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Ethylene dealers reluctant to lower prices
Nov '10
In the just concluded week, spot ethylene market did not attract offers for November cargo, due to inadequate supply in the Middle East, physical demand was limited, because limited tank capacity weighed on the market, despite higher price of naphtha.

Mid-November cargo of Abu Dhabi and Saudi Arabia were sold through tenders, which are expected to be shipped to Europe, India and Southeast Asia, but market sources said more cargo from the Middle East would arrive in December.

Buyers offered below US $1000 / ton (CFR Asia), as supply was adequate, but dealers did not want to lower their offer level, due to strong naphtha costs which stood at $800 / ton (CFR Japan).

Some manufacturers have already started feeling the cost pressures and have reduced operating rates this month. Chandri Asri in Indonesia reduced its operating rate of naphtha cracker (production capacity 600,000 tons / year) to 75-80 percent by the end of October, due to loss in margins.

Operating rate of many local naphtha-cracking plants is still at 90-100 percent, partly because of firm prices of other olefins, such as propylene. Thus buyers expect the market will remain strong.

Derivatives markets were generally firm. Price of high-density PE film products rose $10 to $1230-1280 / ton (CFR China), while MEG price reached over $1,000 / ton (CFR China). PVC price rose $10 to $970-1000 / ton (CFR China).

In Northeast Asia, ethylene stock price fell $10-20 to $980-1000 / ton (CFR Northeast Asia), influenced by consultation level in the market. In Southeast Asia, spot price fell $30 to $970-1000 / ton (CFR South East Asia), reflecting the level of offers and bids on the week.

The FOB Southeast Asian market had no price consultations, as cargoes were mainly sold to derivatives market or contract customers.

Fibre2fashion News Desk

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