Published On: Wed, Sep 12th, 2012

Platts: August petrochemical prices rise 7% on production costs

Platts: August petrochemical prices rise 7% on production costs

Platts: August petrochemical prices rise 7% on production costs

Prices in the petrochemicals market rose 7% to US$1,262 per metric ton (/mt) in August, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI). This is up from the July average of US$1,175/mt, which marked a 6.4% increase from the prior month. Despite a second consecutive month of increase, petrochemicals prices in August continued to trade well below year-ago levels, down 10% from August 2011.

“Stronger oil and naphtha prices continue to put upward pressure on petrochemical prices,” said Jim Foster, Platts Senior Editor of Petrochemical Analytics. “That trend was most obvious in the olefins markets, with both ethylene and propylene seeing a climb in production costs due to higher naphtha prices.”

Along with the higher production costs for some products, there was also market anticipation of a demand increase for other petrochemicals, mostly aromatics, notes Platts. Renewed interested in styrene and polystyrene was expected to provide increased demand for benzene, which is a raw input for styrene. However, benzene was the only product in the PGPI to lose value in August, down 3% to US$1,245/mt.

Seasonally, market observers anticipate an increase in demand for paraxylene as garment manufacturers use more polyester ahead of the winter clothing season. Paraxylene can be converted into polyester. Six of the seven components of the PGPI rose in August. Ethylene had the largest gain, climbing 15% to US$1,228/mt.

PGPI is a benchmark basket of seven widely used petrochemicals, ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the US.

In addition to PGPI, Platts has launched a weekly physical market price assessment for styrene butadiene rubber (SBR) starting from September 7. It follow on the 2011 introduction of the research company’s first rubber assessment, the natural rubber index, known as Platts RBX.