Chemical market trends: commodities price decline continues

28 May 2012 00:00  [Source: ICB]

A $53/tonne drop in naphtha feedstock prices has seen European contract cracker margins reach their highest levels since December 2008 - a 41-month high. In the week ending May 18, euro-based naphtha costs fell by 4.2%. The ongoing bearish trend in naphtha and liquified petroleum gas (LPG) means many ethylene players expect the June contract to settle significantly lower than May's €1,325/tonne FD Northwest Europe (NWE).

US propylene contracts look set for a hefty drop in June, weighed down by lackluster demand and lower spot values. Polymer-grade propylene (PGP) for May traded in the week ending May 18 at 53.00-54.75 cents/lb ($1,168-1,207/tonne) - down about 10 cents/lb from the first week of May. Players say spot values are under pressure because of falling demand amid destocking downstream. Buyers are said to be wary prices will keep falling. The PGP contract was 67.50 cents/lb for May.

A US butadiene (BD) seller has nominated a 24% drop for its June contract. At $1.10/lb, this is down from its $1.45/lb May settlement. A second nomination has been reported from another supplier at $1.37/lb for June - although there is speculation this could be revised downward. A source predicts the two remaining initiatives will fall between the two initial reductions.

Europe's May orthoxylene (OX) contract rolled over and remains at a record high of €1,180/tonne FD NWE. "Europe remains very tight," a seller says. "Asian prices are slightly lower, the US settled at a rollover. It [the rollover] is a compromise."

Asian styrene monomer (SM) fell below $1,400/tonne CFR China on May 15 on bearish sentiment because of concerns over the eurozone debt crisis and weak upstream prices. SM had fallen to $1,450/tonne in the week ending May 11, from $1,515/tonne in the week of April 20.


By: Andy Brice
+44 20 8652 3214



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