Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of November 10, 2008

CRUDE OIL Oil prices ended the week of November 10, 2008 on a slightly improved note, despite a volatile week. Light sweet crude for December delivery rose to US$62.9 on the NYMEX, after plunging marginally below US$60. Concerns of global economic recession has intensified as the International Monetary Fund's warning that advanced economies would shrink by 0.3% in 2009 for the first time since World War II, revising its previous estimates of 0.5% growth. The International Energy Agency predicts oil price to average US$100 from 2008 to 2015- a major adjustment from its forecasts last year, after a review of the outlook for production costs and demand. Reports have indicated that US gasoline stocks have spiked 1.1 million barrels last week, as against market expectations of a drop of 600,000 barrels. NAPHTHA Naphtha prices in Asia dropped below the 300 dollar mark. Naphtha continues to fall in line with dipping crude oil values and pessimistic market outlook that has taken a toll on downstream demand in the region. Open-spec naphtha values for H2 December shipment closed at US$295/MT CNF Japan. Since users who are saddled with huge inventories prefer to draw on their stocks to meet the needs of reduced production as they wait for demand to return to normalcy, demand for naphtha in Asia has taken a hit. ETHYLENE Ethylene prices have dropped below US$340/MT in Asia in the week of November 10, 2008. Prices failed to get revived despite production cuts by key producers, as lackluster demand in the continent pulls prices down by about twenty dollars. As demand continues to be subdued in Asia, particularly China, FOB ethylene prices have slipped to US$335/MT. In fact, poor price realization is compelling players to buy ethylene cargoes rather than process naphtha. This could limit a price dip in the near future despite persistent pessimistic market outlook. PROPYLENE Propylene prices in Asia have fallen below US$280/MT in the week of November 10, 2008. Prices did not perk up despite production cuts by key producers, as unenthusiastic demand, particularly from China, drags down prices by another twenty dollars. FOB propylene prices have dipped to US$275/MT. VCM Persistent lackluster demand from Asian buyers is compelling key producers in the region to offer material outside the continent, and has also led to a further price dip of hundred dollars in Asian VCM. VCM prices stand at their lowest level in about 6 years at US$400/MT CFR Asia. As demand from downstream PVC seems unlikely to rectify itself in the near future, several VCM makers have reduced run rates. EDC CFR Asia EDC prices have ebbed to US$115/MT in the week of November 10, 2008- plunging to ten year lows, triggered by lackluster end user demand. Demand from China continues to be very pessimistic due to falling domestic PVC values. EDC prices are estimated to fall further, along the lines of falling feedstock ethylene. STYRENE MONOMER FOB Korea Styrene Monomer prices moved up to US$555/MT in Asia in the week of November 10, 2008. Feedstock benzene rose to US$420/MT despite falling crude values. As feedstock benzene price pressures continue and end user demand from China continues to deteriorate, Styrene Monomer producers announced plant shutdowns earlier this week. Changzhou Do How Chemical and Jiangsu Shuangliang Lishide Chemical Co shut SM plants in China. This led to a marginal surge in prices that eventually simmered down, as demand from Chinese processors was almost absent. Despite falling prices, sellers were conspicuous by their absence. POLYMERS HDPE Persistent lackluster demand from Asia and deteriorating ethylene values have pulled down HDPE prices to US$765/MT in the week of November 10, 2008. CFR China offers for film grade for the month of November were heard at US$790-825/MT, but lackluster buying ensured that deals were concluded about forty dollars lower. As producers fear another price collapse, one of them liquidated cargoes even lower, bringing down buyer's bids to US$700/MT China. LDPE LDPE prices dipped to US$910/MT in Asia in the week of November 10, 2008. A hundred dollar dip was witnessed in prices on exceptionally downcast demand that shows no potential to pick up. CFR China LDPE for November shipment was being offered at US$1000/MT but was met with buying interest about 100 dollars lower, depressing prices a tad lower than US$900/MT. CFR China offers from the Middle East pegged at US$850/MT met with buying bids about hundred dollars lower. LLDPE LLDPE prices plunged to US$770/MT in Asia in the week of November 10, 2008. A hundred dollar dip was witnessed prices on extremely depressed demand and bearish market sentiments. CFR China LLDPE for November shipment was being offered US$800/MT - but was met with buying interest about 100 dollars lower, depressing prices further. POLYPROPYLENE PP prices in Asia have weakened below US$640/MT CFR China for November shipment in the week of November 10, 2008. Prices have dipped by hundred dollars this week, on a move by sellers to down revise offers in a bid to liquidate cargoes. CFR China offers for injection grade as well as yarn from South Korea hover around US$660/MT, and about fifty dollars lower from the Middle East. Even as seller's offers drop, Asian buyers seem buyers are wary of fresh purchases, in anticipation of a further price drop of hundred dollars in the near future. PVC PVC prices in Asia have dropped below US$600/MT in the week of November 10, 2008. Slow moving PVC sales in China due to subdued demand from buyers coupled with overstocked domestic producers, has pulled down prices. Despite lowered offers from domestic Chinese sellers, several Asian sellers are unwilling to reduce offers any further. Deals were heard concluded for CFR CMP delivery for prompt shipment, about 30-40 dollars lower. Persistent lackluster demand from the Asian buyers is compelling key producers in the region to offer material outside the continent. GPPS Pressured by persistent bearish market outlook due to lackluster buying from China and falling input values, GPPS prices have fallen to hover around US$910/MT in Asia in the week of November 10, 2008. Even at these price levels, very few deals were heard concluded as most buyers prefer to wait and watch for a further price correction as well as for demand from end users to pick up. ABS ABS prices in Asia fell to US$1450/MT in the week of November 10, 2008. Plunging values of butadiene and ACN - the feedstocks for ABS, along with shrunken demand from China and bearish market outlook, have brought down ABS prices in Asia. Apprehensive of prices heading further south, sellers are willing to liquidate their cargoes at much lower levels, reducing offers by about 50 dollars. LG Chem, Che Mei and Cheil Industries are operating plants at barely half the nameplate capacity.