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June 27, 2008

5 Min Read
Polymerupdate global resin pricing and plant news

On the basis of high upstream energy costs, firm prices of ethylene and propylene feedstock, tight supply situations in key Asian markets like China, and reduced runs at several regional plants owing to negative margins, Polymerudpate is reporting that some trading houses have temporarily withdrawn their bids from the markets and retreated to the sidelines to monitor market movement—the speculation being that there are early signs emerging in Asia of buying fatigue, which has been a “wake up call” for at least one trader to slow down buying activity and take stock of its inventories.

Upstream, propylene prices are holding steady in most parts of Asia, with FOB Korea basis at $1750/tonne. In South East Asia, propylene prices are at the $1800/tonne FOB Korea, while on a CFR China basis, propylene prices are at the $1825/tonne.

Styrene monomer (SM) prices in Asia declined in response to a sharp slide in SM prices in China. Falling crude and naphtha rates are partially responsible sending prices down to below the $1635/tonne FOB Korea mark. On the production side, unplanned outages downstream at Wuxi Xingda’s expandable polystyrene (EPS) plant meant there was suddenly additional spot availability of SM in the markets. Market participants are also watching the startup of Jubail Chevron Phillip’s 777 kt/yr unit in Al Jubail, Saudi Arabia.

In key polyethylene terephthalate (PET) feedstock, terephthalic acid (PTA), prices gained in Asia although increases lagged the spike recorded in upstream paraxylene (PX), which climbed above $1700/tonne CFR Asia. PTA prices finished up at $1170 to $1180/tonne CFR Asia. PTA makers Mitsubishi, Hualian Sunshine, and Yisheng are all running their units at reduced capacity rates due to negative margins.

Vinyl chloride monomer (VCM), and therefore, polyvinyl chloride (PVC) feedstock, ethylene dichloride (EDC) prices were assessed up about $20/tonne to $480/tonne CFR Asia with some offers above $500/tonne CFR. VCM prices ended steady at $1000/tonne CFR South East Asia, but upstream pressures continued to remain high and with downstream PVC recording gains and EDC prices on the climb, it was expected that VCM rates too would increase going forward. In related plant news, South Korean firm Hanwha started a turnaround at its vinyls facility located in Yeosu this week. The complex has a 440 kt/yr EDC plant, a 230 kt/yr VCM unit, and 225 kt/yr of PVC output.

In polypropylene (PP), Polymerupdate is reporting that despite softer crude and naphtha rates and the fact that some players have grown cautious in their PP purchases, price offers in the South East Asian region have been rallying. Tight PP availability in South East Asia coupled with high upstream propylene rates have prompted PP homopolymer grades sharply higher, with CIF Vietnam prices of PP injection up at $2055/tonne, up $155/tonne. Indian PP offers to Indonesia are at $2040/tonne for raffia and injection grades, while PP film offers are at the $2060/tonne. Offers from Thailand for PP raffia have firmed to $2040/tonne FOB. Buyers in the Philippines have hiked their bids for PP injection and raffia grades to $2000/tonne CIF, and PP deals to South Asia have been consummated above the $2020/tonne CIF India mark.

In European pricing news, Sabic in Europe announced that as of July 1, it will increase prices euro 200/tonne for all of its high-density polyethylene (HDPE), low-density polyethylene (LDPE), and linear low-density polyethylene (LLDPE) products.

Natural grade and general purpose acrylonitrile butadiene styrene (ABS) contract prices in Europe last week were unchanged at euro 1780/tonne FD North West Europe. In the spot market, ABS prices were firmer at euro 1565/tonne FD North West Europe.

In the wake of Sabic’s announcement, LLDPE prices in Europe raced higher in the spot markets, bolstered by strong domestic demand and tight regional supply. Prices firmed in the contract markets too with butane-grade LLDPE prices assessed at euro 1320/tonne FD North West Europe. In the spot market, butane-grade LLDPE prices rose to euro 1275/tonne FD North West Europe. Following Sabic’s lead, regional producers, including Turkey’s Petkim, are reported to have hiked offers by $40/tonne last week to the $1910/tonne FOB Aliaga. In related plant news Borealis declared force majeure on PE supplies from its swing plant in Schwechat, Austria. The plant has an LLDPE/HDPE swing capacity of 350,000 tonnes/yr.

European LDPE prices have also firmed, with gains recorded in the contract and spot markets. General purpose LDPE contract prices rose to euro 1360/tonne FD North West Europe, while spot markets prices climbed to euro 1275/tonne FD North West Europe.

PP contract prices in Europe were also firmer, with homopolymer injection grades at euro 1220/tonne FD North West Europe, and PP copolymer contract prices higher at euro 1275/tonne FD North West Europe.

PS prices in Europe last week rose with general-purpose grades at euro 1460/tonne FD North West Europe, while high-impact prices rose to euro 1510/tonne FD North West Europe. Prices also raced higher in the spot markets with general purpose at euro 1220/tonne FD North West Europe and high-impact at euro 1255/tonne FD North West Europe.

PVC contract prices in Europe were flat at euro 1020/tonne FD North West Europe, but high upstream product costs, including ethylene feedstock, could mean producers will be determined to take prices higher. In PVC-related plant news, the force majeure declared from Vinnolit’s Knapsack unit on caustic soda, continues. Although production at the PVC plant is on, there are concerns that if repairs at the chlor alkali site take longer than expected, PVC production could be hit.

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