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Asia petrochemical demand, prices to firm post-Lunar New Year

January 23/2012

(ICIS) -- Spot prices of petrochemicals in Asia may get a good nudge up following an expected virtual halt in trades next week as the region celebrates the Lunar New Year, with most market players hoping for a strong pick-up in buying activities.

Prices of some petrochemical products in the region have either been falling or trading sideways since the start of the year, as demand traditionally weakens in the weeks leading to the Lunar New Year celebration, which is happening a bit early in 2012.

Some propylene sellers in northeast Asia expect prices to move up, to track the rising values of feedstock naphtha.
An expected tightness in regional supply because of a slew of cracker turnarounds due in March should also give propylene prices a further boost, market sources said.

Spot propylene prices were quoted at USD 1,350-1,400/tonne (EUR 1,040-1,078/tonne) CFR  NE  Asia at midday on Friday, while naphtha values were at USD 960.50-962.50/tonne CFR Japan.

In the purified terephthalic acid (PTA) market, some sellers have taken a similar stance on transactions.

Expectations that China, the biggest petrochemical importer in Asia, will adopt a more loose monetary policy going forward will boost trade in the commodities market.
The upbeat sentiment that the domestic credit crunch in the worlds second biggest economy will ease was reflected in trades at the linear low density polyethylene (LLDPE) futures market at the Dalian Commodities Exchange this week.

Everything is so uncertain and we are not sure whether demand for synthetic rubber will rebound after the Lunar New Year, a Chinese synthetic rubber producer said. Synthetic rubber producers in Asia are in a bind because of high production costs caused by soaring prices of feedstock butadiene (BD) and their inability to hike product prices amid strong resistance from downstream tyre makers.

Soaring feedstock BD costs have climbed to USD 3,100/tonne CFR  NE Asia and have eroded the margins of synthetic rubber producers in Asia.

However, the downstream tyre producers are also feeling the squeeze from falling tyre export sales.
A number of small and mid-sized tyre producers in China are expected to have an extended Lunar New Year holiday this year because of weak market conditions.

China is a major tyre production centre for the global tyre market.
Author:Anna Larionova
Category:General News
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