Asia petrochemical prices track crude falls after weak China data

01 June 2012 11:14  [Source: ICIS news]

By Pearl Bantillo

SINGAPORE (ICIS)--Spot prices of petrochemicals in Asia tumbled on Friday, tracking sharp falls in crude prices, on concerns about weakening demand following release of disappointing economic data from China - the region's key market and the world’s second biggest economy.

The country, which also ranks as the second top oil consumer, reported a 2.9 percentage-point decline in its Purchasing Managers Index (PMI) to 50.4%, indicating a slowing down in its manufacturing activities.

At 17.50 Singapore time (11:50 GMT), US crude for July delivery fell by $1.46/bbl to $85.07/bbl, while BRENT crude had a steeper decline of $1.82/bbl at $100.05.

A host of downbeat data on oil consumption from the US, as well as continued concerns about the unresolved debt crisis in the eurozone, are keeping market players across the commodities and equities worried over the prospects of the global economy.

The bearish sentiment rippled through the Asian naphtha market, with price nosediving to an 18-month low of $803-806/tonne CFR (cost and freight) Japan.

Asia
is in long supply of naphtha – a condition that is expected to be aggravated by the absence of a major regional buyer – Formosa Petrochemical Corp (FPCC).

The Taiwanese producer shut its biggest cracker, with a 1.2m tonne/year ethylene capacity, in Mailiao, on 31 May because of weak demand and poor margins from olefins.

Meanwhile, the aromatics markets were also dragged down by falling energy futures, with benzene at a five-month low and toluene hitting its lowest level in six months.

At the close of trade on Friday, benzene were assessed at $1,050-1,065/tonne FOB (free on board) Korea, while toluene stood at $1,025-1,035/tonne FOB Korea, according to ICIS.

Further downstream, the purified terephthalic acid (PTA) market was also rattled.

Asian PTA prices plunged to a 19-month low, with buying indications at $990/tonne CFR  China Main Port (CMP) for cargoes of South Korean origin.

It was the first time in one and half year that PTA prices fell below $1,000/tonne, according to ICIS.


By: Pearl Bantillo
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