24 May 2010 06:09 [Source: ICIS news]
By Peh Soo Hwee
SINGAPORE (ICIS news)--Asian ethylene and propylene spot prices may face further downside after plummeting to multi-month lows last week, amid weak conditions in key derivatives market and a slump in values of feedstock naphtha, market players said on Monday.
“With naphtha prices having come down so much, there could be another bottom,” said a Japan-based olefins trader.
Last week, ethylene spot prices dived $160-170/tonne (€128-136/tonne) to five-month lows of $1,100-1,140/tonne CFR (cost and freight), while propylene slumped $90-110/tonne to $1,150-1,230/tonne CFR in northeast Asia - levels not seen since January 2010, according to data from ICIS pricing.
Ethylene and propylene are used in manufacturing polymers.
Weekly variable margins for naphtha cracker operators in ?xml:namespace>
The robust margins – more than double the typical break-even spread of $250/tonne – had kept the bulk of the crackers in
The bloodbath in the olefins market started early last week, with ethylene and propylene offers progressively moving lower in a bid to attract interest, but the rapid price plunge kept buyers at the sidelines, they said.
The bearish market sentiment was principally caused by uncertainty over the outlook for the petrochemical industry against the backdrop of credit tightening measures in
Discussions to purchase a second-half June loading ethylene spot cargo from a southeast Asian producer hit a stumbling block following the price plunge.
“The trader said the customer had run away,” said the producer.
A lack of support from the key polymer pillar – responsible for more than 50% of the consumption of ethylene and propylene in
There was talk of some regional cracker operators mulling cuts in derivative polymer production due to prevailing poor economics.
For instance, standalone variable margins for high density PE remained in the red - at a loss of $35/tonne
“With downstream markets suffering so much, there are no bidders in the market,” said another olefins trader in
($1 = €0.80)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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