SINGAPORE --An overnight dip in crude futures dragged prices of key petrochemicals lower on Thursday as Asian markets extended their sluggishness in early morning trades, and could fall further before the week ends, buyers and sellers said.
Crude oil futures for August delivery shed $2.45/bbl or 1.8% at the New York Mercantile Exchange (Nymex) overnight, settling at $134.55/bbl before continuing to fall in Asian trade this morning.
The unexpected buildup in oil inventories in the US over the past week, as well as pledges by producers such as Saudi Arabia, Kuwait and the United Arab Emirates to increase supplies, weighed down energy prices.
It was unexpected, so naturally the sentiment would be badly affected, said a Korean trader specialising in benzene and styrene monomer (SM) trades.
But a Korean end-user of paraxylene (PX) said that crude oil [prices] had risen too much in recent months anyway, and [prices] should fall back, and this may be the start of the downward correction of [petrochemical] prices.
Naphtha numbers in Japan were lower at the start of trades, with second half August discussions at $1,187.50-1,188.50/tonne on a CFR (cost and freight) basis as at 10 am Singapore time (0200 GMT).
Aromatics sellers were generally cautious with their offers, as they were unsure if the crude-inspired sluggishness would persist, even as buyers took the cue from energy markets to talk down prices.
The toluene market seemed to be most affected by this drop in energy numbers, with discussion levels cited up to $27/tonne lower from Wednesday s levels.
Toluene offers for any August were cited at $1,250-1,260/tonne FOB (free on board) Korea, $10/tonne lower from Wednesday.
A toluene bid was cited at $1,235/tonne for any August, $27/tonne lower from Wednesday, and a second bid was heard at $1,245/tonne but this could not be confirmed.
The uncertainty over crude and naphtha makes it difficult for us to decide what positions to take, a South Korean toluene trader said.
In other aromatics, one lone benzene bid was heard as low as $1,300/tonne FOB for August, threatening to erase painstakingly accumulated in the past week. Prices were firm at $1,315-1,325/tonne FOB Korea at the close of business on Wednesday.
However, weakness was less apparent in the downstream SM market, where discussion levels were almost unchanged at $1,610-1,630/tonne FOB Korea for August material.
PX buyers were also bearish, quoting notional price ideas as low as $1,600/tonne CFR Taiwan for July material, much lower than Wednesday s price of $1,635-1,635/tonne CFR Taiwan.
No discussions were however heard on the isomer xylene front, but buyers seemed to be awaiting a further drop in prices before emerging from the sidelines.
Meanwhile, other petrochemicals seemed less affected from the fall in crude futures.
Propylene prices were on a downtrend from last week s $1,600-1,650/tonne CFR NE Asia, but more due to supply issues than anything to do with the crude oil market, said a Singapore trader.
Ethylene prices were actually firm at $1,660-1,670/tonne CFR NE Asia.
But if the consensus among Asian traders were anything to go by, it seemed the price weakness could persist till at least Friday.
It s almost a foregone conclusion that [crude oil] prices would be lower than last week, and many [aromatics] traders are now looking to cash their gains from the recent rallies, said a Chinese toluene and xylene trader.
If this trend continues, we can see lower prices overall compared to last week and maybe next week, we will start the new month [of July] on a lower level than June, said the trader.
Crude oil futures for August delivery shed $2.45/bbl or 1.8% at the New York Mercantile Exchange (Nymex) overnight, settling at $134.55/bbl before continuing to fall in Asian trade this morning.
The unexpected buildup in oil inventories in the US over the past week, as well as pledges by producers such as Saudi Arabia, Kuwait and the United Arab Emirates to increase supplies, weighed down energy prices.
It was unexpected, so naturally the sentiment would be badly affected, said a Korean trader specialising in benzene and styrene monomer (SM) trades.
But a Korean end-user of paraxylene (PX) said that crude oil [prices] had risen too much in recent months anyway, and [prices] should fall back, and this may be the start of the downward correction of [petrochemical] prices.
Naphtha numbers in Japan were lower at the start of trades, with second half August discussions at $1,187.50-1,188.50/tonne on a CFR (cost and freight) basis as at 10 am Singapore time (0200 GMT).
Aromatics sellers were generally cautious with their offers, as they were unsure if the crude-inspired sluggishness would persist, even as buyers took the cue from energy markets to talk down prices.
The toluene market seemed to be most affected by this drop in energy numbers, with discussion levels cited up to $27/tonne lower from Wednesday s levels.
Toluene offers for any August were cited at $1,250-1,260/tonne FOB (free on board) Korea, $10/tonne lower from Wednesday.
A toluene bid was cited at $1,235/tonne for any August, $27/tonne lower from Wednesday, and a second bid was heard at $1,245/tonne but this could not be confirmed.
The uncertainty over crude and naphtha makes it difficult for us to decide what positions to take, a South Korean toluene trader said.
In other aromatics, one lone benzene bid was heard as low as $1,300/tonne FOB for August, threatening to erase painstakingly accumulated in the past week. Prices were firm at $1,315-1,325/tonne FOB Korea at the close of business on Wednesday.
However, weakness was less apparent in the downstream SM market, where discussion levels were almost unchanged at $1,610-1,630/tonne FOB Korea for August material.
PX buyers were also bearish, quoting notional price ideas as low as $1,600/tonne CFR Taiwan for July material, much lower than Wednesday s price of $1,635-1,635/tonne CFR Taiwan.
No discussions were however heard on the isomer xylene front, but buyers seemed to be awaiting a further drop in prices before emerging from the sidelines.
Meanwhile, other petrochemicals seemed less affected from the fall in crude futures.
Propylene prices were on a downtrend from last week s $1,600-1,650/tonne CFR NE Asia, but more due to supply issues than anything to do with the crude oil market, said a Singapore trader.
Ethylene prices were actually firm at $1,660-1,670/tonne CFR NE Asia.
But if the consensus among Asian traders were anything to go by, it seemed the price weakness could persist till at least Friday.
It s almost a foregone conclusion that [crude oil] prices would be lower than last week, and many [aromatics] traders are now looking to cash their gains from the recent rallies, said a Chinese toluene and xylene trader.
If this trend continues, we can see lower prices overall compared to last week and maybe next week, we will start the new month [of July] on a lower level than June, said the trader.
