INSIGHT: Global downward pressure on chemicals prices continues in May, IPEX falls further

By Nigel Davis

LONDON (ICIS)–The Global ICIS Petrochemical Index (IPEX) fell further in May, dropping 5.0% compared to April, according to data released by ICIS on Wednesday.

For May, the US index led the way down, dropping by 6.6% as C3 and C4 prices fell sharply.

The butadiene rollercoaster ride continued, with US prices down a staggering 31% and sharp price falls in Asia.

The May butadiene contract price in the US was agreed much lower, as imports and resolved production problems improved supply and downstream outages crimped demand. In March, two producers had sales on allocation based on production issues and a turnaround.

Prices were also under pressure as imports arrived and butadiene prices softened in other parts of the world.

The US C3 picture this year has been dominated by restricted monomer supply. Propylene had similar dynamics to butadiene. The spring refinery turnaround season limited supply as usual but two US Gulf crackers were down for maintenance and, in addition, there were two unplanned cracker outages in the first quarter. From late February, propylene inventories were down between 10% and 35% week to week.

There were sharp falls in May northwest Europe styrene contract price and the regional polystyrene contract prices was pushed lower as a result.

The northwest Europe styrene contract prices fell by €245/tonne from the previous month to €1,130/tonne, the second consecutive triple digit euro decrease. Spot styrene price numbers had been drifting lower in Europe through most of April on ready product availability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Sharply lower prices for methanol in the US and northeast Asia also contributed to the index value decline. Methanol spot prices in the US in April tracked lower following China spot levels.

China prices had been dropping fast on sluggish methanol to olefins (MTO) production and weaker crude oil. The US methanol contract price for May was assessed down 9.4% on the spot price falls and reduced China demand.

Ethylene prices were down sharply in northeast Asia in May as were prices for most of the other commodities in the IPEX basket.

The 12 petrochemicals and polymers n the basket are ethylene, propylene, butadiene, benzene, toluene, paraxylene, styrene, polystyrene (PS), polyethylene (PE), polypropylene (PP), methanol and polyvinyl chloride (PVC).

The monthly average Brent crude price was slightly higher in April, when most contract prices were struck, compared with March when they had been on a sharp downward trend.

The May IPEX numbers will be subject to change when the US styrene contract price for the month is settled.

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