Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of November 17, 2008

18-Nov-08
CRUDE OIL Crude oil futures dipped below US$56 in the week of November 17, 2008, as OPEC's plans of another output cut currently seem confounded amid a bleak economic scenario. New York's main futures contract, light sweet crude for delivery in December, fell to US$55.7 a barrel, while Brent North Sea crude for January dipped to US$53.4. Comments by OPEC president suggest that output will not be lowered again this month because the cartel members have not yet fully enforced previous quotas and need to collate more data before OPEC reaches a production cut decision. On demand side, besides slumping of the US and Japanese economy, the 15-nation Eurozone fell into recession for the first time ever, while government figures from Hong Kong showed the southern Chinese financial hub had also slipped into recession. NAPHTHA Despite deteriorating oil values, naphtha prices have recoiled in Asia in the week of November 17, 2008- mainly on firming demand. In fact, as H2 Dec delivery naphtha values rise above US$300/MT, and propylene demand picks up, several market players prophesize a market recovery. ETHYLENE Stagnancy marked the ethylene markets in Asia in the week of November 17, 2008. Monotony prevailed in ethylene markets as sellers did not down revise US$400/MT CFR Asia offers to buyer's expectations that are pegged fifty dollars lower. The outlook continues to be grim for Asian ethylene as several naphtha crackers are scheduled to come onstream in the Middle East. Asian producers, who have lowered run rates by 15-20% to bide deteriorating demand, seem unlikely to gain normal operating rates through 2009. A total of nine crackers will come on stream by 2009, of which more than 9 mln tpa of new ethylene production capacity will be in the Middle East and accelerate the decline of ethylene prices around the world. Hence ethylene markets will be faced not only with duller demand and oversupply, but also fewer plant turnarounds planned through next year. PROPYLENE Propylene prices strengthened by almost US$150/MT in Asia, as demand in China improved. FOB Korea December shipment propylene was up to levels of US$425/MT. After successful conclusion of deals at this level, sellers have raised offers by about twenty dollars to US$500/MT CFR China. VCM VCM prices in Asia have remained flat in Asia in the week of November 17, 2008 at US$400- still at their lowest level in about 6 years. Prices are forecast to elevate - demand from China is reviving as carbide based PVC from domestic producers becomes costlier because of high costs of feedstock carbide, and supply continues to be restricted due to reduced run rates at several VCM plants triggered by weaker production margins. EDC EDC prices have dipped to US$110/MT in Asia in the week of November 17, 2008 triggered by rising supplies from USA, amid rising prices of caustic soda in USA due to limited avails. Very few deals for EDC were heard concluded as the market remained lackluster, and increasing supplies seem to be acting on prices. STYRENE MONOMER Despite falling oil and benzene values, December shipment styrene monomer prices have crept up to US$565/MT in Asia in the week of November 17, 2008. As both buyers as well as sellers prefer to wait in the sidelines, very few deals were heard concluded this week. Feedstock benzene dropped to levels around US$355/MT as demand deteriorated. POLYMERS HDPE HDPE prices inched up to US$775/MT in Asia in the week of November 17, 2008. China, a key player in the world economy, has announced a US$586 bln economic stimulus package to boost its floundering economy- in turn boosting polymer demand. After successful conclusion of CFR China deals at US$775/MT, HDPE prices firmed by about twenty dollars, despite availability of cargoes lower than US$750/MT. As sentiments become firmer, buying intentions elevate to US$700/MT. LDPE LDPE prices have fallen to US$825/MT in Asia in the week of November 17, 2008, on quiet markets due to the cyclical nature of demand from the main sector- agriculture. CFR China offers dipped to US$800-840/MT as deals were concluded at levels of US$820/MT. Since HDPE markets have revived, LDPE prices, in all likelihood, may have bottomed out. Besides a recovery in HDPE prices, restricted supply in the region due to production cuts by major producers could assist price improvement. LLDPE LLDPE prices slipped to US$710/MT in Asia in the week of November 17, 2008, as demand from the main consumer segment- agriculture, will be subdued due to its cyclical lows. CFR China offers dipped to US$705-750/MT, even as few deals were concluded at levels of US$650/MT. POLYPROPYLENE Polypropylene prices in Asia have rebounded, rising to US$650/MT in the week of November 17, 2008, on rising propylene values and improved market outlook. PP sentiments revived in anticipation of an improvement in demand as a US$586 bln economic stimulus package has been announced by China to boost its floundering economy. Most CFR China offers from South Korea and Taiwan hovered around US$700/MT, and about fifty dollars lower for cargoes from the Middle East. Buying intentions continue to hover around US$630/MT. As demand in the region sees slight revival, Reliance Industries Ltd. has restarted one of its polypropylene lines at Jamnagar with a capacity to produce 250,000 tons, shuttered since the end of last month. PVC Quietude prevailed in PVC markets of Asia, stagnating prices at US$650/MT in the week November 17, 2008. Most deals for the month have been concluded and sellers prefer to wait and watch for effects of the economic stimulus package announced in China to set in, before they quote for December. Sellers lack the keenness to settle for low priced deals, in anticipation of a price improvement, even as dull demand from China persists. GPPS GPPS prices witnessed a hundred dollar fall to dip to levels below US$790/MT CFR China. The economic stimulus package announced in China has failed to lift demand and prices for polystyrene. As outlook continues to be pessimistic, CFR China deals were heard concluded almost fifty dollars lower than offers for GPPS and at US$900/MT for HIPS. ABS ABS prices have fallen to US$1360/MT in Asia in the week of November 17, 2008, as demand remains lackluster and feedstock butadiene and ACN values sink further. Sellers continue to quote offers at US$1390-1430/MT CFR CMP levels for November.
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