29 March 2009 20:38 [Source: ICIS news]
HOUSTON (ICIS news)--US olefins market participants were sceptical that a small uptrend which began at the start of the year would last into the second quarter, they said this weekend as the International Petrochemical Conference in San Antonio, Texas, got underway.
The price increase improvement in the first quarter was to be expected given the condition of the ?xml:namespace>
“Anything compared with December would look good,” a propylene producer said.
While demand did seem to improve in January, many had questioned whether there was indeed true new demand or restocking, with buyers taking just enough material to get by.
Price trends in March seemed to support that view. Spot prices for both ethylene and propylene fell sharply in the second week of the month.
US ethylene for March dropped by as much as 10 cents/lb to 23.00-26.25 cents/lb ($507-579/tonne, €380-434/tonne) in the week ended 13 March, while propylene shed 3.00 cents/lb to 20.00 cents/lb, according to global chemical market intelligence service ICIS pricing.
Prices for both products have remained largely steady since then.
Market participants attributed the drop to stalled demand and a sudden increase in supply from the restart of several crackers that were idled when demand plummeted last year.
DuPont in February also started up its Orange unit in
US cracker operating rates jumped to about 70% in February, from 59% in January and 56% in December 2008.
An industry consultant expected March operating rates to be near 80%, indicating more supply - and downward price pressure - could be in the pipeline for the second quarter, provided energy prices do not spike.
The key to the outlook is the business cycle. As goes the economy, so goes monomer demand. However, the timing of a recovery is anybody’s guess. In the most optimistic of forecasts, the
An upturn in ethylene could take up to two years to happen, a bank analyst predicted this week, saying the market usually lags the economy by 6-12 months.
In such a scenario, National Petrochemical & Refiner Association (NPRA) participants could still be waiting for a clearer picture for olefins at the 2010 meeting.
The NPRA 2009 International Petrochemical Conference runs Sunday through Tuesday.
($1 = €0.75)
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