Asia naphtha falls as crude dips below $90/bbl

18 January 2008 05:03  [Source: ICIS news]

By Florence Tan

SINGAPORE (ICIS news)--Naphtha prices fell in Asia on Friday as crude dipped below $90/bbl (€61/bbl) after Federal Reserve chairman Ben Bernanke warned of a slowing US economy.

Olefins and styrene monomer (SM) prices managed to buck the trend, supported by cracker outages at Mitsubishi Chemical and Chandra Asri and strong polyolefins demand, producers and traders said.

Open spec naphtha slipped $13-15/tonne on Friday to $837.5-840.50/tonne CFR (cost and freight) for first half March from a day earlier, according to trading brokerage Ginga. NYMEX crude futures for February dipped $0.41/bbl to $89.72/bbl while March BRENT was down $0.20/bbl to $89.55/bbl.

Benzene prices have fallen $20/tonne this week, in line with a 4% decline in crude values, to $980-990/tonne FOB (free on board) Korea, traders said. SM prices were $5/tonne higher at $1,325-1,335/tonne FOB Korea.

Buying sentiment in the Asian polyethylene (PE) and polypropylene (PP) markets weakened as crude slipped below $90/bbl but prices remained stable due to tight supply and high olefins costs, traders and suppliers said.

Naphtha prices have to fall below $700/tonne CFR Asia before regional producers would consider slashing PP prices, a producer said.

Traders’ offers for film grade linear low density PE (LLDPE) and high density PE (HDPE) were at $1,570-1,620/tonne and $1,610-1,630/tonne on a CFR China/SE Asia basis, unchanged from earlier in the week.

PP producers kept offers stable at $1,450-1,480/tonne CFR China.

Fears of a US recession dampened market sentiment across Asia, causing petrochemical stocks to fall.

Stocks of Japanese chemical majors Asahi Kasei and Mitsubishi Chemical fell 0.3% and 2.74% respectively, as the Nikkei 225 index tumbled 2.8% to 13,395.78 at 12:10 local hours (03:10 GMT).

In South Korea, stocks of petrochemical producer SK Energy plunged 3.46% as the Korea Composite Stock Price Index (KOSPI) dipped 1.84% to 1,691.

Stocks of state-owned Chinese refining majors also took a beating, with PetroChina falling 3.46% and Sinopec down 3.8% on Hong Kong’s Hang Seng Index which lost as much as 2.8% in late morning trade.

In Thailand, petrochemical major PTT saw its share price fall 1.25% and Siam Cement’s share price slid by 0.89% as the Stock Exchange of Thailand 100 Index declined by 1%.

“Thailand, as a market, is not a big loser because we have some balance between the domestic market and exports,” said Pongpan Hapinyakul, Bangkok-based analyst at Kim Eng Securities.

($1 = €0.68)

Jeanne Lim, Chow Bee Lin, Mahua Chakravarty, Steve Tan and Kew Jiahui contributed to this article.

By: Florence Tan
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