Week long National holiday in China prompts a drop in petrochemical prices in Asia

30-Sep-09

Asia has witnessed a drop in petrochemical and polymer prices on sluggish demand from China ahead of the week-long national holidays in the first week of October. Along with this, anticipated skepticism about a pick up in demand post-holidays and volatile crude markets; could lead to a prolonged fall in the absence of unclear market direction. Everyone is uncertain of the Chinese demand post-holidays, hence buyers are hesitant to purchase material in recent weeks. Buying activity came to a virtual standstill as processors continued with their wait-and-watch stance, despite strong demand fundamentals and very low inventory levels. The impact of the downtrend in China also echoed throughout Asia, creating anxiety among Indian and Pakistani polymer importers as per ICIS. Polyolefin prices in the region plunged by US$50-60/ton, also fortified by weakening feedstock prices. In India, end-users have been rejecting import offers as local producers have started offering material at lower prices early this month. Local producers also complained that the price cuts failed to attract many buyers, who may be anticipating prices to fall again next month. In Pakistan, high trader inventories and the emergence of low offers from Iran caused prices to plunge. Appetite for imported cargoes was blunted by easy availability of low-priced cargoes from traders.