INSIGHT INTERACTIVE: US petrochemical prices surge on Harvey disruptions, IPEX climbs

04 October 2017 17:12 Source:ICIS News

By Nigel Davis

LONDON (ICIS)--Hurricane Harvey disruption on the US Gulf Coast pushed upstream petrochemical prices up sharply last month, with significant increases for the major olefins, aromatics and for polypropylene, ICIS data showed this week.

The US ethylene contract for August and September had remained unsettled until Tuesday 3 October. Now the price levels agreed show increases of 12.8% in September – and 6.8% in August.

Crackers and other production units were shut by the storm and subsequent flooding and while many plants restarted in September there was uncertainty about how long outages would continue. Ethylene spot prices climbed through September and ethylene demand remained high due to the units that were running, running hard.

The hurricane’s impact, alongside the usual other factors, helped drive US propylene prices up 17.7% in September, according to data collected for the monthly ICIS Petrochemical Index, or IPEX.

US butadiene for the month was up 9.1%, US benzene up 6.8%, and US toluene up 11.7%. US polypropylene was up 12.6%.

The US IPEX, an index which represents a basket of prices for 12 petrochemicals* weighted by capacity.

The clear impact on the US IPEX is an index increase of 6.1%. Some steep month to month price increases for other petrochemical commodities and polymers also helped push up the other regional indexes and the global index itself.

The global IPEX was up 7.1% compared to August and up 14% year on year.

Prices in Asia and Europe moved up on the back of Harvey concerns and on rising oil and naphtha prices.

The northeast Asia index for September was 8.0%; the September index for northwest Europe up 6.3%.

Helping to drive the northeast Asia index up was a much higher (+28.5%) price rise for butadiene. The surge was caused by tight supply and strong demand in China as consumers re-stocked ahead of the Golden Week holidays.

Northeast Asia methanol prices were up 15.5% up largely on strong methanol to olefins demand.

ICIS has been working with clients trying to assess the likely impact in both the short and the longer term. Its analysis indicates that Harvey related costs will be a burden on companies for months to come with severe knock-on effects down multiple supply chains.

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

The IPEX values are subject to revision as some contract prices settle retrospectively. Contract prices for the following products are not yet settled for September: US styrene, paraxylene and PVC.

Download global and regional ICIS IPEX data here
View the full IPEX methodology here

By Nigel Davis