offers from the Middle East.
As deals for this month shipment have been concluded by most key sellers, hence a lack of transactions in the region have kept LDPE markets stagnant. In the week of December 15, 2008, prices have remained at US$900/MT as the market awaits offers for January. Since price realisation in the region has improved over the past few weeks, traders are trying to move cheap European cargoes toward Asia for January delivery. However, as most buyers had suffered huge losses when prices tanked in the weeks of September 2008, they are still very cautious about taking longer delivery cargoes.
Like the other PE markets, LLDPE prices also stagnated at US$835/MT in Asia in the week of December 15, 2008 in the absence of transactions as the market awaits offers for next month. Though offers from Taiwan have been lifted by twenty five dollars, the market awaits deal conclusion.
Polypropylene prices in Asia dipped to US$775/MT in the week of December 15, 2008, as the markets await offers and bids for next month. Both buyers and sellers have not moved. December deals for yarn and injection grade that were concluded at levels around US$785/MT CFR China have started to recoil by about 20 dollars, as the market anticipates increased supplies in the month and retreating demand due to the advent of the week long Chinese Lunar Holidays in January.
PVC prices stagnated at US$620/MT in Asia in the week of December 15, 2008, despite January offers released by Asian producers from Japan, Taiwan and Korea. As buying bids remain at US$570/MT levels, CFR China offers from Japan have been heard at US$620/MT, while those from Japan and South Korea have been heard about ten dollars higher. The onset of the week long Lunar holidays in China in January could weaken prices in a couple of weeks, and has kept the buyers very wary of buying cargoes at current prices perceived to be higher.
Dual forces are in play in GPPS markets of Asia- on one hand restrained downstream demand has weakened market outlook, and on the other hand, optimistic upstream markets that has managed to maintain the price balance. GPPS prices in Asia have dipped marginally to US$695/MT in the week of December, 15, 2008.
Butadiene prices in Asia that have plunged this week, have tanked upstream ABS prices by over 70 dollars. December offers from Taiwan and South Korea are being heard at US$1140/MT CFR China, in the week of December 15, 2008 in Asia. After a few deals have been concluded marginally lower, CFR China buying intentions have been down revised by 25-30 dollars.