CRUDE GAINS AHEAD OF WEEKEND START

Crude oil prices edged higher on Friday, rising on expectations that oil cartel Organisation of Petroleum Exporting Countries (OPEC) may announce an oil production cut at its emergency meeting next week in an effort to prevent a further decline in rates.

Crude oil prices turned slightly bullish on hints that a curtailment in production will be effected by OPEC at its next meeting which has been postponed to next Friday, October 24th, instead of the original date set for November 18 in the Austrian capital of Vienna . At the meeting the cartel is likely to bring up for discussion issues regarding the current recessionary trends in the global economy and its effects on demand for crude. Ever since reaching record levels of USD 147 per barrels in July 2008, prices have been battered and more than halved in value leading to a dent in revenues for the cartel. The cartel had curtailed its growth demand for oil this year and in 2009 due to a drastic fall in demand for crude in the USA, the world’s largest energy consumer. The growth estimate in demand for crude has been slashed by OPEC to 550,000 barrels per day for 2008, placing average total demand at around 86.5 million barrels per day.

Nymex Crude futures rose to last trade at USD 71.85/barrel. Dated Brent Spot prices decreased marginally to trade at USD 67.69/barrel. WTI Cushing Spot price turned upwards to trade at USD 71.85/barrel.

Polyethylene

ETHYLENE PRICES ON FRIDAY PLUNGE IN ASIA

On Friday last week, ethylene prices in Asia crashed. With buyers refusing to come forward with their inquiries, an intense downward pressure on spot ethylene prices was seen building, forcing sellers to sharply drop their offer prices. Downstream demand for polyolefins continued sluggish while discouraging news about the threats of global recession on the world economy accompanied by plummeting stock markets also contributed towards the sluggish pricing momentum.

Ethylene prices tumbled on Friday and were last assessed at the USD 700/mt FOB Korea levels. Sellers lamented that even at these low prices, buying was non existent and that buyers continued to shy away from putting forward firm bids.

Many actual users confirmed that they were sitting on sufficient inventories, enough to see them through the month of November. Producers, despite having slashed runs were also battling a large build in unsold stock. These factors, along with low demand in the downstream markets convinced buyers that ethylene prices would continue to drift down with a fall of at least another USD 100/mt quite certain within October.

In plant news, SK Energy will down its No. 1 naphtha fed steam cracker with a 200 kt/annum capacity later this month. Lotte Daesan will reduce rates at its 650 kt/annum cracker by 10% this week. KPIC will reduce runs at its 470 kt/annum cracker while YNCC has reduced operations at its three crackers to about 80% rates.

LLDPE PRICES SLUMP MORE THAN USD 150/MT

Asian LLDPE prices fell hard this week, down more than USD 150/mt from previous weeks assessed levels. Price declines in crude, sinking prices of naphtha, plunging ethylene feedstock values and virtually non-existent demand together dragged CFR Asia prices lower to the USD 1230/mt CFR Far East and South East levels and USD 1280/mt CFR South Asia levels.

Sellers of LLDPE lamented that their clients were discouraged by the current global recessionary trends and feared that the worst was yet to come.

As finished product sales remained low world over, demand for LLDPE was subdued. No processor wished to risk building raw material stock in a market where prices falls were fast and sharp.

PE producers were seen tackling the current weak market situation by reducing runs or shutting operations for maintenance.

South Korea’s Hanwha Chemical was scheduled to down its No. 3 LLDPE line in Yeosu October 22nd. If the current trends persisted, Hanwha planned to extend the shutdown beyond the original start up date. Its No.1 LLDPE line was shut on October 13th for a turnaround while its No. 2 line was due to shut on November 4th.

LDPE PRICES CRASH

LDPE general purpose prices crashed this week in Asia. CFR prices mid week were assessed down at the USD 1400/mt levels. By Friday morning, prices further dropped to the USD 1350/mt CFR levels. Demand across Asia remained muted with sellers unable to draw attention their way despite the steep rate cuts.

Regional buyers of LDPE are reluctant to commit to purchases in these uncertain times. The global financial crisis and the slowing world economies are a very real threat which cannot be taken lightly. For those who are sitting on LDPE inventories, buying is not an option at this time. Processors who have run low on stock are showing interest at levels below the USD 1200/mt CFR China mark. Sellers of LDPE may brush these prices off as ridiculous, however given the direction of pricing fundamentals, traders believe that these prices will be tested before long.

PE PRICES IN CHINA DECLINE

Prices of PE in China continued to journey south on Thursday. Falling prices of crude and naphtha coupled with ample supplies and dull demand together dragged PE prices sharply lower.

Market offers for PE down adjusted at Tianjin Port of northern China. PE 9020 and 9085 quoted at around USD 1450/mt and USD 1420/mt respectively. PetroChina was expected to announce its revised price for LLDPE 7042 at USD 1375/mt.

Due to the muted demand, the offers for imported PE also dropped below the USD 1465/mt mark at Tianjin Port yesterday. The mainstream offers for 1002KW and 218W were down at USD 1435/mt and USD 1595/mt respectively.

Chemasia reported that the market offers for PE kept on edging down at Qilu Chemical City. PE TN26, 7042 and 6098 were on offer at around USD 1360/mt, USD 1315/mt and USD 1610-1625/mt respectively.

Polypropylene

BLACK DAYS FOR PROPYLENE AS PRICES FREE FALL

Propylene prices in Asia collapsed on Friday. Prices witnessed a freefall as sellers were seen desperately seeking buyers for their product. FOB Korea prices crumbled to levels near the USD 640/mt mark. CFR China prices were assessed down at the USD 710/mt levels. CFR South East Asia prices crashed to the USD 740/mt levels.

What the markets are witnessing in petrochemical prices these days is unprecedented. It has badly scarred many a market participant leaving most sellers with colossal unimaginable losses. Friday saw propylene prices hammered down by over USD 250/mt. These kind of price declines are not welcomed by the weak hearted sellers. Demand in downstream PP, Phenol, ACN and acrylic acid markets are at a standstill with absolutely no signs of lifting despite these unbelievably steep price declines. This is the worrying factor which has spooked the buying community and has prompted most of them to withdraw entirely from the markets. These days there are no inquiries and no bids, leaving frenzied, panic stricken sellers twiddling their thumbs.

With the threat of a global recessions enveloping world economies, finished product sales have very badly been hit and there is no hope of an early recovery. This convinces traders that maybe the price bottom for propylene is still some distance away. Meanwhile, the best way forward for producers of propylene continues to remain the tool of reducing output.

Another frightening development for the selling community are reports that Chinese buyers have been cancelling deliveries of propylene due to their inability of opening L/C’s. This has resulted in the sudden availability of prompt parcels which will lead to avails of plenty of distress cargoes.

PP MARKETS OF CHINA FACE A GRIM OUTLOOK AS PRICES CONTINUE TO PLUNGE

Activity was extremely thin in the PP markets of Shanghai City in eastern China last week.

Affected by news that the international crude oil prices dropped below the USD 70/barrel mark overnight, sentiments in trading turned further bearish.

The market prices for PP yarn grade declined to USD 1245/mt levels . The prices for PP high-melting copolymer grade were heard to have slipped to levels below the USD 1465/mt mark.

The PP market of Hangzhou City in eastern China’s Zhejiang province saw prices continue to plunge. Sinking prices of crude and naphtha coupled with a crash in prices of propylene feedstock together dragged prices in the region lower. Sharply reduced prices of PP by Sinopec’s Shanghai sales office and PetroChina’s eastern China sales office ruined the confidence of market players. Currently, PP yarn grade T30S manufactured by Sinopec Zhenhai Refining and Chemical Co., Ltd. was quoted at USD 1245/mt, with transactions reported to be scarce even at these low levels.

The PP market of Yuyao City according also saw prices fall by large margins. The downward momentum was strong in the regional markets with no signs of an improvement in the near term.

ASIAN PP PRICES CONTINUE TO DIP WITH NO BOTTOM IN SIGHT FOR THE MARKETS

With propylene prices at the USD 770/mt FOB Korea mark, with naphtha down at below the USD 450/mt CFR Far East levels and with crude at below the USD 70/barrel mark, prices of PP on Friday in Asia came under intense pressure.

Although prices of PP injection and PP raffia were assessed mid week at the USD 1175/mt to USD 1185/mt CFR levels, offers were heard at levels well below these on Friday. Demand was totally slack in Asia and according to most sellers, despite the reduced offer rates, buying interest remained nil.

Distress cargoes are coming up for offer across parts of Asia at very low levels. Rumours in China point toward deals sealed at below the USD 1000/mt CFR mark. There is very little information available regarding these deals hence the price at below the USD 1000/mt mark is not being seriously considered by the selling community. However the damage has been done and buyers are not wrong in awaiting offers at near these levels given the current slump in naphtha and propylene prices.

Meanwhile in south Asia PP injection prices were assessed down this week at the USD 1215/mt CFR levels. PP film was assessed at the USD 1255/mt CFR levels while PP Block Copolymer prices were assessed down at the USD 1245/mt CFR levels. Buyers chose to stay away from purchases at these price levels.

Polystyrene

GPPS AND HIPS PRICES IN ASIA SLIDE SHARPLY

Polystyrene (PS) prices fell sharply in Asia this week. Prices tanked on sliding prices of SM feedstock. Non existent regional demand also pressured spot prices lower.

On Thursday, GPPS prices on a CFR China basis were assessed down at the USD 1300/mt levels. CFR South East Asia prices of GPPS were assessed down at the USD 1310/mt levels. Buyer bids were few and were heard at levels as low as USD 1200/mt CFR. HIPS prices meanwhile were assessed down at the USD 1440/mt CFR China levels and at USD 1450/mt CFR South East Asia levels. The margin between GPPS and HIPS remained high on account of high polybutadiene rubber prices.

Demand across Asia for PS even at the reduced levels was nil. Sellers worried that low finished product sales and fast spreading recessionary trends the world over would continue to hamper demand in the near term. Cues from Asia’s key markets of China and India were very depressed leaving the selling community with no hopes for an early recovery.

Poly Vinyl Chloride

EDC, VCM AND PVC PRICES SINK ACROSS ASIA

PVC prices sank in Asia as demand continued sluggish across the region. With buyers reluctant to commit to fresh purchases owing to global economic uncertainties and crashing upstream prices, near term outlook was labelled as ‘gloomy’.

