08 June 2012 09:35 [Source: ICIS news]
SINGAPORE (ICIS)--Trading of petrochemicals in Asia remained sluggish on Friday, with prices falling in tandem with crude, largely shrugging off China’s surprise move to boost its economy via an interest rate cut – its first in three years.
“The present market is so bearish, buyers are unlikely to turn bullish overnight just because of an interest rate reduction,” said a bitumen trader.
On Friday afternoon, crude futures fell by more than $2/bbl, extending their declines as concerns the about US economy weighed more on the market.
Federal Reserve chairman Ben Bernanke on Thursday did not hint at fresh measures to help the recovery of the world’s biggest economy.
Naphtha prices were tracking crude’s falls in Asia, shedding $13.00-14.00/tonne at midday to $767.00-770.00/tonne CFR (cost and freight)
Trading of aromatics was likewise affected by crude, with benzene falling $55-60/tonne to $985-1,000/tonne at midday and toluene at $970-990/tonne FOB
“Market sentiment has not improved,” said a China-based trader, saying that natural rubber futures prices declined to yuan (CNY) 22,300/tonne on Friday from $22,800-22,900/tonne on Thursday.
The country’s Purchasing Managers’ Index (PMI) declined by 2.9 percentage points in May to 50.4% from April.
“Clearly, the disappointing data triggered the [interest rate] cut… If it fails to spur lending and investment as policymakers wish, more cuts will be taken later,” said Zhang Junfeng, a senior analyst at Shenzhen-based broker China Merchants Securities (CMS).
Zhang said the Chinese authorities will likely issue one to two more interest rate reductions this year.
“This may sound to be good news in the short-term, but when this settles in, then the market will realise a bigger problem that is
Additional reporting by Fanny Zhang, Dolly Wu, Ong Sheau Ling, Helen Yan, Alfa Li, Kim Lu, Victor Liu
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