16 November 2010 07:34 [Source: ICIS news]
By Felicia Loo
Demand from China had already propelled some petrochemical prices, traders said, adding that fuelling this positive outlook was the quantitative easing (QE2) policy in the
The announcement of the fresh economic stimulus of $600bn (€438bn) in the
Asia naphtha prices hit a two-year high of more than $800/tonne as US crude futures soared to a 25-month high of nearly $89/bbl last week, ICIS data showed.
“We are positive on the [petrochemical] outlook in 2011 amid sky-high cotton and rubber prices, making PE [polyethylene], PP [polypropylene] and synthetics more appealing,” said Gordon Kwan, head of regional energy research at Mirae Asset Securities in Hong Kong.
Spot PE prices in China rose to $1,650-1,700/tonne CFR (cost & freight) China in the week ended 12 November because of skyrocketing linear low density polyethylene (LLDPE) futures, ICIS data indicated.
The country has been the world’s biggest PE consumer since 2009.
“With most of the QE2 liquidity likely to rush over to Asia, many countries have set up capital inflow barriers to prevent the repeat of the 1997 financial crisis, thus leaving the commodity space the only viable outlet for this hot money,” said Kwan of Mirae Asset Securities.
The fresh stimulus of $600b was equivalent to boosting global oil demand by a whopping 22%, Kwan added.
“This will have positive repercussions all the way down the value chain to the chemicals segment. We are bullish on the entire energy complex in 2011, from upstream E&P [exploration & production] to refining and to petrochemicals, as global economic recovery resumes,” he said.
The weak US dollar continued to fuel higher oleochemicals prices as sellers sought to recoup lost margins from foreign exchange losses, traders said.
Oil consumption in China is expected to grow at a strong pace, backed by superior economic growth, and firming up the country’s ranking as the world’s top energy consumer as defined by the International Energy Agency.
With an oil supply crunch in China, Chinese trader Unipec – the trading arm of Asia’s top refiner Sinopec Corp – bought a hefty 150,000 tonnes of naphtha for delivery in the first half of December for its crackers, which are mostly running at full capacity.
Chinese refineries across the country are desperately trying to churn out diesel to meet a surge in diesel-fired power generation demand as winter sets in, traders said.
“As a result, less naphtha supply is available,” one trader said.
“It is a bullish market. The feel is bullish and everything is bullish,” a Chinese polymers trader said.
($1 = €0.73)
Additional reporting by Serena Seng
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections