PO prices less bullish on worries of weaker demand

(ICIS) -- Market participants in Asia are toning down their bullish first-quarter forecasts for propylene oxide (PO) because of the uncertain macroeconomic outlook and worries about oversupply and weaker demand from China, the region's largest PO consuming nation.

Market players originally expected total PO demand in China to grow to above 2.2m tonnes in 2012, up from around 1.85m tonnes in 2011.
However, Asia's demand for PO is expected to drop because global economies are still grappling with substantial downside risks such as laggin GDP growth momentum as well as low business and consumer confidence, while China is still maintaining a prudent monetary policy, despite a recent cut in its bank reserve requirement ratio.

In addition, the tight supply conditions seen in 2011 have eased as operations at key facilities resumed and commercial production at new PO plants, including Dow Chemical's 390,000 tonne/year PO unit in Thailand have started successfully.
As a result, total PO imports to China rose to 41,437 tonnes in November 2011. The figure is a 69% month on month increase and an almost three-fold rise from the previous quarter. A similar trend is expected for December, but customs statistics are not yet available.

The increase in supply exerted downward pressure on the spot PO market, causing prices to fall by as much as USD 400/tonne (EUR 312/tonne) within weeks in December 2011, ICIS data showed.
In December, PO prices dropped to a one-year low of USD 1,500/tonne CFR China, according to ICIS data, narrowly breaching what market players said was the breakeven level for many producers, before rebounding to USD 1,600/tonne in end-2011 on the back of pre-holiday restocking activity.

Asian PO prices are likely to remain at above USD 1,600/tonne CFR China this year, as they did in 2011, industry sources said.
However, there will be price deviations of around USD 100-300/tonne this year, corresponding with changes in market sentiment and the demand-supply balance.
Spot PO prices fluctuated at a wider USD 300-500/tonne range in 2011 because of tight supply and rose to above USD 2,000/tonne in the aftermath of the March earthquake in Japan, as market players panicked when regional supply chains were disrupted.

MRC

(ICIS) -- Styrolution is targeting a EUR145/tonne (USD186/tonne) increase for its European January polystyrene (PS) because of higher styrene and butadiene costs, a source at the styrenics producer said on Friday. The styrene barge contract for January was settled at EUR1,214/tonne FD (free delivered) NWE (northwest Europe), up by EUR120/tonne from its December level.


Butadiene is also up, with the January contract settling at EUR1,700/tonne FD NWE, up by EUR 50/tonne from December. Butadiene is used in the manufacture of high impact polystyrene (HIPS).
US-based producer Styron has already announced that it will target a EUR135/tonne increase for January PS.


Buyers have become accustomed to PS pricing moving in line with its main feedstock styrene, and they are now expecting to be paying much higher prices when they settle later in the month.

2012 is expected to be a difficult year in the European PS arena as new capacity comes on-stream.

European producers have managed to maintain a fine supply/demand balance in the recent past, closing down capacity where necessary and cutting back production in line with dwindling demand.

Styrolution is 50:50 joint venture between BASF and INEOS, comprising the key styrenics activities of the two partners. It began trading on 1 October 2011.

MRC

(chemmonitor) -- Polyethylene (PE) and polypropylene (PP) markets in the Middle East will witness good margins due to firm values for a raw material this year. Meanwhile, PP and PE costs may be permanent with a tendency to decrease on the back of poor consumption.

In Saudi Arabia prices for ethane gas are stable. They are negotiated at USD 0.76 (EUR 0.61) per MMBtu. Values for Saudi propane gas demonstrate a downward surge.

PE producers will broaden the boarders of their resin market on profitable prices.

MRC

(chemmonitor) -- The Iran-based company Amir Kabir Petrochemical Co operates a low density polyethylene (LDPE) unit in Bandar Imam. Its annual output is estimated at over 295,000 tonnes. The plant is run in full.

The company does not intend to suspend productions and shut the facility in Q1 of 2012.

The producer will not reconstruct the plant till the end of Q1.

Amir Kabir Petrochemical Co also runs a HDPE unit at Bandar Imam site.

MRC

(dow) -- Dow Europe GmbH is announcing a price increase for polyethylene (PE) resins across the European, Middle Eastern and African regions.

Effective January 1, 2012, or as contract terms allow, Dow Europe GmbH increased prices for all grades of its low-density polyethylene (LDPE), linear low-density polyethylene (LLDPE) and high-density polyethylene (HDPE) resins by 120 Euros per metric ton.

MRC