- Buyer's Guide
Prices in the $3-trillion-plus global petrochemicals market fell 5 percent to $1,309 per metric ton in April according to the monthly Platts Global Petrochemical Index (PGPI), a benchmark of seven widely used petrochemicals.
The PGPI showed a similar 5 percent month-over-month decrease from February to March. On a year-over-year basis, the data showed petrochemical prices last month were down 9 percent from the April 2012 average price of $1,444 per metric ton.
Olefins, which are a group of hydrocarbon compounds that 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."
The average price of ethylene in Asia fell 5 percent in April to $1,232 per metric ton, 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 metric tons per year No. 2 vinyl chloride monomer line in Yeosu from May 20 through July 10 for maintenance, and its 190,000 metric tons per 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 metric tons per year No. 1 VCM plant in Nanyo from May 16 through June 25 for maintenance, and its upstream 1.125 million metric tons per year caustic soda and 1.2 million metric tons per year ethylene dichloride plants 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 per metric ton in April, down 7 percent from the March 2013 average of $1,349 per metric ton. On a year-over-year basis, ethylene prices fell 10 percent 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 percent price drop in April to $1,460 per metric ton from $1,538 per metric ton in March.
The Platts Global Naphtha Index averaged $558 per metric ton in April. This marked an 11-percent slide from the March average of $629 per metric ton in May. The naphtha index was down nearly 20 percent from April 2012. Naphtha was lower on a month-over-month and year-over-year basis, largely in response to declining crude oil prices.
Propylene, the second olefin component of the Platts Global Petrochemical Index, was also lower in April. It fell 6 percent to $1,247 per metric ton last month versus the March level of $1,331 per metric ton. Polypropylene, which is produced from propylene, fell 3 percent in April to $1,477 per metric ton.
"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."
Prices of aromatics, which are 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 per metric ton in April, marking a 5-percent decline from the March level of $1,197 per metric ton. However, on a year-over-year basis, toluene prices were up 2 percent compared to April 2012.
Paraxylene prices fell 5 percent in April to $1,406 per metric ton compared to the prior month's average of $1,472 per metric ton. But on a year-over-year basis, prices of paraxylene, like toluene, were up 2 percent 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 percent to $1,315 per metric ton in April following a March level of $1,301 per metric ton. Compared to the same time a year ago, the global benzene index was up 6 percent in April.
For more information, visit www.platts.com.