SUMMARY After nearing a record price of US$106 a barrel in the week of March 10, 2008, oil prices stabilized at US$105 at the end of the week. Naphtha prices rose in line with optimistic crude market. Ethylene and propylene prices have dipped on supply pressures. EDC prices have stagnated on reduced running rates at several VCM plants. Restricted supply, higher feedstock costs, and rising downstream PVC prices have kept VCM prices high. Styrene Monomer prices have dipped on weaker buying sentiments. HDPE price have steadied on reduced buying as buyers anticipate prices to stop rising. LDPE and PVC prices have risen on restricted supplies, LLDPE has risen as buying from China has picked up. GPPS and ABS prices have risen.
CRUDE OIL
After nearing a record price of US$106 a barrel in the week of March 10, 2008, oil prices stabilized at US$105 at the end of the week. Stability was achieved as investors reacted to a surprise drop in US crude supplies and a fresh drop in dollar values against the euro. OPEC's decision to maintain output and rising tensions on Venezuela's border have also supported prices. Most analysts had expected the U.S. Energy Department to report a rise in oil stocks last week for the eighth straight time. Instead, the stocks fell 3.1 million barrels. The EIA report and OPEC decision have fuelled a turmoil of investing in oil futures, as the falling dollar drew investors to the market.
NAPHTHA
Naphtha prices rose in line with optimistic crude market, in the week of March 10, 2008, even though end user demand continued on a weaker note. End user demand has seen a dip in the past few days as, affected by lean cracking margins, several of them have cut back on purchases as well as plant shutdowns. Formosa's 900000 tpa No.2 cracking plant will be closed for a little more than a week this month. Chinese Petroleum Corporation (CPC) is also considering scaling down operations at three of its cracking plants.
ETHYLENE
Ethylene prices have recorded a further sharp drop to US$1200/MT in Asia in the week of March 10, 2008, mainly due to growing supply across the Asian region coupled with reduced buying. The supply pressure has been strong despite reduction in operating rates by several naphtha crackers, as interest from buyers continues to wane and be restrained. As profit margins get smaller due to the difference between feedstock naphtha price and ethylene price realisation, crackers in Asia plan to lower operating rates. Formosa's 900000 tpa No.2 cracking plant will be closed for 7 to 10 days this month. Chinese Petroleum Corporation (CPC) is also considering scaling down operations at three of its cracking plants. Users in Taiwan continue to have high ethylene stocks, hence they are unwilling to purchase spot ethylene cargoes offered in the range of USD1170-1180/MT CFR China.
PROPYLENE
Propylene prices have dipped to US$1150/MT in Asia in the week of March 10, 2008, as the Asian region continues to be well supplied. Suppliers from South Korea, intending to sell at US$1200/MT FOB Korea levels, have met with resistance from the buyers, who are not willing to consider prices above US$1150/MT CFR China.
EDC
Reduced running rates at several VCM plants has led to subdued downstream EDC demand. EDC market remained lackluster in Asia in the week of March 10, 2008, as a gap existed between selling ideas and buying intentions. Offers from most sellers remained unchanged at the level of US$450/MT, while buying interest was pegged at US$420/MT CFR China.
VCM
Restricted supply across Asia and higher naphtha feedstock costs, as well as rising downstream PVC prices, have taken their toll on VCM prices. VCM prices continued on their uptrend in Asia, rising to US$860/MT in the week of March 10, 2008. Anticipated offers for March shipment from Japan have been sharply hiked to US$900/MT levels, taking prices at least seventy dollars higher than February levels. Though buyers from China have not yet commenced price negotiations, it is estimated that prices for March will find stability at US$860/MT CFR China. This represents a fifty dollar rise that corresponds with the rise in PVC values.
STYRENE MONOMER
Styrene Monomer prices slipped to US$1435/MT in Asia in the week of March 10, 2008 on weaker buying sentiments. Sellers continued to offer material at US$1445/MT levels, but were met with resistance from buyers who were not willing to buy above US$1425/MT level. Feedstock benzene prices in Asia slipped on weaker buying interest to US$1080/MT this week, despite bullish crude oil market.
POLYMERS HDPE
Anticipation of a halt in further price gain by buyers has led to lackluster market for HDPE in Asia in the week of March 10, 2008. HDPE prices in Asia stagnated at US$1670/MT as most buyers in China preferred to wait and watch for prices to dip. A forty dollar gap existed between sellers offer prices and final prices at which deals were concluded.
LDPE
Limited availabilities in the Asian region have kept LDPE prices firm at US$1790/MT in the week of March 10, 2008. Supplier offers for March, that continue to be on a buoyant note, have met with resistance from buyers. Buyers have forced deals from Middle East as well as South Korea to be concluded at prices almost twenty dollars lower than selling intentions.
LLDPE
Relentless demand from buyers in China has kept LLDPE market outlook positive. LLDPE prices have risen to US$1660/MT in Asia in the week of March 10, 2008 on steady demand from buyers.
PP
Polypropylene prices have steadied at US$1500/MT in Asia in the week of March 10, 2008. Lower inventory levels have kept demand from China continually firm.
PVC
Propped by restricted supplies and mounting upstream VCM costs, polyvinyl chloride prices in Asia have risen to US$1100/MT in the week of March 10, 2008. Supply in the Chinese market has been badly as domestic producers have been forced to shut down plants on account of rising production costs of feedstock carbide, electricity and mounting salary levels. Some deals were concluded at US$1090/MT levels, and March cargoes from Japan and South Korea have been sold up to USD1100/MT CFR China level with L/C usance terms.
GPPS
GPPS prices in Asia spiked to US$1455/MT in the week of March 10, 2008 as higher feedstock SM prices continue at robust levels. Faced with rising cost pressures, offers from major suppliers from South Korea and Taiwan for March were heard at US$1490/MT CFR China. In China, the producers are in a dual mode; downstream users have been restricted by cost pressure, tight cash flow and power supply shortage, whereas the producers have benefited from appreciation of the RMB currency against the US dollar, opening up avenues for accepting export orders.
ABS
ABS prices rose to US$1810/MT in Asia in the week of March 10, 2008. Most offers from suppliers from the Far East that steadied at US$1830/MT levels, were initially met with buyers resistance. Several buyers were reluctant to buy at levels above US$1800/MT, but changed their stance upon conclusion of deals at US$1790/MT CFR China level. Recovering demand is anticipated to keep prices at levels above US$1800/MT.
