European slide leaves October IPEX at four-month low

[adds October IPEX figure in intro for clarity].

LONDON (ICIS)—The poorest performance in more than two years from the European sub-index has contributed to a 2.6% fall in this month’s ICIS Petrochemical Index (IPEX) to 323.42, from the revised September figure of 332.02*.

European prices plunged across the board by an average of just over $100/tonne, with all but two of the 12 constituents of the petrochemical basket registering the lowest prices in dollar terms so far in 2014.

The dollar strengthened by 3.5%, the largest month-on-month rise since late 2011, to lead the European sub-index to tumble by 6.6%.

The olefins sub-index in Europe exhibited the largest fall of all the sub-indices. Ethylene and propylene dollar-denominated prices, which fell by 7.9% and 7.7% respectively, were the worst performing products globally.

Upstream naphtha prices softened as ICE Brent crude oil futures dropped to their lowest levels in more than two years. Both domestic demand and export opportunities were also limited by a spate of cracker turnarounds. Eight European crackers were scheduled for maintenance in September.

Polyethylene (PE) demonstrated the greatest reduction of the European polymers, with prices in dollar terms down by 7.4%, in line with the softer feedstock ethylene prices and echoing poor demand in August.

Comparatively, PE was the strongest performer in the US, as prices rose by 3.2%. The US polymer sub-index was the only one across all the three regions to record higher values, up by 1.5%. The September contract for polyvinyl chloride (PVC) remains unsettled however.

PE prices rose on the back of tight supply following continued long-term cracker outages, leaving up to 10% of ethylene capacity off stream, and PE facility turnarounds.

Despite the polymer gains, the US index fell overall by 1.4% with methanol the only other product to exhibit price improvement. Methanol contract prices, having fallen for the past five consecutive months because of ample imports, rose amid further gas curtailments in Trinidad inflating spot barge prices.

The US aromatics sub-index registered the largest decline outside Europe, down by 4.2%. Apart from styrene, which is still awaiting the September contract settlement, benzene prices fell by 7.2%; the most in the region, paraxylene (PX) by 5.8% and toluene by 1.3%.

Benzene prices softened as a result of improving supply conditions coupled with downstream turnarounds for styrene producers.

The Asian sub-index also slipped by 1.4%, with benzene registering the poorest performance as prices fell by 7.1%. Toluene prices also fell by 5.6%.

Asian butadiene (BD) was the second most improved product globally, registering a $66/tonne price improvement ahead of a busy period of cracker turnarounds in September and increased LPG feed utilisation.

Methanol was the only other constituent to register a price rise as sellers maintained bullish sentiment ahead of a seven-day national holiday in China in October.

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, polypropylene and polystyrene (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.

*The September IPEX has been revised from 333.77 to 332.02 following settlements of August contract prices for PX, styrene and PVC in the US, PX and styrene in Asia and PX in Europe. The September index will be subject to further revision once the August contract price settles for ethylene in the US. The October index will be subject to further revision once September contract prices settle for ethylene, styrene and PVC in the US and PX and styrene in Asia.

The revised historical IPEX data is available from ICIS on request
For a full methodology of the revised IPEX, click here