Platts: Petrochemical Prices Continue 2Q Declines on Lower Oil Prices

Published on Monday, 09 July 2012 06:18 Written by TradersHuddle Staff

LONDON, July 9, 2012 /PRNewswire/ -- Continuing the decline begun in early second quarter, prices in the $3-trillion-plus global petrochemicals market fell in June to an average of $1,104 per metric ton (/mt) for the month. June's average price is down $175 or 14% from the May average, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals.

June's 14% month-on-month price drop is the largest one-month percentage decline in global petrochemical values since November 2008, when prices fell 38% following the start of the global recession in mid-2008. It follows an 11% decline in the monthly average in May and is down 20% from the June 2011 average.

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.

The chart above shows the daily end-of-day Platts Global Petrochemical Index (PGPI) price in red and also displays the 20-day PGPI moving average in blue.

Across the globe, petrochemical prices followed energy prices lower. The Brent crude oil price peaked at $126 per barrel (/b) in March, before falling as low as $89/b during the third week of June. During that same period, the Platts naphtha index fell 35%. Naphtha is a primary raw material input that produces olefins, which are the key ingredients in the manufacturing of other petrochemicals and polymers.

"The price drop in crude oil and naphtha that began in March triggered a knock-on decline in global olefins prices, with propylene and ethylene both dropping about 30% since mid March," said Jim Foster, Platts senior editor of petrochemical analytics. "While the rebound in crude oil and naphtha the last two weeks appears to be helping olefins bottom out, any olefins price rebound will be tempered by continued weak demand and rising inventories."

During the last week of June, the Platts global naphtha index climbed 10%, while crude prices climbed 7%. During that same period, global ethylene and propylene prices gained less than one percent.

All seven components of the PGPI were lower in June on a month-on-month, average monthly price basis. Ethylene showed the largest loss, falling 21% from May. Paraxylene prices were down 16% compared to the May average, while propylene prices fell 14%. In the polymer markets, low-density polyethylene values fell 13% and polypropylene prices were down 10%. The global toluene index in June fell 8% and benzene values fell two percent.

June's PGPI components continued to fall despite slight gains in global equity markets. Through June, the Dow Jones Industrial Average (DJIA) climbed 4%, while the Nikkei 225 and London Stock Exchange Index (FTSE) both climbed 5% during June.

To access a summary of the June 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