September Petrochemical Prices Fell 5% on Fear of Slowdown & Weaker Oil

LONDON, Oct. 5, 2011 /PRNewswire/ -- Platts -- The Platts Global Petrochemical Index (PGPI), a basket of seven widely used petrochemicals, fell in September by more than 5% to an average monthly price of $1,324 per metric tons (/mt), down from the August average of $1,387/mt.  The downward trend in September was largely attributable to weaker oil and natural gas prices and concerns of global economic slowdown. On an annual basis, the September 2011 average was up 21% from the average this same time a year ago.

Much of decline in the September PGPI resulted from a drop in the cost of raw inputs that go into the production of petrochemicals. On average, Brent crude oil prices were mostly flat from August to September. However, a sharp drop of nearly $10 per barrel (/b) during the last two weeks of September, resulted in a nearly 10% drop from the end of August to the end of September. By September 30, the Brent crude price had fallen below $104/b, after finishing August at $115/b. Natural gas prices also fell, but not as sharply. Natural gas prices, as valued at the Henry Hub location in the United States, were down 7.3% in September.

Another factor in the PGPI's steep decline was concern about a possible slowdown in the global economy. Consumer confidence was shaken in September by the 7% drop in the S&P 500 Index and the 6% decline in the Dow Jones Industrial Average.

In the United States, where the economy had performed sluggishly in the most recent three months, the U.S. Bureau of Economic Analysis reported a weak year-on-year second quarter growth rate of 1.3% in gross domestic product (GDP). While that was slightly stronger than the 0.4% growth rate in the first quarter, it was the second weakest gain in GDP since the third quarter of 2009 – when the most recent economic recovery period began.

In Europe, where a debt crisis continues to linger, the FTSE 100 Index also tumbled during September, falling nearly 12%. In Asia, the Nikkei 225 Index was more stable, falling only 3% in September.

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

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. It has utilization as a price reference, a gauge of sector activity, and a measure of comparison for determining the profitability of selling crude oil intact or refining it into products.

To access a summary for each of the seven key petrochemicals included in the PGPI, http://www.platts.com/newsfeature/2011/pgpi/index.

First published by Platts in August 2007, the PGPI peaked at $1,679/mt on July 14, 2008 before plummeting to a low of $491/mt on December 5, 2008, on the heels of the global financial meltdown. Published daily in Platts Petrochemical Alert, a real-time news service, 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, consult Platts Media Center. For more information on petrochemicals, visit the Platts website at www.platts.com.

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SOURCE Platts