Europe aromatics to remain unstable

(ICIS) -- Following on from an erratic 12 months, 2012 is expected to contain more uncertainty for European aromatics players.

With many unwilling to commit to building stocks in a precarious economic environment, the sharp pricing peaks and troughs seen in 2011 look set to be an ongoing feature of the landscape next year.

Looking back at benzene price developments across 2011, the key trend appears to have been unforeseen production issues or even capsized vessels in the Rhine pushing up numbers, quickly followed by upstream volatility and wavering demand driving the market back down.

⌠In this market it is either feast or famine, said one source earlier this year.
And while January looks to be a firmer month for both benzene and styrene - the former in particular - many sources are guarded about predictions for anything beyond that.

With benzene currently trading at more than USD 100/tonne above the December contract price, a number many felt was unusually low, a sharp correction is expected in the new year as the market begins to replenish empty tanks.

Despite this, many observers remain less than sanguine about how the market will shape up as the first quarter progresses.
An earlier-than-usual Lunar New Year in 2012 will see the Asian markets slow down as February approaches, and beyond that will largely depend on external factors.
While benzene has always been closely linked to the health of the wider global economy, next year this will be even more pronounced than usual.

There are mixed opinions about how crude prices will develop, with some pundits suggesting a sharp drop from the current USD 100-plus/bbl levels seen, while others expect that volatility in the Middle East may push prices up even further.


Most market sources believe that paraxylene (PX) will be structurally short in 2012, and say demand will strengthen after the start-up of Artlant's new 700,000 tonne/year purified terephthalic acid (PTA) plant in Sines, Portugal, early in the year.


However, with concerns that the economy might dampen demand, players have adopted a wait-and-see stance.
Regarding the strength of the PX market in Europe next year, one trader said: "It will be better, but all will depend on the economic situation in good old Europe."

MRC

China PVC rebound to be slow despite tight supply

(ICIS) -- China's polyvinyl chloride (PVC) import prices are likely to rebound next year on the back of tight supply, but the gains may be undermined by weak downstream demand and a bearish global economy, industry sources said.

PVC prices in China began declining in mid-August and fell to an all-year low of USD 840-860/tonne (EUR 647-662/tonne) CFR CMP on 4 November. That is 31% lower as compared with the 2011 peak of USD 1,220-1,250/tonne CFR CMP seen in late May.

The downtrend in prices was due to the high interest rate in China and the tightening of its monetary policy, which restricted end-users' cash flow and weakened buying sentiment.

However, prices rose following an explosion at Japan's Tosoh Corp's 550,000 tonne/year No 2 vinyl chloride monomer (VCM) line at Nanyo in Yamagata prefecture on 13 November, to settle at to USD 940-950/tonne CFR CMP on 23 December
VCM is the key feedstock for the production of PVC.

Market players said the recent rise in PVC prices was largely because of the tightened supply as well as high feedstock VCM prices, instead of actual demand as downstream consumption in China has been persistently weak.
VCM prices have been hovering at USD 750-800/tonne CFR NE Asia since mid-November.

⌠The PVC price increase is because of tight supply and a cost push because of high feedstock VCM prices, a Japan-based producer said.

Looking ahead, market participants have different opinions on the outlook for the PVC market next year.
Some market participants are optimistic about an improvement in demand after the Lunar New Year holiday in late January and said that will bode well for prices.

However, other market participants are doubtful about the likelihood of a strong rebound in PVC prices next year.
A trader in China said the tight supply stemming from Tosoh's outage is not expected to have a major impact on PVC prices because demand is unlikely to recover next year, judging from the weak Chinese construction sector.

Moreover, there are serious concerns about the eurozone debt crisis as well as weak US economy, which are expected to persist in the coming year.
The bearish global economy may dampen the buying interest for PVC as the US and Europe are big re-export markets for downstream Chinese manufacturers, industry sources said.
⌠In general, prices should be on an uptrend, but not so strong, because the economic situation is not stable, said a trader in Japan.


MRC

Iran threats to stop the flow of oil from the Gulf

(Reuters) -- Iran's threat to stop the flow of oil from the Gulf supported crude prices on Wednesday and put world shares on the back foot.

Tehran said on Tuesday it would stop oil transiting through the Strait of Hormuz if sanctions were imposed on its crude exports over its nuclear ambitions, a move that could conceivably trigger military conflict with economies dependent on Gulf oil.

Brent crude oil steadied above USD 109 a barrel after climbing more than a dollar in the previous session. Prices have surged over 5 percent since December 16.

"The only way Iran would actually close Hormuz is when it is attacked and war breaks, but such a possibility appears low as no country would want to take the risk when growth worldwide was likely to slow down," said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.

But he added the tensions would be a major source of volatility in 2012 along with the euro zone debt crisis. He expected Brent to trade between USD 105-110 in 2012.

MRC

Iran threats to stop the oil from the Gulf

(Reuters) -- Iran's threat to stop the flow of oil from the Gulf supported crude prices on Wednesday and put world shares on the back foot, while looming Italian debt auctions hampered the euro.

Tehran said on Tuesday it would stop oil transiting through the Strait of Hormuz if sanctions were imposed on its crude exports over its nuclear ambitions, a move that could conceivably trigger military conflict with economies dependent on Gulf oil.

Brent crude oil steadied above USD 109 a barrel after climbing more than a dollar in the previous session. Prices have surged over 5 percent since December 16.


"The only way Iran would actually close Hormuz is when it is attacked and war breaks, but such a possibility appears low as no country would want to take the risk when growth worldwide was likely to slow down," said Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.

But he added the tensions would be a major source of volatility in 2012 along with the euro zone debt crisis. Brent is expected to be traded between USD105-110 in 2012.

MRC

Synthetic rubber consumption by India's auto industry dips 5%

(commodityonline) -- The consumption of synthetic Rubber by the India's auto tyre industry declined by 5% to 24,010 tonnes in September 2011 against 25,323 tonnes same period last year, according to data provided by Rubber Board.

While, India's auto tyre industry consumed 1,54,887 tonnes in April-Sept 2011 as against 1,44,126 ton in the same period of the previous year.

India's synthetic rubber output fell by 10% to 8,421 tonnes in September 2011, while consumption declined by 3 per cent to 33,510 tonnes. While, the production was 9,320 tonnes and consumption at 34,480 tonnnes during 2010-11, reported PTI.

The Indian auto tyre industry consumed 1,54,887 tonnes in April-September 2011 as against 1,44,126 tonnes in the same period of the previous year.

Meanwhile, the total imports in April-September in this fiscal rose to 1,73,490 tonnes from 1,51,435 tonne in the same period last fiscal.

Synthetic Rubber is the raw material used to manufacture auto tyres.

MRC