Stable crude prices may not stop US aliphatics drop

19 December 2008 00:00  [Source: ICIS news]

Crude oil price floor may not stop aliphatics dropHOUSTON (ICIS news)--US aliphatic solvent prices could drop a bit further even though crude oil prices have become less volatile, buyers said on Thursday.

However, sellers said as the crude oil descent slows down, it could mean aliphatics have neared the support level.

Most aliphatics were priced at 36.5-47.0 cents/b ($805-1,036/tonne, €564-725/tonne), according to global chemical market intelligence service ICIS pricing.

Aliphatics were priced in the low to mid 70s cents/lb during the summer months, when crude oil prices reached record highs.

After falling precipitously over the last several months, West Texas Intermediate (WTI) crude oil values have seemingly stabilised near the low to mid $40s/bbl mark. That might indicate that oil has reached or neared the support level.

“When you look at the crude market, it seems that it’s found the bottom of the market and has shown signs of rebounding slightly,” a producer said.

However, while buyers agreed that the drop in crude oil prices appears to have slowed, they said there was still room on the downside for aliphatic solvents.

Buyers cited the proportionally greater drop in the crude oil market, and the lack of demand amid the tepid economy as reasons for expecting additional softening in aliphatics prices.

The long decline in US house sales and new-housing starts could continue for some time due to a worsening of the general economy.

New house permits dropped to a record low annual rate of 616,000 in November, according to the US Department of Commerce. That was the lowest level since the department began tracking permits in January 1960.

Aliphatic solvents are used in paint formulation, as well as in pesticides, printing inks and in industrial applications.

US aliphatic solvent producers include Calumet, ConocoPhillips, Citgo, Shell and ExxonMobil.

($1 = €0.70)

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By: Gene Lockard
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