Asia naphtha, petchems up as crude hits over $82

19 September 2007 06:02  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian petrochemicals and open spec naphtha prices climbed the most in four months on Wednesday after crude futures surged to over $82/bbl for the first time following the US Federal Reserve’s decision to cut interest rates, market sources said.

Second half October naphtha contract notionally rose $8-9/tonne from Tuesday to $724.50-727.50/tonne CFR (cost and freight) Japan on Wednesday morning. The price was headed for the biggest gain since 18 May.

“Crude is accelerating naphtha’s bull-run. If this continues, naphtha could hit another new record high again,” a Singapore-based naphtha broker said.

The Federal Reserve lowered its interest rate by a half-percentage-point to help sustain economic growth in the world’s largest oil consumer. The US crude futures have risen 17% in the past four weeks and have closed at a record four of the past five trading sessions.

Asia’s naphtha price hit an all-time high at $740/tonne CFR Japan in May, but prices had since slipped to below $700/tonne earlier this month as a supply glut weighed on the market.

Also affected by crude’s rise were petrochemicals like styrenic resins prices have also risen despite the oversupply in feedstock benzene, which is a primary component of styrene monomer (SM) prices.

Resin sellers raised offers by some $20-50/tonne for polystyrene (PS), expandable polystyrene (EPS), acrylonitrile-butadiene-styrene (ABS) and styrene-acrylonitrile. Buyers picked up parcels on concerns that prices might escalate further.

On the other hand, higher crude prices had not affected Asia’s aromatics and polymers prices, traders said.

Rallying crude values had limited impact on the Asian benzene market as prices remained rangebound at $975-985/tonne FOB (free on board) Korea. Indications were limited in a sluggish market, with offers for big berth November parcels at $990/tonne FOB Korea against bids at $975/tonne FOB Korea.

Traders said that oversupply in Asia could be a reason behind the slow trend seen in benzene, despite the rally in crude and naphtha values.

Polymer prices also remained insulated from crude’s bull-run.

Sentiment was also bearish in China and Southeast Asian polyethylene (PE) and polypropylene (PP) markets with importers staying on the sidelines, regional traders and producers said.

“End-users have covered their immediate requirements and are uninterested to build up stocks at current prices. Demand from traders is also weak as many traders deemed taking positions at current prices as risky,” an Asian polypropylene (PP) producer said.

Producers’ selling indications for homopolymer PP grades are at $1,360-1,380/tonne CFR (cost and freight) China and southeast Asia (SE Asia) for October.

South Asia polymer markets have also been unaffected by crude’s surge. Prices for October shipments of polyvinyl chloride (PVC) into India have fallen by $40/tonne from September to $1,090/tonne CFR India, a South Korean PVC supplier said.

“Normally, a surge in crude prices would have strengthened buying sentiment, but trader inventories are overflowing, dampening the appetite for imported cargoes,” an Indian plastics converter said.

Prema Viswanathan, Chow Bee Lin, Mahua Mitra, Clive Ong contributed to this article.

By: Nurul Darni
65 6789 4359

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