Ethylene prices meanwhile nosedived on Thursday. Prices fell USD 80/mt to the USD 870/mt to USD 880/mt CFR levels. Prices of EDC also plunged. Falling crude, naphtha and ethylene prices dragged EDC rates in Asia down to the USD 300/mt CFR levels. In China, prices were heard down at below the USD 300/mt levels.

There is little that sellers can do as demand refuses to lift even after sharp rate reductions.

VCM prices were also seen dragged lower in Asia. Despite run cuts, VCM producers were concerned about fast building stocks. A drop in EDC prices coupled with falling PVC rates prompted producers of VCM to lower their rates to the USD 700/mt CFR levels. Buyer bids were non existent. A few speculative buying ideas were low at the USD 650/mt CFR mark.

TRENDS REMAIN SUBDUED IN CHINA’S PVC MARKETS

Sluggish fundamentals continued to grip China’s PVC markets. Weakness in upstream ethylene coupled with falling prices of EDC and VCM, weighed down on the PVC markets in China, dragging spot prices of ethylene based PVC in the region lower. Bearish trends in Asian PVC markets supported the muted pulse across the Chinese markets.

Prices of carbide based PVC also drifted down in China. The PVC market of Xiamen City in Fujian province saw thin transactions yesterday. Downstream plants still viewed future trends as negative and only affected purchases on a hand-to-mouth basis when necessary. Currently, the deals for low-end resources of PVC No.5 resin were done at around USD 915/mt (on a delivered basis). Transactions were hard to conclude even at these sharply reduced levels.

In Hangzhou City of eastern China’s Zhejiang province yesterday, prices for low-end resources of PVC No.5 resin were at around USD 945/mt (on the delivered basis). For high-end resources, prices were at USD 950/mt (on a delivered basis).

Chemasia reported that on the industry side, the 100 kt/yr PVC plant of Yunnan Yanhua Chemical Co., Ltd. was still under outage. Its 30 kt/yr PVC plant was in normal production. The company down adjusted its offers for PVC No.5 resin. Its ex-work offers for cargoes sold to Kunming City of Yunnan province was USD 965/mt.

Acrylonitrile Butadiene Styrene

Polyethylene Terephthalate

Other News

CRUDE AND NAPHTHA INCH UP IN ASIA

With crude futures in Asia up on Monday morning on expectations that OPEC may meet to reduce output to prevent a further slump in prices, naphtha rates in Asia today firmed.

Frist half of December prices of naphtha were up at the USD 455/mt to USD 458/mt CFR Japan levels today. Second half of December prices were up at the USD 470/mt to USD 473/mt CFR Jaapn mark. First half of January prices were up at the USD 484.50/mt to USD 487.50/mt CFR Japan levels.

Despite gains in crude and naphtha, benzene values continued to remain under downward pressure. Prices dropped to below the USD 600/mt FOB Korea levels with bids for December heard at lows near the USD 550/mt FOB Korea mark.

CRUDE GAINS AHEAD OF WEEKEND START

Crude oil prices edged higher on Friday, rising on expectations that oil cartel Organisation of Petroleum Exporting Countries (OPEC) may announce an oil production cut at its emergency meeting next week in an effort to prevent a further decline in rates.

Crude oil prices turned slightly bullish on hints that a curtailment in production will be effected by OPEC at its next meeting which has been postponed to next Friday, October 24th, instead of the original date set for November 18 in the Austrian capital of Vienna . At the meeting the cartel is likely to bring up for discussion issues regarding the current recessionary trends in the global economy and its effects on demand for crude. Ever since reaching record levels of USD 147 per barrels in July 2008, prices have been battered and more than halved in value leading to a dent in revenues for the cartel. The cartel had curtailed its growth demand for oil this year and in 2009 due to a drastic fall in demand for crude in the USA, the world’s largest energy consumer. The growth estimate in demand for crude has been slashed by OPEC to 550,000 barrels per day for 2008, placing average total demand at around 86.5 million barrels per day.

Nymex Crude futures rose to last trade at USD 71.85/barrel. Dated Brent Spot prices decreased marginally to trade at USD 67.69/barrel. WTI Cushing Spot price turned upwards to trade at USD 71.85/barrel.

Polyethylene

ETHYLENE PRICES ON FRIDAY PLUNGE IN ASIA

On Friday last week, ethylene prices in Asia crashed. With buyers refusing to come forward with their inquiries, an intense downward pressure on spot ethylene prices was seen building, forcing sellers to sharply drop their offer prices. Downstream demand for polyolefins continued sluggish while discouraging news about the threats of global recession on the world economy accompanied by plummeting stock markets also contributed towards the sluggish pricing momentum.

Ethylene prices tumbled on Friday and were last assessed at the USD 700/mt FOB Korea levels. Sellers lamented that even at these low prices, buying was non existent and that buyers continued to shy away from putting forward firm bids.

Many actual users confirmed that they were sitting on sufficient inventories, enough to see them through the month of November. Producers, despite having slashed runs were also battling a large build in unsold stock. These factors, along with low demand in the downstream markets convinced buyers that ethylene prices would continue to drift down with a fall of at least another USD 100/mt quite certain within October.

