Petchem markets have moved into an interesting phase.
Optimists will point to the recovery in crude oil and financial markets, plus higher prices for naphtha and benzene. They will see these as signs that we are just in the middle of a typical correction. And they will hope for further price increases over the summer.
Pessimists will point to the higher prices being focused on products where financial players dominate, such as the S&P 500 Index and Brent. Equally they will note that benzene's higher price is due to lower US production, not stronger demand.
Neutrals will note that some markets have improved and some, like HDPE and PTA, have stabilised. But they will be worried by developments in European propylene, where ICIS' Nel Weddle reports:
• "Customers were saying that they could not deal with inventory levels"
• "One propylene producer said, 'Being honest, I am desperate'."
• A consumer "described the current situation as a catastrophe".
The blog will continue to watch developments very carefully.
Detailed moves since the IeC Downturn Alert launched at end-April, with ICIS pricing commentary on market sentiment last week, are below:
HDPE USA export, purple line, down 17%. "More interest in US exports, particularly in South America".
PTA China, red, down 11%. "End-users were resistant towards higher prices because their inventories remain abundant".
Naphtha Europe, brown, down 9%. "Little interest in naphtha from the petrochemical industry, but healthy demand from gasoline".
Brent crude oil, blue, down 6%.
Benzene NWE, green, down 5%. The US again led markets higher due to "lower production rates and firming energy futures."
US S&P 500 Index, pink, down 1%.