Asian petrochemicals surge on record crude

22 May 2008 06:27  [Source: ICIS news]

By Serene Cheong

 

SINGAPORE (ICIS news)--Petrochemical prices surged on Thursday after US July crude futures breached $135/bbl (€85.05) level in Asian trade before easing slightly to $134.62/bbl (up $1.45 from Wednesday) by noon .

The spike in crude was attributed to high global inflation rates, seasonal demand for gasoline products and a surprise fall in US inventory levels as shown by statistics from the Energy Information Administration.

Supply fears on speculation of increased Chinese demand for crude oil and its products, high price forecasts by analysts, depreciation of the US dollar and controlled oil output by the Organisation of Petroleum Exporting Countries (OPEC) also triggered the surge.

In response, downstream Asian naphtha trades broke a new historical record high of $1,071.00/tonne with Sempra’s sale of its second half of July contract to Shell.

Asian naphtha opened $41.00/tonne higher with first half July prices indications pegged at $1,112.50-1,115.50/tonne CFR (cost and freight) Japan, second half July at $1,110.50-1,113.50/tonne and first half August price indications at $1,109.00-1,112.00/tonne.

In aromatics, benzene prices surged past the $1,300/tonne FOB (free on board) Korea mark to hit a fresh 12-year high - according to historical data from global chemical market intelligence service, ICIS pricing.

Bids for July benzene loading cargoes were heard at $1,285-1,300/tonne on early Thursday trades, meeting an offer at $1,340/tonne. Prices were up by $40/tonne as compared to Wednesday’s close and were assessed at $1,310-1,320/tonne.

Toluene prices surpassed the $1,200/tonne level to set a new 14-year high due to sharply rising feedstock costs.

Bids for July loading cargoes rose early on -beginning at $1,195-1,200/tonne FOB (free on board) Korea and were at $1,210/tonne before mid-day, while an offer for July shipment was at a high of $1,250/tonne.

Spot prices for polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) resins are are expected to be hiked soon on the back of strong SM values.

Resin prices reached new highs in more than a decade as general purpose (GP) PS traded up to $1,600/tonne CFR China while ABS sales breached the $1,900/tonne CFR China level, both up $30-40/tonne from the week before.

High crude also boosted the Asian polyolefins markets as offers of polypropylene rose to $1,700-1,720/tonne CFR China for June shipment, up about $60-70/tonne from May transactions.

Meanwhile, traders were offering linear low density polyethylene (LLDPE) at $1,690/tonne CFR China for May delivery, $20-40/tonne above last transactions.

Traders added that Asian producers of polyolefins were under increasing pressure to raise prices to cover their costs, but highlighted that further hikes could force some downstream plastics processors to cut operating rates, hence dampening regional demand.

In the alternative energy sector, bullish crude oil markets underpinned vegetable oil prices as higher heating oil numbers boosted biodiesel’s appeal with trades of Bursa Malaysia’s benchmark crude palm oil August delivery contract at ringgit (M$) 3,626/tonne (11:15am local time), up M$70/tonne from the opening.

Asian equity markets were also adversely impacted by the surge in crude oil prices, with Northeast Asian markets such as NIKKEI 225, SSE, KOSPI and Hang Seng down 0.8%, 1.4%, 1.54% and 2.41% respectively. In the Southeast Asian region, STI, SET and KLSE were also in the red as numbers slipped 1.29%, 0.40% and 0.38%.

Desmond Chia, Mahua Chakravarty, Chow Bee Lin, Clive Ong and Jeremiah Chan contributed to the story

($1 = €0.63)

By: Serene Cheong
+65 6780 4359

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