Petchem trading slows as holiday period nears

D'turn 3Dec11.pngThe blog was in Singapore last week, running the final New Normal workshop of the year with co-author John Richardson. The main topic during the breaks was the continuing concern over China’s demand.

This is reflected in the latest Downturn Monitor above. On the positive side, China’s PTA prices improved due to hopes of easier lending conditions. But on the negative side, US HDPE export prices fell 2c/lb ($44/t) as sellers adapted to lower Asian prices.

In Western markets, the Eurozone is still the main focus of attention. Prices generally firmed, with concerns about Iran sanctions also helping to support Brent crude oil, naphtha and benzene prices.

In general, however, trading remains very slow, with most players wary of taking positions before the long Christmas and New Year break, particularly as this will then be soon followed by Lunar New Year in Asia.

The chart shows how prices have moved during 2011, with the period since the Downturn began highlighted in yellow. Only Brent and naphtha are higher than at the start of the year. Downtream pricing remains relatively weak, as consumers cut back discretionary spending.

ICIS pricing comments this week, and price movements since 7 January for the benchmark products in the IeC Downturn Monitor are below:
Benzene NWE (green), down 20%. “Concerns surrounding Iran led to firmer crude values being reflected in higher December numbers”.
PTA China (red), down 17%. “Expected increase of liquidity at the end of financial year inspired buying interest.”
HDPE USA export (purple), down 4%. “Prices fell slightly, following global price drops in Asia and the Middle East.”
S&P 500 Index (pink dot), down 2%
Naphtha Europe (brown dash), up 1%. “Market is set to remain long for the foreseeable future.”
Brent crude oil (blue dash), up 16%.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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