In plant news, SK Energy will down its No. 1 naphtha fed steam cracker with a 200 kt/annum capacity later this month. Lotte Daesan will reduce rates at its 650 kt/annum cracker by 10% this week. KPIC will reduce runs at its 470 kt/annum cracker while YNCC has reduced operations at its three crackers to about 80% rates.

LLDPE PRICES SLUMP MORE THAN USD 150/MT

Asian LLDPE prices fell hard this week, down more than USD 150/mt from previous weeks assessed levels. Price declines in crude, sinking prices of naphtha, plunging ethylene feedstock values and virtually non-existent demand together dragged CFR Asia prices lower to the USD 1230/mt CFR Far East and South East levels and USD 1280/mt CFR South Asia levels.

Sellers of LLDPE lamented that their clients were discouraged by the current global recessionary trends and feared that the worst was yet to come.

As finished product sales remained low world over, demand for LLDPE was subdued. No processor wished to risk building raw material stock in a market where prices falls were fast and sharp.

PE producers were seen tackling the current weak market situation by reducing runs or shutting operations for maintenance.

South Korea’s Hanwha Chemical was scheduled to down its No. 3 LLDPE line in Yeosu October 22nd. If the current trends persisted, Hanwha planned to extend the shutdown beyond the original start up date. Its No.1 LLDPE line was shut on October 13th for a turnaround while its No. 2 line was due to shut on November 4th.

LDPE PRICES CRASH

LDPE general purpose prices crashed this week in Asia. CFR prices mid week were assessed down at the USD 1400/mt levels. By Friday morning, prices further dropped to the USD 1350/mt CFR levels. Demand across Asia remained muted with sellers unable to draw attention their way despite the steep rate cuts.

Regional buyers of LDPE are reluctant to commit to purchases in these uncertain times. The global financial crisis and the slowing world economies are a very real threat which cannot be taken lightly. For those who are sitting on LDPE inventories, buying is not an option at this time. Processors who have run low on stock are showing interest at levels below the USD 1200/mt CFR China mark. Sellers of LDPE may brush these prices off as ridiculous, however given the direction of pricing fundamentals, traders believe that these prices will be tested before long.

PE PRICES IN CHINA DECLINE

Prices of PE in China continued to journey south on Thursday. Falling prices of crude and naphtha coupled with ample supplies and dull demand together dragged PE prices sharply lower.

Market offers for PE down adjusted at Tianjin Port of northern China. PE 9020 and 9085 quoted at around USD 1450/mt and USD 1420/mt respectively. PetroChina was expected to announce its revised price for LLDPE 7042 at USD 1375/mt.

Due to the muted demand, the offers for imported PE also dropped below the USD 1465/mt mark at Tianjin Port yesterday. The mainstream offers for 1002KW and 218W were down at USD 1435/mt and USD 1595/mt respectively.

Chemasia reported that the market offers for PE kept on edging down at Qilu Chemical City. PE TN26, 7042 and 6098 were on offer at around USD 1360/mt, USD 1315/mt and USD 1610-1625/mt respectively.

Polypropylene

BLACK DAYS FOR PROPYLENE AS PRICES FREE FALL

Propylene prices in Asia collapsed on Friday. Prices witnessed a freefall as sellers were seen desperately seeking buyers for their product. FOB Korea prices crumbled to levels near the USD 640/mt mark. CFR China prices were assessed down at the USD 710/mt levels. CFR South East Asia prices crashed to the USD 740/mt levels.

What the markets are witnessing in petrochemical prices these days is unprecedented. It has badly scarred many a market participant leaving most sellers with colossal unimaginable losses. Friday saw propylene prices hammered down by over USD 250/mt. These kind of price declines are not welcomed by the weak hearted sellers. Demand in downstream PP, Phenol, ACN and acrylic acid markets are at a standstill with absolutely no signs of lifting despite these unbelievably steep price declines. This is the worrying factor which has spooked the buying community and has prompted most of them to withdraw entirely from the markets. These days there are no inquiries and no bids, leaving frenzied, panic stricken sellers twiddling their thumbs.

With the threat of a global recessions enveloping world economies, finished product sales have very badly been hit and there is no hope of an early recovery. This convinces traders that maybe the price bottom for propylene is still some distance away. Meanwhile, the best way forward for producers of propylene continues to remain the tool of reducing output.

Another frightening development for the selling community are reports that Chinese buyers have been cancelling deliveries of propylene due to their inability of opening L/C’s. This has resulted in the sudden availability of prompt parcels which will lead to avails of plenty of distress cargoes.

PP MARKETS OF CHINA FACE A GRIM OUTLOOK AS PRICES CONTINUE TO PLUNGE

Activity was extremely thin in the PP markets of Shanghai City in eastern China last week.

Affected by news that the international crude oil prices dropped below the USD 70/barrel mark overnight, sentiments in trading turned further bearish.

The market prices for PP yarn grade declined to USD 1245/mt levels . The prices for PP high-melting copolymer grade were heard to have slipped to levels below the USD 1465/mt mark.

The PP market of Hangzhou City in eastern China’s Zhejiang province saw prices continue to plunge. Sinking prices of crude and naphtha coupled with a crash in prices of propylene feedstock together dragged prices in the region lower. Sharply reduced prices of PP by Sinopec’s Shanghai sales office and PetroChina’s eastern China sales office ruined the confidence of market players. Currently, PP yarn grade T30S manufactured by Sinopec Zhenhai Refining and Chemical Co., Ltd. was quoted at USD 1245/mt, with transactions reported to be scarce even at these low levels.

