Asia polymers, aromatics values rally on crude gains

20 March 2009 09:59  [Source: ICIS news]

SINGAPORE (ICIS news)--Prices of Asian aromatics and polymers have rallied due to the near four-month high in crude values despite weak downstream demand, industry sources said on Friday.

At 5:15pm local time (8:00am GMT), May Brent on London’s ICE futures was trading at $50.63/bbl, down 4 cents/bbl. At the same time, April NYMEX light sweet crude futures were trading at $51.50/bbl, down 11 cents/bbl.

NYMEX light sweet crude futures surged more than $3/bbl to $51.61/bbl on 19 March due to the US Federal Reserve’s decision to pump nearly $1,000bn into the US economy by buying long-term Treasury bonds, sparking inflationary fears.

Linear low density polyethylene (LLDPE) traders in China raised offers by $20/tonne (€15/tonne) to above $1,000/tonne CFR (cost and freight) China for prompt lifting at bonded warehouses, citing firmer crude values and a stream of delays in new plant start-ups in the Middle East.

In the aromatics cluster, benzene values surged to five-month highs, with bids for any May-lifting parcels rising $10-12/tonne from the 19 March highest bid to $460-462/tonne FOB (free on board) Korea

Offers were similarly raised to $470-475/tonne FOB Korea from $457-460/tonne FOB Korea on Thursday.

Bids for any May-lifting toulene cargoes also rose $10/tonne to $540-545/tonne FOB Korea, according to global chemical intelligence service ICIS pricing.

“This increase in [polymer and aromatics] prices could be driven by restocking activities, since there was so much destocking, particularly in the last few months,” said Sutthichai Kumworachai, a petrochemical analyst at brokerage firm KGI securities.

Kumworachai said that his target price for average crude values in 2009 was $50/bbl, with expectations for a further increase in prices during the second half of the year.

Despite prices rallying in the upstream aromatics and polymers sectors, price sentiments remained weak in the Asian propylene oxide (PO) market.

“Producers have no desire to increase prices due to weak demand and falling [feedstock] chlorine prices,” said an industry source, adding that average operating rates of PO plants in Asia were 50% or lower.

Only one major northeast Asian producer was heard to be running its PO unit at 60-70%, said the source.

($1 = €0.73)

With additional reporting by Mahua Chakravarty, Chow Bee Lin and Yu Guo

For issues hitting the Asian chemicals market, see John Richardson’s Asian Chemical Connections blog
To discuss issues facing the chemical industry go to ICIS connect

By: Bohan Loh
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