Asian polymer markets gain support from strong upstream markets

In Asia, there has been much speculation over the past few months of a possible downturn in polymer prices based on the large new capacities either starting up or soon to enter production both in the Middle East and inside China itself.  Although Asia's polymer markets have so far stubbornly defied all expectations of imminent decreases, many buyers and traders have elected to remain on the sidelines, claiming that the current rallies are largely speculative in nature and will not last.  One factor that is helping to maintain stronger polymer prices in Asia this month is pressure from upstream costs, with the prices of many key feedstocks currently standing at the highest levels recorded for several months.

On November 18, spot naphtha prices in Asia rose to their highest level of 2009 after gaining $21/ton on the day to settle at $718/ton CFR Japan, with sources citing firming naphtha prices in Europe as well as higher Asian ethylene prices for the rise.  When compared with the first trading day of November, spot naphtha prices have gained $54/ton. 

In the spot ethylene market, prices have firmed up by $120/ton when compared with the beginning of the month, with most of the increase concentrated in the past one week.  Spot ethylene prices are currently being quoted at around $1040-1050/ton CFR Northeast Asia, with this price level being the highest seen since late July while spot cargoes had been priced below the $800/ton mark as recently as the middle of October.  Traders attributed firming ethylene prices to strong demand from China and Taiwan as well as limited availability in Asia due to reduced ethylene exports from the Middle East. 

In the spot propylene market, November pricing has also been marked by a strong upward trend, with prices gaining $55-60/ton since the beginning of the month to be reported at around $1060/ton FOB Korea, the highest level reported since late August.  Low stock levels in Asia were cited as one of the main factors behind the rise in propylene costs.

Spot styrene prices have also witnessed considerable increases over the month of November, with spot prices on an FOB Korea basis rising $115/ton since the start of the month to reach the level of $1095/ton FOB Korea, a price level last seen in late August.  Players attributed the rise in prices to concerns over possible tightness in supply following some plant outages in South Korea as well as to higher benzene feedstock costs, which have also raced to a three-month high this week in Asia at just above $900/ton on FOB Korea basis.