July IPEX falls on continued downtrend in prices

03 July 2012 15:48  [Source: ICIS news]

LONDON (ICIS)--The ICIS Petrochemical Index (IPEX) for July is 302.29 – the lowest value since the start of the year and its third consecutive drop. The IPEX has fallen by 9.5% against its revised* June figure of 334.18 as chemical prices decline in all regions.

The European component of the IPEX sank the most of all three regions, dropping by 10.2% in dollar terms after a 2.1% strengthening of the dollar against the euro was accounted for. The US followed with a 9.8% decline, then Asia falling by 9.1%.

Out of the chemical sub-indices, the olefins group was the biggest casualty, dropping by 13.1%. US butadiene (BD) had one of the most dramatic falls in price among all the 36 chemical products in the IPEX basket, dropping by around 27%, stemming from the weak economy and demand.

US propylene prices slumped by almost 23%, hitting a 30-month low, following spot prices after they tumbled towards the end of May. The slide in propylene prices originates from weaker demand and lower upstream crude oil and gasoline prices.

In Europe, BD prices plummeted by 19.5% in dollar terms also because of weak demand and lower upstream crude oil prices. The largest downturn in price in Europe was for polyvinyl chloride (PVC) down almost 23% in dollar terms - the result of weak market fundamentals and lower ethylene feedstock costs. There is little recovery expected for the European domestic market as buying tends to slow down in July and August for the holiday period.

One of only two price rises out of all the chemicals was for benzene in Europe, firming by almost 6% in dollar terms on a combination of a strong market and a weak euro.

Published at the beginning of each month, the IPEX provides an independent indicator of average change in world petrochemical prices.

Dating back to January 1993, historical ICIS prices for a basket of 12 essential petrochemical products in the US, western Europe and northeast Asian markets have been weighted by regional nameplate capacity to generate a monthly index value.

The IPEX product basket comprises ethylene, propylene, benzene, toluene, paraxylene (PX), styrene, methanol, BD, PVC, polyethylene (PE), polypropylene (PP) and polystyrene (PS).

*The June IPEX has been revised from 335.37 to 334.18, following settlement of the May US ethylene, styrene and PVC and Asian styrene contract prices. This month’s index is also subject to revision once the June US ethylene, styrene and PVC and Asian styrene contract prices settle.

The revised historical IPEX data is available from ICIS on request
For a full methodology of the revised IPEX, click here

Author: Afsar Hussain

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