Price trends of oil, polymer feedstock and commodity polymers in Asia for the week of October 27, 2008

CRUDE OIL Crude oil prices have fallen by almost 8 dollars in the week of October 27, 2008. For December delivery per barrel o New York's main contract, light sweet crude dipped to US$64 and Brent North Sea crude fell to $US62. A robust cut in production by OPEC of 1.5 mln bpd, has failed to influence demand and lift oil prices-on growing fears of a global economic recession that has amplified concerns of declining energy demand. OPEC's production cut will come into effect on November 1. OPEC number two producer - Iran, is reported to have said that the cartel is likely to cut back further on production if the latest reduction does not stabilise crude prices. OPEC's decision to slash output would be reviewed at it's next meeting in Oran, Algeria, on December 17. NAPHTHA Naphtha prices had a drastic fall of almost forty dollars in the week of October 27, 2008. Asian naphtha prices fell to US$395/MT on falling crude values and deteriorating demand as major producers have announced either production cuts or shutdowns. ETHYLENE Ethylene prices in Asia dropped to US$500/MT in the week of October 27, 2008 on deficient downstream demand. Key processors in Asia, particularly China, rely very heavily on demand from the markets of the West. With deteriorating export demand as well as bearish domestic market sentiments, petrochem majors are saddled with high inventory levels. This has left them mulling options of reduced run rates and even plant shutdowns. High inventories coupled with deficient demand are exerting pressure on spot prices. PROPYLENE Propylene prices have dipped to US$500/MT in Asia in the week October 27, 2008 on almost inert demand. Asian petrochem majors have been faced with reduced downstream demand as exports deteriorate and domestic markets remain bearish, leading to inventory build up. This has left them mulling options of reduced run rates and even plant shutdowns, exerting pressure on spot prices. Propylene prices peaked around US$1850/MT in Asia in June 2008, dipped to US$1100/MT in the week of October 6, 2008 and currently hover around US$500/MT CFR China. STYRENE MONOMER A hundred and fifty dollar dip was witnessed in styrene monomer prices in Asia in the week of October 27, 2008. Feedstock benzene prices continued to dip, falling to around US$450/MT FOB Korea. As feedstock naphtha, ethylene and benzene prices tank, SM prices have dipped to US$700/MT FOB Korea. Very few deals have been heard concluded at these levels, and offers are expected to drop further. VCM As downstream PVC market sentiments remain bearish and deficient demand keeps prices low, VCM prices in Asia fell to US$650/MT in the week of October 27, 2008. Sellers prefer to wait and watch before they quote November offers in a bid to better gauge downstream market sentiments, even as buyers have expressed an interest at below the 600 mark. In plant news, Japanese producer Tosoh has decided to prolong a maintenance shutdown at its 400,000 tpa No.3 VCM plant. The plant has been shuttered since the first half of September and bearish market sentiments are ensuring a delay in its restart. EDC Reduced run rates at downstream plants and falling upstream ethylene values have kept EDC prices in Asia down. Prices have fallen to US$260/MT in the week of October 27, 2008, as bearish buyers prefer to wait and watch for a further price correction in line with deteriorating VCM, PVC and ethylene values. POLYMERS HDPE Under pressure from persistently slackening demand amid bearish market sentiments and sinking ethylene values, HDPE prices in Asia dipped by over 150 dollars to US$1025/MT in the week of October 27, 2008. As buyer demand remains muted, producers from Thailand and Malaysia have lowered CFR China offers below US$1050/MT. Despite this, buying interest fails to revive, and since buyers are scouting for offers at US$1100/MT, very few deals have been heard concluded. LDPE Pressured by a persistent lull in demand and pessimistic market outlook, prices of LDPE in Asia toppled by almost $150 to US$1200/MT in the week of October 27, 2008. CFR China offers were heard at US$1250, but deals were heard concluded for Malaysian cargoes about fifty dollars lower. Offers for South Korean material were also heard at similar levels. Demand from Chinese processors continues to be subdued, hence prices are expected to witness a further price downward correction. LLDPE LLDPE prices fell by over hundred dollars to US$1040/MT in the week of October 27, 2008 in Asia on unenthusiastic demand. Speculative CFR China offers for November shipment for LLDPE at US$1050-1100 did not find buyers. Buying intentions in the region seem to be pegged almost 50 or more dollars lower as cargoes from Iran were traded at US$940/MT CFR China. Incessantly falling naphtha and ethylene values have also added to market woes. Low key demand from Chinese processors is expected to persist, hence prices are expected to witness a further price downward correction. POLYPROPYLENE As feedstock propylene values tank, CFR China polypropylene offers in Asian market fell by almost two hundred dollars to US$890/MT in the week of October 27, 2008. November CFR China offers from South Korea were heard at the 900 dollar mark, while deals were heard concluded about twenty dollars lower, and general buying interest from China was heard another twenty dollars lower. News of November offers from Singapore was circulating at US$865/MT, while unenthusiastic buying has kept few deals at lower range of 800. PVC PVC prices in Asia have witnessed another price collapse, falling to US$800/MT in the week of October 27, 2008 on deteriorating export demand and bearish domestic market sentiments in China. Offers for next month have met with reluctance from buyers after conclusion of few deals at US$785/MT CFR China. As demand fails to pick up and market outlook continues to be pessimistic, buyers from China have expressed intentions almost 40 dollars lower. Weakened consumer demand worldwide has taken a toll on prices of all feedstocks and polymers. Demand from Chinese processors continues to be subdued, hence prices seem likely to witness a further price downward correction. GPPS As oil and feedstock naphtha and styrene monomer prices continue to soften, GPPS prices witnessed a hundred dollar drop in Asia this week. November shipment CFR China offers for GPPS were heard at US$1200-1250/MT, with deals concluded about 10-20 dollars lower. As demand continues to be subdued, buying bids have fallen to US$1150/MT CFR China. HIPS has also slipped by the same margin to US$1310/MT CFR Hongkong. ABS Price of ABS has plummeted to US$1725/MT in Asia in the week of October 27, 2008, on incessantly deteriorating demand from China and plunging input costs. Pessimistic market outlook in the continent has dampened offers from producers in South Korea and Taiwan by an additional twenty five dollars. Conclusion of deals at the 1700 mark and deficient buying from China has forced sellers to reconsider offers about fifty dollars lower.