Price trends of oil and commodity polymers in Asia for the week ended March 16, 2009
Crude oil for April delivery rose to US$48.14 a barrel on the Nymex over the weekend, after rising on the previous day, by almost US$5 to US$47 – the most since February 19. Crude oil prices moved up for the second consecutive day on the eve of OPEC meet to consider a production cut in Vienna on March 15.
The International Energy Agency has slashed oil demand forecast for 2009 for a seventh month, a decline that will be matched by lower non-OPEC supply. OPEC has also reduced its 2009 oil demand forecast by 520,000 bpd to 84.6 mln bpd. Since the global market is oversupplied, few members of OPEC seem to be in favour of lowering production, while others seem to favour to halt reductions. Several feel that OPEC may choose to enforce existing quotas rather than cut output further.
As crude oil prices lingered in the high 40′s, naphtha prices in Asia also continue on their uptrend in the week of March 16, 2009. Open-spec naphtha for H2-April delivery closed at US$410/MT CNF Japan.
In the week of March 16, 2009, Taiwan’s Formosa Petrochemical Corp will resume operation of its No.1 naphtha unit after a similar attempt earlier led to an explosion at the 700,000 tpa unit in early March. The 700,000 tpa No. 1 plant has been shut since January because of weak demand. Once the No. 1 unit successfully resumes production, Formosa plans to proceed with an overdue maintenance at its No.3 unit, as well as to repair a mechanical fault for about 15 days. Prices have been affected in Asia due to supply concerns caused by unplanned shutdown of Shanghai Secco’s 900,000 tpa naphtha cracker due to mechanical glitches and problems at Formosa. Offers in the week moved above US$600/MT FOB Korea against buying bids about 10 dollars lower.
A hike of almost twenty dollars was recorded in propylene values in Asia in the week of March 16, 2009, pushing prices for next month shipment to US$700/MT FOB Korea. Supply concerns that arose in the markets after the sudden outage at Shanghai Secco’s 900,000 tpa naphtha cracker due to mechanical glitches, have pushed offers up to US$770/MT CFR Far East. Buying interest however, continues to be weaker with bids hovering 25-30 dollars lower. Supplies are expected to moderate with the estimated restart this week of GS Caltex’s 200,000 tpa plant after a one and half month shutdown.
Robust downstream demand continuing for several weeks in Asia along with benzene prices that have vaulted by fifty dollars in the week have propelled Styrene Monomer prices to US$855/MT FOB Korea in the week of March 16, 2009. Upbeat market sentiments has boosted buying intentions to US$845/MT, but are being met with reluctance on the part of the sellers to conclude deals, in anticipation of better price realization next week. Deals for April shipment feedstock benzene were concluded at US$450/MT FOB Korea, along with news of moderate stability in the US benzene and SM markets.
In the absence of seller’s offers for April shipment, VCM markets have been quiet in Asia in the week of March 16, 2009. Prices have remained at last week’s US$590/MT in the absence of moves from sellers who await a market direction. As buying interest from PVC makers is pegged about 25-30 dollars lower, in all likelihood, prices are expected to slip in line with falling prices of derivative PVC.
Stagnating at US$210/MT in Asia in the week of March 16, 2009, the EDC market waits to pick up momentum. Currently, both buyers as well as sellers have adopted a wait and watch policy, hence there is a dearth of sellers offers for April shipment. Buyer’s sentiments weaken as derivative markets weaken, pulling down bids for next month by about 10 dollars. Sellers however, seem unwilling to relent, and continue to quote about 20-25 dollars more than last week.
Lackluster operations in HDPE markets of Asia has stagnated prices at US$935/MT in the week of March 16, 2009. Sellers await interest from buyers, and have not yet quoted for April shipment. Few sellers in Asia as well as from Middle East have offered film grade material at US$970/MT CFR China. After the successful conclusion of deals at US$955 levels, April cargoes from Taiwan were heard about 30-35 dollars higher. As buying interest seems to be dwindling, prices could slide in the next few weeks.
Despite peak demand season, LDPE markets saw minimum movement and prices hovered around US$975/MT in Asia in the week of March 16, 2009. Miniscule deals were concluded this week, stagnating CFR prices as bids remained at US$960-970/MT, while CFR China offers from South Korea were heard above the 1000 dollar mark.
Sound demand from the Chinese agricultural sector has propped up prices to US$995/MT in Asia in the week of March 16, 2009. CFR China April shipment offers are hovering around the 1000 dollar mark, with deal concluded at US$1010/MT CFR by a Taiwanese producer, even as other producers have gauged CFR China offers at US$1000/MT.
As propylene prices surge in Asia, derivative PP prices have also moved in tandem, rising to US$885/MT in Asia in the week of March 16, 2009. Few sellers have hiked CFR China offers to US$925-950/MT. Propylene prices are estimated to moderate in the coming weeks, which in turn could stabilize PP prices.
PVC prices in Asia have been stationary at US$675/MT in the week of March 16, 2009, pausing as speculative offers for April were awaited. Though dialogue is on to decide April offers, an official announcement is awaited, making offers and bids conspicuous by their absence in the market. Offers are estimated to dip by 10-20 dollars by few participants, while sellers seem hopeful of a marginal increase.
Offers for GPPS have been raised due to higher production cost. Prices have spiked in tandem with SM prices to US$910/MT in Asia in the week of March 16, 2009. CFR China offers spiked to US$900-935/MT from the Fareast and about US$915-935/MT from Taiwan, however deals were concluded about 30-35 dollars lower.
Rising feedstock costs have pushed ABS prices for April shipment to US$1175/MT CFR China in the week of March 16, 2009. Offers from South Korea as well as Taiwan were heard about US$1180-1200/MT.