Petrochemical prices slump in January pushes global IPEX down 2.0%

LONDON (ICIS)–Petrochemical and polymer prices fell sharply in January in the major producing and consuming regions helping drive the ICIS Petrochemical Index (IPEX) down by 2.0% in the month.

Price falls were seen across the board as the oil price fell further and the demand outlook remained clouded by global economic uncertainty.

Financial and commodity market nervousness at the start of the year was fully reflected in the petrochemicals and polymers picture.

US polymer, aromatics and even methanol prices were lower in the month.

Ethylene, propylene, aromatics and polymer prices were sharply lower in northeast Asia – although butadiene prices were higher over the course of the month.

The Asia markets usually provide a good bellwether for the health of the sector with prices moving rapidly in relation to the global picture as well as to more local supply and demand issues.

All Europe olefins, aromatics and polymer prices, alongside the methanol price, included in the IPEX index were lower in January.

The index tracks the movement month to month of a basket of 12 petrochemical products* on a regional and global basis. It dates back to 1993.

The global IPEX has dropped sharply since July 2015 and been on a downward trend since the oil price started to fall in the second half of 2014. Petrochemical and polymer prices rallied from March 2015 but this only persisted until June.

Price falls in January 2016 took the IPEX to a low point not seen since the middle of 2009 when the sector was on a path to price recovery following the 2008 financial crisis. Low petrochemical and polymer prices currently, however, have to be seen against the backdrop of lower oil-related feedstock costs for some suppliers and low natural gas liquids prices in the US.

The US IPEX in January was down 1.6% at 209.1 but is likely to be set lower at a later date as important contract settlements for January are agreed. The current US IPEX number for January does not include contract settlements for ethylene, styrene and polyvinyl chloride (PVC). Polystyrene prices in the US were unchanged in January as the contract rolled over from the previous month.

The northeast Asia IPEX was down 1.9% month to month at 181.1 and at this stage does not include paraxylene or styrene numbers, which have yet to settle.

The Europe Index was down 2.8% at 233.1 while the global index value was 199.5.

ICIS will revise the regional and global IPEX values for January when these contract settlements are made.

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

The IPEX represents price movements in a basket of 12 petrochemicals over the course of each month. The petrochemicals are ethylene, propylene, butadiene, benzene, toluene, paraxylene, styrene, polystyrene (PS), polyethylene (PE), polypropylene (PP), methanol and polyvinyl chloride.

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.

Download global and regional ICIS IPEX data here
View the full IPEX methodology