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Strong crude prices could squeeze petrochemical margins

December 14/2010

(ICIS) -- Strong supply amid continued weakness in demand may keep petrochemical prices soft in Asia next year, with producers margins likely to be squeezed by higher oil prices, an industry analyst said on Tuesday.

Oil prices were hovering close to $90/bbl (?68/bbl), largely on account of the US dollar weakness that makes investments in dollar-denominated commodities more attractive. At noon, light sweet crude for January delivery was trading at $88.47/bbl, up by more than 8% from the start of the year.

Among petrochemical products, ethylene gained 2.2% in value in northeast Asia from the start of the year, while toluene was up 1.1% while benzene fell 5.72% over the same period, according to ICIS data.

Ethylene capacity additions in Asia this year would be about 7m tonnes, based on earlier projections from Chemical Market Associates, Inc (CMAI).


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