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Asia petrochemicals, naphtha to get fillip post-Feb holidays

January 28/2011

(ICIS) -- Asian petrochemical prices are expected to firm after the Lunar New Year holidays, underpinned by strong Chinese demand for polymers and styrene that will keep naphtha values buoyant, traders said on Friday. Trading usually slows down during the week-long Lunar New Year festivities in China, which fall on 2-8 February this year.

But in a sign of sustained downstream demand, prices for petrochemical feedstock naphtha soared to $865-868/tonne (?631-547/tonne) CFR (cost and freight) Japan for the front-month contract, according to ICIS. Naphtha prices were up a quarter from a year ago.

China, the worlds top energy guzzler, will continue to have a big appetite for petrochemicals, thanks to its galloping economy. Its GDP grew at a faster pace of 9.8% in the fourth quarter of 2010, while inflation slowed to 4.6% in December.

Chinas polyethylene (PE) and polypropylene (PP) prices were expected to rise further post-holidays, on restocking activity. Meanwhile, tight supply of styrene would continue to boost monomer prices.

Chinas downstream styrenic plastics expansion at around 2m tonnes was five times larger than the expected 400,000 tonne/year increase in styrene monomer production this year.


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