Price Trends of Oil, Polymer Feedstock and Commodity Polymers in Asia20 Jan 2011 • by Natalie Aster
In the week of January 17, 2011, benchmark oil for February delivery settled at US$91.5 on the Nymex, rising after government reports suggested that the US economy is gaining strength. It is reported that in USA, retail sales and industrial production rose last month. As per another report by the US Labour Department, consumer prices excluding food and energy rose just 0.1% last year, meaning that the risk of inflation is low. Brent crude settled at US$98.6 on the ICE Futures exchange in London. In its latest effort to curb inflation and restrain growth, China’s central bank raised the amount of money banks must keep on reserve. This led to oil price dip at the end of last week.
Naphtha prices have spiked to two week highs to US$875/MT in Asia in the week of January 17, 2011. Naphtha cracks surged to a week’s high of US$154/ton premium. A power outage at South Korea’s Yeosu has not had any major impact on the crackers' operations going forward, but is estimated to have caused some damage to some furnaces. The temporary shutdown due to the power outage had also forced South Korea's No. 2 refiner GS Caltex to temporarily shut its refinery with a 94,000 bpd residue fluid catalytic cracker (RFCC). Mid week, prices in Asia were at a two-session low to US$864, while cracks were at their lowest level in three months despite healthy demand from North Asia. Lower premiums were paid, reflecting an even softer market flooded with cargoes from India and the West.
Ethylene prices have spiked to US$1160/MT in Asia in the week of January 17, 2011 amid supply constraints and rising interest from derivative MEG sector. Post a sudden shutdown, South Korea’s Yeochun NCC (YNCC)’s 578,000 tpa No 2 cracker will continue to run at 85-90% for the next three months to facilitate repairs at the affected furnace. This has triggered supply concerns in the region, propping up offers for February shipment. Buying was lacklustre in SE Asia on inventories piled up for the next few weeks.
Propylene prices rose to US$1250/MT in Asia in the week of January 17, 2010. Prices have moved higher in Asia, Europe and USA: on tight supplies in Europe and USA, and in Asia because sellers began to look into the possibility of concluding export deals with buyers in America and Europe. As per Chemorbis, demand for Asian material from American buyers helped push spot propylene prices on an FOB Korea basis up by around US$60/ton this week while spot prices on a CFR China basis posted smaller increases of around US$15/ton as buyers inside China were hesitant to purchase in large amounts ahead of the upcoming Chinese New Year holidays
ETHYLENE DICHLORIDE (EDC)
Despite rising ethylene values, and strengthening PVC markets, ethylene dichloride (EDC) prices dipped to US$500/MT in Asia in the week of January 17, 2010.
VINYL CHLORIDE MONOMER (VCM)
Vinyl chloride monomer (VCM) prices fell to US$885/MT in Asia in the week of January 17, 2010, in line with falling EDC values.
Players in Southeast Asia are divided as to the likely direction of the market for February, with some buyers moving to top up their stocks in anticipation of further price increases in the weeks ahead while others are electing to remain on the sidelines in anticipation that demand will eventually prove to be insufficiently strong to support the recent increases announced by sellers, as per Chemorbis. Demand within the region has been better this month when compared with December, although players commented that trading activities are still a bit sluggish. Most converters reported normal demand for their end products, although they complained that they are having a difficult time reflecting their rising raw material costs onto their end product prices. Demand has also picked up in India, where several distributors report that they have been building up stocks in anticipation of seeing higher prices in February. However, there is some concern about the demand outlook for the Chinese market, where an early January rally in the PE market fizzled out this week as the lack of buying interest blunted sellers’ optimism. Demand is not expected to see much improvement in China over the short term as many converters reported that they will begin wrapping up their business ahead of the Chinese New Year holidays soon. Import PE prices continued to firm up in Southeast Asia this week as regional producers are announcing increases on their offers because they wish to enter the Chinese New Year holidays on a firm note even if demand has not quite caught up with their new offer levels yet. Prices have risen in line with rising input costs. Deal conclusion has been minimum for hand to mouth requirement, as downstream processors reduce run rates ahead of the week-long Lunar New Year holidays.
HDPE prices have inched up to US$1305-1310/MT in Asia in the week of January 17, 2010.
The overall import ranges on a CIF SEA, cash basis moved up US$5-30/ton for HDPE film this week. Done deals were reported towards the lower end of the overall ranges for all three products while sellers offering closer to the upper end of the ranges complained that their offers are not meeting with much interest from buyers, as per Chemorbis. In Thailand, offers for HDPE film grade firmed up by over US$30/MT, while demand remains sluggish in Malaysia due to the recent legislation banning plastic bag usage in some parts of the North.
LDPE prices have increased to US$1695/MT in Asia in the week of January 17, 2010. After successful conclusion of deals at this level, offers have been increased by 20-30 dollars. However, these high levels have not attracted any buyers.
Prices have moved up to US$1395/MT in Asia in the week of January 17, 2011. After successful conclusion of deals at this level, CFR China offers for February shipment were heard at US$1420/MT from Saudi Arabia, at US$1440/MT from the Middle East, above US$1500/MT from Thailand. However, no deals have been concluded at these levels. The overall import ranges on a CIF SEA, cash basis moved up US$20-80/ton for LLDPE film.
Polypropylene prices have firmed up to US$1500/MT in Asia in the week of January 17, 2011, on robust upstream costs amid limited availability. Demand has picked up fairly as compared with the past month, although buyers remain hesitant to purchase in large quantities as demand outlook post-Chinese New Year holidays remains dim, as per Chemorbis. Several converters report plans to stock some cargoes over the short term, adding that most find prices in their respective local markets to be more attractive than the prevailing import price levels. Homo-PP offers in the region’s import market moved up by US$50/ton on the low end and the high end of the overall range last week as producers and traders continued to revise offers higher in the face of stronger upstream costs and tight supplies. A major Southeast Asian producer began this week by lifting homo-PP prices by US$60/ton when compared with their latest offer levels while also increasing their PP copolymer prices by US$70-80/ton. Players had been expecting to see higher offer levels for Indian origins based on news that Reliance is planning to conduct a maintenance shutdown at its 1.1 mln tpa PP plant in Jamnagar in February. Although higher import offers have been meeting with resistance from buyers, import sellers commented that currently they intend to stand firm on their prices, given limited availability in the region. Asian PP markets are facing a situation of scarce supplies, on a series of plant turnarounds scheduled in Asia and the Middle East for H1. In Southeast Asia, players have been reporting widespread concerns about a further tightening in supplies following the Chinese New Year. In China, PP producers are considered to be taking a waiting stance due to thin market activity. The country’s import market saw few offers this week from overseas producers with only a couple of sellers offering Middle Eastern and Indian materials.
PVC prices have increased to US$1010/MT in Asia in the week of January 17, 2011 on elevated demand in China. As negotiations for next month loading intensify amid deal conclusion at higher levels, benchmark offers to China were quoted higher at US$1030/MT in line with robust feedstock prices. However, buying has been lacklustre as the buyers prefer to wait in the sidelines after the increase in offers. Market was relatively quiet as most buyers were still contemplating the offers, and interest remains pegged at the thousand dollar mark.
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