Price and market trends: Declining Europe prices weaken June IPEX

14 June 2013 09:48  [Source: ICB]

Petrochemical prices decline across the region - with ethylene the biggest loser - as benzene bucks the trend

The June ICIS Petrochemical Index (IPEX) has fallen for the third successive month and is the lowest since September 2012.

The index declined by 0.6% compared with the revised figure for May of 320.06*. The June US and Asian sub-indices of the IPEX rose, but a steep decline of the Europe component impacted heavily on global performance.

All European prices tumbled in dollar terms in May apart from benzene, which climbed by 5.7% as concern regarding a busy turnaround schedule emerged.

Ethylene was the biggest loser in the region, with an 8.6% slump in dollar-denominated prices. Sources said that although demand has improved from April, it is still vulnerable. There has been a tightening of the demand balance but this may be down to stock building before the traditionally slower summer months.

The Asian component of the IPEX rebounded by 0.7%, mainly on a 0.5% rise in the polymer ­component of the IPEX, as higher polyethylene (PE) and polypropylene (PP) values overcame falls in polystyrene (PS) and polyvinyl chloride (PVC) prices.

Butadiene (BD) prices improved by 6.0%, despite weak demand and oversupply from mid-May onwards.

The higher BD values and higher propylene prices could not overcome a 3.3% decrease in ethylene values as the Asian olefin sub-index weakened by 0.7%. The US sub-index of the IPEX edged up by 0.2% despite a 6.0% fall in BD values. US BD producers lost out in May, mainly as lower-priced Asian styrene-butadiene-rubber (SBR) was being imported. The lower-priced SBR was as a result of weaker demand in Asia. The sub-index benefited from a 2.0% rise in PS prices as feedstock benzene prices increased. There were shipment delays to buyers within the month but these had no real impact as the supply and demand balance was stable.

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

The IPEX product basket of 12 essential petrochemical products comprises: ethylene, propylene, benzene, toluene, paraxylene (PX), styrene, methanol, BD, PVC, PE, PP and PS.

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

*There has been a revision to the May IPEX from 320.24 to 320.06 following April contract settlements for styrene and PVC in the US.

The May index will be subject to further revision once the April ethylene contract settles in the US. June's index will also be ­subject to revision once the contract prices settle for ethylene, styrene and PVC in the US and styrene in Asia.

By: Faheem Behardien
+44 208 652 3214

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