The PP market of Yuyao City according also saw prices fall by large margins. The downward momentum was strong in the regional markets with no signs of an improvement in the near term.

ASIAN PP PRICES CONTINUE TO DIP WITH NO BOTTOM IN SIGHT FOR THE MARKETS

With propylene prices at the USD 770/mt FOB Korea mark, with naphtha down at below the USD 450/mt CFR Far East levels and with crude at below the USD 70/barrel mark, prices of PP on Friday in Asia came under intense pressure.

Although prices of PP injection and PP raffia were assessed mid week at the USD 1175/mt to USD 1185/mt CFR levels, offers were heard at levels well below these on Friday. Demand was totally slack in Asia and according to most sellers, despite the reduced offer rates, buying interest remained nil.

Distress cargoes are coming up for offer across parts of Asia at very low levels. Rumours in China point toward deals sealed at below the USD 1000/mt CFR mark. There is very little information available regarding these deals hence the price at below the USD 1000/mt mark is not being seriously considered by the selling community. However the damage has been done and buyers are not wrong in awaiting offers at near these levels given the current slump in naphtha and propylene prices.

Meanwhile in south Asia PP injection prices were assessed down this week at the USD 1215/mt CFR levels. PP film was assessed at the USD 1255/mt CFR levels while PP Block Copolymer prices were assessed down at the USD 1245/mt CFR levels. Buyers chose to stay away from purchases at these price levels.

Polystyrene

GPPS AND HIPS PRICES IN ASIA SLIDE SHARPLY

Polystyrene (PS) prices fell sharply in Asia this week. Prices tanked on sliding prices of SM feedstock. Non existent regional demand also pressured spot prices lower.

On Thursday, GPPS prices on a CFR China basis were assessed down at the USD 1300/mt levels. CFR South East Asia prices of GPPS were assessed down at the USD 1310/mt levels. Buyer bids were few and were heard at levels as low as USD 1200/mt CFR. HIPS prices meanwhile were assessed down at the USD 1440/mt CFR China levels and at USD 1450/mt CFR South East Asia levels. The margin between GPPS and HIPS remained high on account of high polybutadiene rubber prices.

Demand across Asia for PS even at the reduced levels was nil. Sellers worried that low finished product sales and fast spreading recessionary trends the world over would continue to hamper demand in the near term. Cues from Asia’s key markets of China and India were very depressed leaving the selling community with no hopes for an early recovery.

Poly Vinyl Chloride

EDC, VCM AND PVC PRICES SINK ACROSS ASIA

PVC prices sank in Asia as demand continued sluggish across the region. With buyers reluctant to commit to fresh purchases owing to global economic uncertainties and crashing upstream prices, near term outlook was labelled as ‘gloomy’.

Ethylene prices meanwhile nosedived on Thursday. Prices fell USD 80/mt to the USD 870/mt to USD 880/mt CFR levels. Prices of EDC also plunged. Falling crude, naphtha and ethylene prices dragged EDC rates in Asia down to the USD 300/mt CFR levels. In China, prices were heard down at below the USD 300/mt levels.

There is little that sellers can do as demand refuses to lift even after sharp rate reductions.

VCM prices were also seen dragged lower in Asia. Despite run cuts, VCM producers were concerned about fast building stocks. A drop in EDC prices coupled with falling PVC rates prompted producers of VCM to lower their rates to the USD 700/mt CFR levels. Buyer bids were non existent. A few speculative buying ideas were low at the USD 650/mt CFR mark.

TRENDS REMAIN SUBDUED IN CHINA’S PVC MARKETS

Sluggish fundamentals continued to grip China’s PVC markets. Weakness in upstream ethylene coupled with falling prices of EDC and VCM, weighed down on the PVC markets in China, dragging spot prices of ethylene based PVC in the region lower. Bearish trends in Asian PVC markets supported the muted pulse across the Chinese markets.

Prices of carbide based PVC also drifted down in China. The PVC market of Xiamen City in Fujian province saw thin transactions yesterday. Downstream plants still viewed future trends as negative and only affected purchases on a hand-to-mouth basis when necessary. Currently, the deals for low-end resources of PVC No.5 resin were done at around USD 915/mt (on a delivered basis). Transactions were hard to conclude even at these sharply reduced levels.

In Hangzhou City of eastern China’s Zhejiang province yesterday, prices for low-end resources of PVC No.5 resin were at around USD 945/mt (on the delivered basis). For high-end resources, prices were at USD 950/mt (on a delivered basis).

Chemasia reported that on the industry side, the 100 kt/yr PVC plant of Yunnan Yanhua Chemical Co., Ltd. was still under outage. Its 30 kt/yr PVC plant was in normal production. The company down adjusted its offers for PVC No.5 resin. Its ex-work offers for cargoes sold to Kunming City of Yunnan province was USD 965/mt.

Acrylonitrile Butadiene Styrene

Polyethylene Terephthalate

Other News

CRUDE AND NAPHTHA INCH UP IN ASIA

With crude futures in Asia up on Monday morning on expectations that OPEC may meet to reduce output to prevent a further slump in prices, naphtha rates in Asia today firmed.

