By Nigel Davis
LONDON (ICIS)--Olefins and plastics prices stopped falling in northeast Asia in July, putting the brakes on the decline that had reflected earlier crude price volatility and falling oil prices from late May to late June.
Prices are still up on last year but in the generally lowest price petrochemicals market, and certainly the most reactive, the falling price trend eased.
Prices of 12 major petrochemicals and polymers* form the basis for the ICIS regional and global petrochemical price indexes, or IPEXs.
The northeast Asia IPEX rose 1.5% in July as sentiment turned more positive, and the sharp price corrections seen earlier for butadiene and methanol were absent.
The Global IPEX value for the month was down 1.2% at 233.17 (the IPEX is calculated relative to a January 1993 base of 100), but it remained 7% above the year before level.
And while the northeast Asia index was high month to month, the US IPEX was down 3.8% and the northwest Europe IPEX down 3.4%.
Running into July and early in the month – as major contract prices are settled in both regions, supply demand balances were coming into closer alignment following maintenance and other shutdowns earlier in the year.
There was some fundamental rebalancing at work in some of the major commodity petrochemical markets.
Butadiene and methanol prices were both in a state of flux.
Reacting to the rebalancing market in Asia to weaker rubber market sentiment butadiene prices in northwest Europe were down 30.8% in July while butadiene prices in the US were 25.0% lower.
Butadiene prices in northeast Asia in July were up 3.2%.
Methanol prices in northwest Europe were down 20.1%, while the decline in the US was 2.6% while prices were higher in northeast Asia.
The third quarter European contract price for methanol was settled down sharply following the downward trend in spot prices and much weaker prices in China.
Ethylene prices were down 2.3% in northwest Europe but up 2.6% in northeast Asia.
Ethylene prices were 4.1% lower in the US. Spot prices had been falling running into the start of the month largely on better availability.
Two crackers were down at the end of June but so were their downstream units.
Meanwhile, two new shale-gas based crackers in Texas, and expanded crackers in that US sate as well as Louisiana and the Mid-west had begun contributing to supply.
Downstream demand in PE had been hampered by high inventories, a situation that was not auguring well for the onrush of new ethylene and PE supply expected from the US as the shale-led investment wave began to bear fruit.
The ICIS IPEX values are subject to revision as contract prices for some of the petrochemicals in the basket settle.
On agreement, the US styrene contract price for July will impact the US and global IPEX values for the month.
*The 12 products in the ICIS IPEX basket are ethylene, propylene, butadiene, benzene, toluene, paraxylene (PX), styrene, polyethylene (PE), polypropylene (PP), polystyrene (PS), polyvinyl chloride (PVC) and methanol.