In May 2010, prices fell at a faster pace in the $3 trillion global petrochemicals market with the average daily price of Platts Global Petrochemical Index (PGPI) dropping 7.5% from $1,237 per metric ton (/mt) in April to $1,144/mt. The index, a basket of the most widely used petrochemicals prices published by Platts, had been falling since mid-April. The PGPI hit a six-month high of $1,262/mt April 12 before falling to $1,064/mt by May 28.
“The April price downturn in olefins, the primary building blocks to most petrochemicals, passed through to aromatics and polymers in May signaling lower input costs for things like plastics, rubber and nylon,” said Shahrin Ismaiyatim, Platts global editorial director of petrochemicals. But short-term market action suggests market volatility appears to be the industry’s only constant in the second quarter.
There were only two days in May that spot prices posted gains over the previous trading day’s close. Petrochemicals took their pricing cues in large part from macro-economic and geopolitical factors during a turbulent month, noted Ihsan Rahim, Platts managing editor for Americas petrochemicals.
The PGPI reflects the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE), and polypropylene published by Platts and is weighted by the regions of Asia, Europe, and the United States.
Americas
“In the Americas, lower physical delivery contract prices for key petrochemicals settled down in May and moved with the tide of dropping spot prices for chemical feedstocks,” Rahim said. The June US benzene physical contract tumbled 57 cents to an initial settlement price of $2.95 per gallon, setting the stage for a drop in European prices. Meanwhile, US steam cracker operators saw margins shrink as spot ethylene prices extended losses from April, while the monthly average for feedstock ethane prices was almost identical to April.
Asia
In the Far East, weak fundamentals saw most Asian petrochemical prices slumping to year-lows in the second-half of May, with all three key aromatics suffering double-digit losses by the end of the month. Aromatics are the most actively traded petrochemicals. Asian benzene prices lost nearly 15% of their value between May 17-21, while Asian toluene dropped a similar 15.23% in the same time period.
Sizable losses were also seen in the Asian olefins sector. Propylene slumped 19.3%, while the Asian ethylene market declined 23.8%. Sources described the plummet in spot prices as “inevitable,” given the phobia among end-users on holding excess feedstock.
Europe
In Europe, a softer crude oil and gasoline environment spawned a pronounced decline in the aromatics complex, but polymers held to their uptrend, according to Ilana Djela, Platts managing editor for European petrochemicals. May’s month-on-month loss in European benzene was the most prominent at 11%, outpacing the drop in Eurobob gasoline by 1%. However, European polymers were sheltered from negative bias and finished May on the upside, aided by tight inventories, persistent supply issues, and stable demand.
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