Frist half of December prices of naphtha were up at the USD 455/mt to USD 458/mt CFR Japan levels today. Second half of December prices were up at the USD 470/mt to USD 473/mt CFR Jaapn mark. First half of January prices were up at the USD 484.50/mt to USD 487.50/mt CFR Japan levels.

Despite gains in crude and naphtha, benzene values continued to remain under downward pressure. Prices dropped to below the USD 600/mt FOB Korea levels with bids for December heard at lows near the USD 550/mt FOB Korea mark.

CRUDE OIL PRICES SLIDE BELOW USD 80/BARREL

Crude oil prices declined below the USD 80/barrel mark on Friday due to declines in the stock markets the world over and fears that demand for oil will recede in the near future.

Crude prices turned sharply bearish upon panic selling of shares which sent global stock markets crashing down as fears have risen that the financial crisis which has gripped the world could lead to a global recession. Even energy stocks have been impacted due to the decline in the global stock markets. One of the world’s largest energy companies, Exxon Mobil Corp also witnessed its shares falling to a 52 week low on Friday. It is being feared that the falling stock markets coupled with weak financial conditions of many countries could lead to a fall in demand for crude, adding to further downward pressure on prices.

The bearish undertone in crude prices was also due to the fact that Paris based energy watchdog, International Energy Agency curtailed its forecast for oil demand for this year by 240,000 barrels per day and for 2009 by 440,000 barrels per day. Global oil demand for 2008 is now expected to be pegged at 86.5 million barrels per day by the IEA and 87.2 million barrels per day next year.

Prices also fell on account of reports that crude inventories in the US had fallen as a result of weaker demand for the commodity. In its weekly inventory report released for the week ended October 3, The US Department of Energy (DoE) stated that there was a rise of 8.1 million barrels in crude inventories, far greater than a market expectation of a gain of 2.3 million barrels.

Nymex Crude futures fell sharply to last trade at USD 77.70/barrel. Dated Brent Spot prices decreased steeply to trade at USD 76.24/barrel. WTI Cushing Spot prices turned downwards to trade at USD 77.70/barrel.

Polyethylene

ETHYLENE PRICES FREE FALL TO LEVELS BELOW THE USD 900/MT CFR MARK

Ethylene prices were assessed lower at below the USD 900/mt CFR Asia levels. Prices were punished as demand was nil and supplies ample. Sellers in a desperate attempt to attract buyers crashed their offer rates to the USD 880/mt CFR Asia mark.

Even after the price drop, buyers of ethylene remain distanced from purchases. Sellers have been repeatedly failing in efforts to confirm business and now are convinced that even at the USD 850/mt CFR Asia mark they will remain unsuccessful in finding buyers. Few have witnessed a market depression as they are now experiencing. In the downstream markets, prices of PE have plunged. Even after the declines, buying continues to disappoint. The weakness is widespread and impacting every sector of industry.

In plant news, Formosa is reported to have shutdown its No. 3 cracker which has a 1.2 million mt/annum output capacity. The plant will remain down until October 18th.

In Japan, Mitsui is planning to shut its cracker in Chiba on October 20th for repairs. The plant will remain down for about 10 days.

BUYING INACTIVITY DRIVES SPOT LLDPE RATES IN ASIA DOWN USD 120/MT

LLDPE prices declined in Asia last week. Mid week prices were assessed down at the USD 1400/mt CFR Far East and South East Asia levels. At these prices, buyers failed to come forward with their orders. Given the steady and steep price fall in crude, naphtha and ethylene feedstock, LLDPE sellers by Friday, further reduced their offer rates. Prices finished down at the USD 1355/mt CFR levels.

LLDPE sellers are aware that buyers in China are sitting on very low LLDPE stock. However they are refusing to consider offers no matter how low these are. Last week LLDPE offer prices were down revised by about USD 120/mt. Even at the USD 1360/mt to USD 1370/mt CFR China mark, buyers remained reluctant to transact.

In China, LLDPE imports in the month of August fell to 117,55 mt. This represented a decline of 25.4% from a month earlier.

ASIAN PRICES OF LDPE FALL USD 100/MT

Prices of LDPE sank in Asia last week. By Wednesday last week, LDPE rates were down USD 50/mt from a week earlier. The absence of buying interest accompanied by a crash in ethylene feedstock rates on Friday dragged spot LDPE numbers down a further USD 50/mt. General purpose LDPE prices in the Far East by Friday were assessed at the USD 1500/mt to USD 1510/mt CFR levels.

Despite the steep price reductions, buying has failed to improve. This does not favour the selling community who now fear further losses in prices this week. Buyers are reluctant to purchase cargoes in light of the many uncertainties in play including fears of a global economic recession. Finished product sales have dropped and most businesses have been badly hit.

In China, LDPE imports in the month of August dropped to 58,767 mt, a decline of about 31.2% from July.

PE SELLERS IN CHINA SHARPLY REDUCE THEIR PRICES IN A PANIC STICKEN MARKET

Prices of PE in the market of Tianjin Port in northern China plunged. With ethylene prices in Asia tanking and with PE prices in the region witnessing a steep plunge, the impact on China’s PE markets was hard and immediate.

Offers for domestic LDPE film grade and LLDPE were pegged down at USD 1610/mt. The offer for LLDPE 0209AA manufactured by PetroChina Dushanzi Petrochemical Co., Ltd. was at USD 1580/mt.

