Petrochemical Prices Drop in 2010

Petrochemical prices fell for the third consecutive month in June 2010, according to analysts at Platts, whose Global Petrochemical Index (PGPI) dropped to $1,051 per tonne on 30 June, the lowest of 2010 so far, as a result.

The PGPI reflects a compilation of the daily price assessments of the physical spot markets of ethylene, propylene, benzene, toluene, paraxylene, low density polyethylene (LDPE) and polypropylene as published by Platts and weighted by the three regions of Asia, Europe and the US.

The decline in prices was attributed to several factors including a slowdown in demand and over-production that resulted from price increases since January 2009.

Between November 2009 and April 2010, the index continually rose, hitting a high of $1,262 per tonne on 12 April, after which it dropped.

The downward movement was characterised by PGPI’s average daily price dropping 10.1% to stand at $1,029 per tonne in June 2010 from $1,144 per tonne in May 2010.

In Asia, new supplies put severe pressure on production margins in the aromatics markets of benzene, toluene and paraxylene.

China in particular continues to deal with high stockpiles of key petrochemicals implying that the consumer outlook from the traditional importing regions of the US and the eurozone is weak.

In Europe, cheaper imports and weaker prices in the world’s energy complex kept benzene prices under pressure during June 2010, while availability of deepsea cargoes from the Middle East, US and Latin America pushed down prices for olefins ethylene and propylene.

Despite the downward price trend in olefins and benzene, European steam cracker operators continued to profit highly in June 2010 at a monthly average of $240 per tonne or €197 per tonne.