Weaker Asian Olefins Contribute to 5% Drop in Global Petrochemical Prices Platts Olefins and Polymer Indexes Now Available via Platts Market Center

TAIWAN, May 8, 2013 /PRNewswire/ -- Prices in the $3-trillion-plus global petrochemicals market fell 5% to $1,309 per metric ton (/mt) in April, according to the monthly Platts Global Petrochemical Index (PGPI) just released at the 2013 Asia Petrochemical Industry Conference, one of the industry's most popular gatherings since 1979. The PGPI is a benchmark basket of seven widely used petrochemicals and is published by Platts, a leading global energy, petrochemicals and metals information provider and a top source of benchmark price references.

The PGPI showed a similar 5% month-over-month decrease from February to March.   On a year-over-year basis, the data showed petrochemical prices last month were down 9% from the April 2012 average price of $1,444/mt.  

Petrochemicals are used to make plastic, rubber, nylon and other consumer products and are utilized in manufacturing, construction, pharmaceuticals, aviation, electronics and nearly every commercial industry.

Olefins
Olefins – a group of hydrocarbon compounds which are the building blocks to many petrochemicals – saw the greatest price declines of the PGPI last month.

"Ethylene was particularly weak," said Jim Foster, Platts senior petrochemicals analyst. "Not surprising since crude oil prices declined, as did naphtha prices. With naphtha determining the marginal price for ethylene, ethylene prices had to follow."

PLATTS GLOBAL PETROCHEMICAL INDEX IN DOLLARS PER METRIC TON
The daily price reflected as a monthly average

Apr-'13

Monthly

%

Change

Annual

%

change

Apr-'12

Mar-'13

Feb-'13

Jan-'13

Dec-'12

$1,309

- 5%

- 9%

$1,444

$1,378

$1,453

$1,425

$1,350

The average price of ethylene in Asia fell 5% in April to $1,232 per metric ton (/mt), as measured on a cost and freight basis to China. Asian buying of ethylene slowed last month as the cost of raw material inputs for petrochemicals fell and downstream demand weakened, partly for plant maintenance reasons.

There were many instances of buyers in Japan and South Korea offering ample May-loading cargoes in April, ahead of scheduled maintenance planned for downstream operations in May. South Korea's Hanwha Chemical is set to shut its 200,000 mt/year No. 2 vinyl chloride monomer line in Yeosu May 20-July 10 for maintenance, and its 190,000 mt/year No. 1 line in Yeosu for a week following the restart of its No. 2 line.

Japan's Tosoh plans to shut its 260,000 mt/year No. 1 VCM plant in Nanyo May 16-June 25 for maintenance, and its upstream 1.125 million mt/year caustic soda and 1.2 million mt/year ethylene dichloride plants at the same complex during the same period. The planned closures are expected to further decrease demand for ethylene.

Pressure on ethylene prices was not isolated to Asia. The global ethylene index was $1,249/mt in April, down 7% from the March 2013 average of $1,349/mt. On a year-over-year basis, ethylene prices fell 10% last month. As a result, low density polyethylene (LDPE), which is produced from ethylene and used to make thin film for food and other packaging and coatings for cables, saw a 5% price drop in April to $1,460/mt from $1,538/mt in March.  

The Platts Global Naphtha Index averaged $558/mt in April. This marked an 11% slide from the March average of $629/mt in May. The naphtha index was down nearly 20% from April 2012. Naphtha was lower on a month-over-month and year-over-year basis, largely in response to declining crude oil prices. The price of Dated Brent crude oil slipped 6% last month to an average $103 per barrel.

Propylene, the second olefin component of the Platts Global Petrochemical Index, was also lower in April. It fell to 6% to $1,247/mt last month versus the March level of $1,331/mt. Polypropylene, which is produced from propylene, fell 3% in April to $1,477/mt.

"Market sources believe propylene derivatives in Asia could see price support in the near future, given that a number of major producers have announced cuts in operating rates, which will limit supply," Foster said. "However, any sustained weakness in downstream demand could cap any gains."

More information on olefins may be found in Platts' Olefinscan, a news service focused on supply, demand and price fundamentals. Platts today announced subscribers have an additional means of accessing Olefinscan: via the online Platts Market Center platform, which provides a number of tools that allows its users to better assess and analyze price trends.

Aromatics
Prices of aromatics – a group of scented hydrocarbons with benzene rings, used to make a variety of petrochemicals - were mostly lower in April, also following energy prices lower.  For example, the Global Toluene Index averaged $1,133/mt in April, marking a 5% decline from the March level of $1,197/mt.  However, on a year-over-year basis, toluene prices were up 2% compared to April 2012.

Paraxylene prices fell 5% in April to $1,406/mt compared to the prior month's average of $1,472/mt. But on a year-over-year basis, prices of paraxylene, like toluene, were up 2% versus the April 2012 average.  

The Global Benzene Index was the only price component of the PGPI to show an increase in April. It edged up 1% to $1,315/mt in April following a March level of $1,301/mt. Compared to the same time a year ago, the Global Benzene Index was up 6% in April.  

Petrochemical prices last month moved counter to price trends in the global equity markets. The Dow Jones Industrial Average (DJIA) rose 2% month-over-month in April. The London Stock Exchange Index (FTSE) edged up less than 1%. But in Asia, the Nikkei 225 was up a robust 12%.  

To access a summary of the April performance of each of the seven key petrochemicals included in the PGPI, visit this link: http://www.platts.com/newsfeature/2013/Petrochemicals/pgpi/index.

The PGPI reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the United States. Used as a price reference, a gauge of sector activity, and a measure of comparison for determining the profitability of selling a barrel of crude oil  intact or refining it into products, the PGPI was first published by Platts in August 2007.

Published daily in a real-time news service Platts Petrochemical Alert and other Platts publications, the PGPI is anchored by Platts' robust and long-established price assessment methodology and the firm's 100-year history of energy price reporting. 

Platts petrochemicals experts are available for media interviews. A sample list of experts may be found at the Platts Media Center. For more information on petrochemicals, visit the Platts website at www.platts.com.

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets.  Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency.  Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coalelectricityoil, natural gasmetalsnuclear powerpetrochemical, shipping and sugar markets.  A division of McGraw Hill Financial (NYSE: MHP), Platts is headquartered in New York with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHP), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power & Associates, McGraw Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.com.

SOURCE Platts



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