IPEX shows slight recovery for September, rises by 2.6%

04 September 2012 15:09  [Source: ICIS news]

By Afsar Hussain

LONDON (ICIS)--The September ICIS Petrochemical Index (IPEX) has rebounded from the year-low in August to 307.77, a 2.6% increase from the revised* August figure of 300.10.

The main driver for the upwards movement stems from the European component of the IPEX and the olefins sub-index. Europe drove the IPEX increase, improving by almost 10%, aided by a 1.3% weakening of the dollar over the same period.

The US component edged up by 1.6%, while Asia experienced stagnant growth. Out of the sub-indices, olefins gained the most by 5.7%, followed by aromatics at 5.2% and then polymers at 3.9%.

European olefins saw the most dramatic increases of 14%. There were higher settlements for olefins contracts around Europe in August, brought about by poor cracker margins experienced by producers in July.

Producers targeted significant increases for the August contract price to try to claw back margins which were lost to significant decreased contract settlements from May to July.

This forced the ethylene contract price to increase by €140/tonne ($177/tonne) which, in turn, led to downstream polyethylene (PE) producers hiking their prices by around €145/tonne – consequently the largest price hike of all the chemicals in the IPEX basket (up by 12.8% in dollar terms) – to ensure adequate margins were achieved along the product value chain.

The biggest price drop was achieved by butadiene (BD) in Asia, losing on average 17.5% of its value from July to August. Downstream demand for BD through early August was weak, escalated by a weak automotive industry in Asia as a result of poor auto sales in Europe and Asia’s emerging markets such as China and India.

However, a tightening of BD supply towards the latter part of the month resulted in a recovery of prices, as supplies from Taiwan tightened.

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, polyvinyl chloride (PVC), PE, polypropylene (PP) and polystyrene (PS).

*The August IPEX has been revised from 299.82 to 300.10, following settlement of the July US styrene contract price. This month’s index is also subject to revision once the August US ethylene, styrene and PVC and Asia styrene contract prices settle.

($1 = €0.79)

The revised historical IPEX data is available from ICIS on request
Click here for a full methodology of the revised IPEX

By: Staff Reporter
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