Olefin Prices in Asia Decline during China Holiday
OREANDA-NEWS. October 17, 2012. Fluctuating oil prices pushed spot naphtha prices down in Asia on the week creating a downwards pressure on olefins prices in the region, as per ChemOrbis. At the same time, the absence of Chinese players due to their National Day holiday over the past week hindered demand from downstream markets.
On the Nymex, crude oil futures for November deliveries constantly fluctuated in the period and closed the week below the USD 90/barrel threshold, ending up with a loss of around USD 2/barrel week over week. Energy prices tumbled more than USD 5/barrel since the beginning of September. Spot naphtha prices slid nearly USD 15/ton on CFR Japan basis in Asia with respect to the previous week.
They indicated a USD 35/ton fall from the levels reported in early September. Apart from the weaker upstream chain, players’ general waiting stance to see the post holiday market scene in China also weighed down on spot propylene and ethylene costs in Asia. After closing September on a firm note, the spot ethylene market edged down by around USD 5/ton both on CFR Northeast Asia and Southeast Asia basis when compared to the previous week. However, propylene prices posted larger drops when compared to ethylene costs due to an unexpected capacity excess that occurred in Asia.
Spot propylene offers were down USD 50/ton on FOB South Korea basis on the week, bringing the cumulative fall to USD 75/ton with respect to early last month, as per ChemOrbis. The main trigger behind growing availability was an unexpected shutdown at an acrylic acid plant of Nippon Shokubai in Japan. The company reportedly shut the 460,000 tpa plant following a serious explosion at the end of September. The plant is known as the largest production facility in Asia for this product, market sources underscored, adding that the shut production caused ample supply for propylene, the feedstock for acrylic acid. This led to propylene sellers stepping back from their prices to sell their cargoes. Sources commented that several Japanese producers were mulling over cutting their operations at their crackers in a bid to balance increased propylene supplies.
As Chinese players started to return from holidays this week, players in global monomer and polymer markets will be closely tracking the developments in this major market. According to initial reports, the post holiday period began on a soft note in China, with PP, PE, PS, PET and ABS sellers giving either stable or lower prices citing softer crude oil prices and muted buying interest on the first working day after the holiday.