06 January 2010 15:58 [Source: ICIS news]
By Nigel Davis
ICIS data show prices rising in December and a significant annual increase from the end-2008 slump. Yet product prices have barely covered raw material cost increases in a still generally weak business environment, despite the steady increase in demand through 2009.
The ICIS Petrochemical Index (IPEX), representing a basket of global petrochemical product prices weighted by regional nameplate capacity, rose 3.6% in January as producers in
Data released by ChemSystems this week show how rising feedstock costs have weighed on the sector. Petrochemicals profitability has been elusive despite improving demand, the consultancy says.
“The burden of rising feedstock costs, as crude oil rebounded, has prevented any significant recovery in petrochemical margins even as market weakness eased towards the end of 2009,” it adds.
The company’s west European petrochemical industry margin index fell to its lowest ever value, of 57, in 2009, giving an idea of just how bad the year was. The index is based on the first quarter of 1984 at 100.
European petrochemicals output is still well down from the high point in the first half of 2008. The European economies are recovering but industrial production remains very fragile. Government stimulus plans have helped lift demand - and pull product into the
The uncertainty has been exemplified in
The west European benzene contract price sank 20% in the fourth quarter of 2009 as downstream derivatives plants were closed.
The European January benzene contract settled up a third at €759/tonne ($1,093/tonne) boosted by stronger exports and domestic supply constraints.
European ethylene markets weakened considerably towards the end of 2009, although demand for downstream derivatives was stronger again from
Asia business recovered after a slow start to the fourth quarter following the extended holiday period in
Business in the
ChemSystems says that
US polyolefins markets were sluggish over the period with
The ChemSystems data particularly show the impact of rising crude oil prices on feedstock costs for much of the industry.
In October and November, for instance,
Average natural gas prices in the
West European and
Propane and butane prices strengthened relative to naphtha on seasonal demand increases thereby removing the cost advantage that had been available from cracking liquefied petroleum gas (LPG) from much of the year, ChemSystems notes.
($1 = €0.70)
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