Platts: January Petrochemical Prices Surge 9% on Restocking and Tight Supply

Published on Monday, 06 February 2012 10:51 Written by TradersHuddle Staff

LONDON, Feb. 6, 2012 /PRNewswire/ -- Prices in the $3-trillion-plus global petrochemicals marketplace surged in the first month of 2012, climbing 9% to $1,270 per metric ton (/mt) in January, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals.

The January increase was the largest monthly gain in 24 months and was driven by restocking after the year-end holiday period and in response to supply tightness in some regions. It follows an less–than-1% drop in the December PGPI monthly price average to $1,161/mt and marks a 6% decline from the January 2011 average price.

Petrochemicals prices traditionally rise in January, according to Platts, the founder of the index and the physical market price assessment processes for each of its components. In fact, over the past three years, the largest gains of the calendar year have occurred in January. Since the PGPI was introduced in August 2007, January prices have averaged 9.7%.

Petrochemicals are used to make plastic, rubber, nylon and other materials for consumer products, packaging, manufacturing, construction, pharmaceuticals, aviation, electronics and nearly every commercial industry.

All seven of the PGPI components' monthly averages were stronger in January. The largest increase was seen in the benzene market, which gained 16% to $1,200/mt, up from $1,033/mt in December. The stronger benzene price was attributed to higher pyrolysis gasoline prices in Europe and increased demand globally. Supplies also were tight in the U.S. in January as several domestic producers were facing production related issues, resulting in more exports from Asia to the United States.

Propylene prices also posted double-digit gains in January, climbing 13% to $1,200/mt, up from $1,057/mt in December. The increase was attributed to tightness in the market caused by cracker turnarounds.

On an end-of-day, end-of-month basis, the PGPI market-on-close value was $1,353/mt on January 31 – a 15% increase compared to the end-of-day, end-of-month value for December of $1,173/mt. Month-end closing prices are often used for valuing portfolios.

The increases in the January PGPI outpaced gains in global equity markets. Through January, the Dow Jones Industrial Average (DJIA) posted 3.4% gains, while the Nikkei 225 climbed 4.1%. The London Stock Exchange Index (FTSE) gained 2%.  

To access a summary of the January performance of each of the seven key petrochemicals included in the PGPI, visit this link: http://www.platts.com/newsfeature/2012/pgpi/index.  

The PGPI reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the United States. Used as a price reference, a gauge of sector activity, and a measure of comparison for determining the profitability of selling a barrel of crude oil  intact or refining it into products, the PGPI was first published by Platts in August 2007.

Published daily in Platts Petrochemical Alert, a real-time news service, and other Platts publications, the PGPI is anchored by Platts' robust and long-established price assessment methodology and the firm's 100-year history of energy price reporting. 

Platts petrochemicals experts are available for media interviews, consult Platts Media Center. For more information on petrochemicals, visit the Platts website at www.platts.com.

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals and metals information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, and shipping markets.  A division of The McGraw-Hill Companies (NYSE: MHP), Platts is headquartered in New York with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About The McGraw-Hill Companies: McGraw-Hill announced on September 12, 2011, its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.

SOURCE Platts