In the import markets, the offers for LLDPE 0218D and 1002KW were heard at USD 1580/mt and USD 1725/mt respectively.

Traders based in Hangzhou City of eastern China’s Zhejiang province who were already low on confidence lost further trust in near term pricing trends on news that the settlement prices for PE by Sinopec’s Shanghai sales office and PetroChina’s eastern China sales branch in succession, were sharply down from the previous official prices. The market prices for PE 2425H, 7042, 5000S, 7260 and 5502FA were at USD 1625-1685/mt, around USD 1625/mt, USD 1755/mt and USD 1640/mt and USD 1685/mt respectively.

A source reported that panic spread across the PE markets of Qilu Chemical City over the weekend. Prices of PE TN26, 2102TN00, 7042 and 6098 quoted down at USD 1615/mt, RMB 1625/mt, USD 1625/mt and USD 1785/mt respectively.

Polypropylene

ASIAN PROPYLENE PRICES TANK

Propylene prices were seen plummeting in Asia last week with Friday alone seeing spot prices down USD 90/mt. The weeks losses were steep at over USD 150/mt. FOB Korea prices of propylene slipped to the USD 900/mt levels with CFR South East Asia prices down at the USD 1000/mt levels. CFR China and CFR Taiwan prices of propylene were assessed down at the USD 970/mt levels.

Sinking prices of upstream crude and naphtha coupled with the absence of buying activity in the downstream PP markets sent propylene feedstock buyers deeper into the sidelines. Regional stocks of propylene were ample including in Japan and South Korea and sellers conceded to the fact that their struggles hereon would continue to mount in light of the current global financial crisis.

Sellers of propylene who turned their attention to markets outside Asia including the US and Europe found that the buying sentiments in both regions were equally dull.

In Asia’s PP markets meanwhile, prices of injection and raffia grades on Friday were assessed down at the USD 1200/mt CFR levels. Sellers complained that even after the steep price falls, PP buyers failed to respond enthusiastically insisting that trends were unlikely to lift until finished product sales improved. And this was unlikely to happen as long as global economies were heading toward a recession.

SELLER OF PP EXPECTS PRICE PLUNGE TO CONTINUE

Crashing crude and naphtha prices, plunging prices of propylene feedstock, the absence of buying interest triggered by a global economic crisis and ample regional product availability together dragged prices of PP across Asia sharply lower this week.

CFR prices of PP injection and PP raffia were assessed down at the USD 1250/mt levels in China. PP film prices were assessed at the USD 1300/mt CFR China levels while PP copolymer prices were down at the USD 1285/mt CFR levels. In South Asia PP injection and PP raffia prices were assessed down at the USD 1300/mt CFR levels while PP film prices were assessed at the USD 1350/mt CFR levels. Even at these prices, buying interest was impossible to come by and the struggle for sellers continued to steadily mount.

Other than a trickle of need based inquiries, market activity remains dry. What is an increasingly disconcerting thought for sellers is that despite their willingness to offer hefty reductions and sell PP stocks at a loss, they have failed to awaken buyer interest.

Inactivity in PP markets is expected to continue throughout the week. Indeed prices of PP will likely sink to below the USD 1200/mt CFR levels. There seems no stopping the negative triggers which have instilled themselves in every nook and cranny of the markets.

PP PRICES NOSEDIVE IN CHINA

Even though the official price of PetroChina’s eastern China sales branch for PP yarn grade was fixed at RMB 1625/mt, prices in the open markets for this grade were down at below USD 1465/mt. Short-selling in the futures markets dragged spot prices lower in the PP markets of Hangzhou City in Zhejiang province.

The market offers for PP fell sharply at Tianjin Port of northern China too. Several downstream plants were shut, leading to extremely weak demand.

Traders in the PP market of Shantou City in Guangdong province of southern China were low on confidence and reduced their offers in tandem with falling prices of crude, naphtha and propylene feedstock rates. Declining prices of PP across the rest of Asia coupled with low demand pushed prices of PP lower in the region. The market prices for PP T30S and V30G from Hainan were pegged at USD 1600/mt and USD 1610/mt according to source.

Polystyrene

PRICES OF SM TANK IN ASIA

A sharp tumble in prices of upstream crude, naphtha, ethylene and benzene, dragged lower prices of Asian SM on Friday with FOB Korea rates plunging to the USD 1050/mt levels.

In China, domestic prices fell a whopping USD 75/mt as buyers refused to entertain seller offers no matter how willing they were to reduce their rates. Chinese prices of SM were heard down at the RMB 1245/mt ex tank levels late on Friday.

CFR Taiwan prices of SM were down at the USD 1080/mt levels with 30 day payment terms. Despite the drop, buying interest was nil.

With activity in the derivative PS and ABS markets painfully sluggish in Asia, the near term outlook in SM was negative and market participants remained convinced that steep price drops would continue.

Meanwhile sellers outnumbered buyers with several traders predicting a further crash in SM values next week triggered by Friday’s plummeting prices of ethylene and falling benzene feedstock rates.

PS PRICE FALL IN ASIA SWIFT AND STEEP

A price plunge in upstream SM coupled with the absence of buying across the Asian region weighed down heavily on the polystyrene (PS) markets this week, dragging spot prices of both GPPS and HIPS sharply lower.

