July IPEX rebounds on strong Asian performance

LONDON (ICIS)–A strong performance in the Asian regional sub-index has led the July ICIS Petrochemical Index (IPEX) to rise for the first time in five months. A 0.7% rise in the index was registered over the revised June figure of 323.01*.

Asian butadiene (BD) prices exhibited the strongest growth in all three regions, soaring by 13.4%. BD prices have been pushed up by continued strong demand from South Korea, where local crackers owned by Lotte Chemical continue to increase LPG feedstock usage, resulting in lower yields of BD.

The only lower values in the Asian sub-index were recorded by methanol and polystyrene (PS), which exhibited price reductions of 3.5% and 0.9% respectively. Methanol prices are at their lowest since April 2011, reflecting weaker buy-sell sentiment and ample availability.

Overall the Asian aromatics sub-index, which is still awaiting June contract settlements for styrene and paraxylene (PX), recorded the largest gains, up by 2.3%. Benzene prices climbed by 4.8% and toluene prices jumped by 8.8%, fuelled by escalating crude prices amid recent violence in Iraq and escalating prices in the US as more toluene is fed into the gasoline pool.

The US sub-index slipped by 0.5% despite the US driving season causing a hike in toluene prices, as all other constituents of the petrochemical basket registered flat or lower values. Toluene prices rose by 11.3% and are at a nine-month high.

The largest decline in the US came from the olefins sub-index. Apart from ethylene, which is still awaiting the June contract settlement, BD prices fell by 4.4% and propylene prices by 4.3% following long supply and high inventories. Polypropylene (PP) prices weakened by 3.6%, reflecting the lower upstream costs.

Of the three regions, prices in Europe performed the weakest, as the sub-index dropped by 1.7%, negatively impacted by a 0.9% stronger dollar. Only PX, which was the best performer in the region, and polyvinyl chloride (PVC) registered higher values. Despite a 2.4% increase in PX prices, in dollar terms, overall aromatics values fell by 4.9%, as they were weighed down by lower benzene prices, which plummeted by 7.6%. Styrene prices softened by 4.1%, in dollar terms, following the fall in prices for upstream key constituent benzene.

The knock-on continued down the styrenics chain, with European PS prices slipping by 2.0%, the largest reduction of all polymers in the region. Polyethylene (PE) prices fell by 0.3% and PP prices edged down by 0.1%, as feedstocks ethylene and propylene recorded marginally lower values.

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, BD, benzene, toluene, PX, styrene, methanol, PVC, PE, PP and PS.

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

*The June IPEX has been revised from 324.04 to 323.01 following the settlements of May contract prices for ethylene, PX, styrene and PVC in the US and PX and styrene in Asia. The July index will be subject to further revision once June contract prices settle for ethylene, PX, styrene and PVC in the US and PX and styrene in Asia.

The revised historical IPEX data is available from ICIS on request (link -)

Click here for a full methodology of the revised IPEX