UpdateAsia naphtha falls as crude slides

18 January 2008 10:12  [Source: ICIS news]

(Adds latest crude and closing share prices in paragraphs 4-5, 11-14)

SINGAPORE (ICIS news)--Naphtha prices fell $13-15/tonne (€8.90-10.25/tonne) in Asia on Friday as crude futures dipped below $90/bbl after Federal Reserve chairman Ben Bernanke warned of a slowing US economy.

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

Open spec naphtha slipped to $837.50-840.50/tonne CFR (cost and freight) for first-half March from a day earlier, according to trading brokerage Ginga.

NYMEX February light sweet crude futures dipped $0.41/bbl to $89.72/bbl while March Brent was down $0.20/bbl to $89.55/bbl during intra-day trading.

Futures on NYMEX then rebounded to above $90/bbl after US president George W Bush announced a financial package aimed at cushioning the country’s economy from a downturn.

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) market 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.

Petrochemical stocks across Asia, which had fallen earlier on Friday, recovered at the end of day as market players discounted the impact of a full-fledged US recession.

Japanese chemical major Asahi Kasei’s stock closed higher at 3.9% while Mitsubishi Chemical’s remained unchanged, as the Nikkei 225 index recovered to close 0.6% higher after tumbling as much as 2.8% earlier in the day.

In South Korea, shares in petrochemical producer SK Energy continued to decline to close 3.5% lower although the Korea Composite Stock Price Index (KOSPI) gained 0.7% to finish at 1,734.72.

Stocks of state-owned Chinese refining majors continued their decline, with PetroChina and Sinopec ending 0.3% and 1.1% lower respectively on the Hong Kong Exchange. This was despite the Hang Seng Index climbing 0.35% to close higher at 25201.87.

In Thailand, petrochemical major PTT saw its share price finish 0.6% higher while Siam Cement’s stock closed 0.9% lower. The Stock Exchange of Thailand 100 Index, however, closed slightly higher at 0.07%.

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

($1 = €.68)

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

By: Florence Tan
+65 6780 4359

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