CFR prices of GPPS in China and South East Asia were assessed at levels as low as USD 1400/mt. CFR prices of HIPS were assessed down at the USD 1530/mt levels. Despite prices diving more than USD 80/mt from previous weeks assessed levels, buying failed to show any signs of lifting.

A PS processor a polymerupdate team member spoke with this morning said, “ on Friday, crude prices nose dived near about USD 9/barrel. Nymex rates fell to the USD 77.70/barrel levels. Naphtha on Monday will open sharply down and will drag further lower prices of ethylene, benzene and SM feedstock. Given these price declines and given that finished product sales are very poor; processors are not risking purchasing any fresh raw material stock.

The bottom for PS is still a long distance away with over a USD 200/mt reduction from current levels expected.

CHINESE PS PRODUCERS LOWER THEIR PRICES

BASF-YPC Co., Ltd. lowered its PS offers this week. The reference ex-work prices for GPPS 158K and HIPS 476/466 were revised at USD 1875/mt and USD 2020/mt respectively. Run rates were at its PS unit was kept at 70%.

The prices for PS posted by Chevron-Phillips Chemical Industry (Zhangjiagang) Co., Ltd. were on a steady decline after the holidays. Prices were pushed lower following a steep drop in upstream SM rates coupled with muted buying interest in the region. The latest open ex-work offer for HIPS 5210 was USD 2005/mt. Sales were flat despite the price reduction. Run rates were at 70% capacity.

Meanwhile, the Ningbo subsidiary of Taiwan’s Formosa Chemicals and Fibre Corporation (FCFC) lowered its open ex-work offers for PS by USD 30/mt. According to source, GPPS 5250 and HIPS 8250 were now on offer at USD 1740/mt and USD 1930/mt respectively.

Poly Vinyl Chloride

EDC, VCM AND PVC PRICES SINK ACROSS ASIA

PVC prices sank in Asia as demand continued sluggish across the region. With buyers reluctant to commit to fresh purchases owing to global economic uncertainties and crashing upstream prices, near term outlook was labeled as ‘gloomy’.

Ethylene prices meanwhile nosedived on Thursday. Prices fell USD 80/mt to the USD 870/mt to USD 880/mt CFR levels. Prices of EDC also plunged. Falling crude, naphtha and ethylene prices dragged EDC rates in Asia down to the USD 300/mt CFR levels. In China, prices were heard down at below the USD 300/mt levels.

VCM prices were also seen dragged lower in Asia. Despite run cuts, VCM producers were concerned about fast building stocks. A drop in EDC prices coupled with falling PVC rates prompted producers of VCM to lower their rates to the USD 700/mt CFR levels. Buyer bids were non existent. A few speculative buying ideas were low at the USD 650/mt CFR mark.

SUBDUED BUYING INTEREST PRESSURES PVC PRICES IN CHINA LOWER

Prices of PVC in the markets of Fuzhou City of Fujian province in China continued to decline on Tuesday. Post the National Day holidays, buying activity across China failed to show any signs of improvement, spreading a wave of panic among sellers. Bearish cues from upstream crude and naphtha and from other Asian markets, further prompted a call for sharp price reductions which did not spear any product.

Deals for low-end resources of PVC No.5 resin and for large orders were done at reduced price levels of around USD 960/mt (on a delivered basis). The dealing prices for part of the high-end resources and small orders were at a level of USD 965-975/mt (on a delivered basis). Trading volumes were extremely thin.

Transactions were sluggish in the PVC market of Jieyang City in Guangdong province of southern China yesterday. The deals for common resources of PVC No.5 resin were done at USD 955-965/mt (on the delivered basis). As the selling prices for some individual ethylene-based PVC materials were comparatively low, the local carbide-based PVC market was also impacted.

On the industry side, the 120 kt/yr carbide-based PVC plant of Zhejiang Juhua Chemical Co., Ltd. was still being overhauled and the restart date was yet to be decided. A source reported that the run rate at the other carbide-based PVC plant of the company was kept at about 50% capacity levels.

Acrylonitrile Butadiene Styrene

Polyethylene Terephthalate

Other News

NAPHTHA PRICES IN ASIA DOWN AT THE USD 563/MT LEVELS

Naphtha prices in Asia opened softer on Monday morning. Second half of November prices were sharply down at the USD 563/mt to USD 566/mt CFR Japan levels. First half of December prices were at the USD 578/mt to USD 581/mt CFR Japan levels. Second half of December prices were at the USD 592/mt to USD 595/mt CFR Japan mark.

Prices in the aromatics markets meanwhile held stable at the start of trade today. Although buying continued to remain lackluster, sellers were keen to defend their offers for benzene and toluene stable on the back of gains in crude futures in Asia on Monday morning. Sellers therefore kept their benzene offers at the USD 810/mt FOB Korea levels while prices of toluene were pegged at the USD 730/mt FOB Korea levels.

Downstream buying activity in SM is dry. FOB Korea prices of SM have slipped to below the USD 1000/mt levels. This is sure to keep the pressure on benzene prices in the region ticking. Committing to a benzene purchase today will be a risk. Even if prices do hold out, this will be temporary. The near term outlook continues to look bearish across product sectors.