Petrochemicals’ index, high in April, on the slide since

The average daily price of the PGPI dropped 7.5% from $1237/tonne in April to $1144/tonne. The index is a basket of the most widely used petrochemicals prices published by Platts (London), a global energy-information provider. According to Shahrin Ismaiyatim, Platts' global editorial director of petrochemicals, "The April price downturn in olefins, the primary building blocks to most petrochemicals, passed through to aromatics and polymers in May signaling lower input costs for things like plastics, rubber, and nylon."

There were only two days in May that spot prices posted gains over the previous trading day's close. The Index reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene published by Platts and is weighted by the three regions of Asia, Europe and the United States.

In the Americas, June U.S. benzene physical contracts fell $0.57 to an initial settlement price of $2.95 per gallon, setting the stage for a drop in European prices. Meanwhile, U.S. steam cracker operators saw margins shrink as spot ethylene prices extended losses from April, while the monthly average for feedstock ethane prices was almost identical to April.

Moving to the Far East, the majority of Asian petrochemical prices slumping to year-lows in the second-half of May, with all three key aromatics suffering double-digit losses by the end of the month. Asian benzene prices lost nearly 15% of their value from May 17-21, while Asian toluene dropped a similar 15.23% in the same time period. Aromatics are the most actively traded petrochemicals and are used in gasoline blending, pharmaceuticals, plastic manufacturing, and refrigeration, among others.

Also in Asia, propylene prices dropped 19.3%, while the Asian ethylene market declined 23.8%. "Industry players are nervous about the prospect of a free fall in prices reminiscent to the scenarios in end-2008 and early-2009, when the financial tsunami hit global markets, and Asian trading houses closed en-masse," said Quintella Koh, Platts managing editor for Asia petrochemicals.

In Europe, it was a softer crude oil and gasoline environment that led to a decline in aromatics prices, but unfortunately for plastics processors there the drop did not carry over to resin prices. These in fact finished May to the upside, aided by tight inventories, supply issues, and stable demand. —[email protected]