ICIS data has shown that petrochemical markets in Asia have reacted swiftly to recently rising crude oil and naphtha prices but European and US markets are still feeding through the sharp crude price downturn of the past six months. The ICIS Petrochemical Index (IPEX), represents a capacity weighted basket to 12 primary petrochemical products, and fell 1.5% in February from January 2015. The index is reportedly down 37% from February 2014 and 36% lower than in August 2014 when crude oil prices began to fall dramatically.
Oil price impacts
The average Brent crude price was US$58.16/bbl in February 2015 down from the US$109.89/bbl average in February 2014. WTI crude was US$50.72/bbl in February, a drop from US$100.75 the year before on the same basis. Crude prices started to fall in August 2014 and have prompted steep drops in prices of the petrochemical industry’s primary liquid feedstock, naphtha. The rally in prices for crude, however, which began at the end of January this year has yet to feed fully into prices for the major petrochemicals given the time lag for costs to pass along the primary petrochemical product chains.
Spot price driven markets in Asia did react quickly to the uptick in crude prices in February. The sharpest increases were in the prices for propylene, ethylene, benzene and their derivatives. Contract paraxylene prices continued to fall in an over supplied market. Paraxylene is a feedstock for the polyester cloth and polyethylene terephthalate bottle industry.
Over in the US, petrochemical price movements were mixed although prices rose for products must directly linked to oil. Ethane and other NGLs predominantly produced from shale gas are the preferred feedstock for many petrochemicals in the US. Prices have indeed been lower since the second half of 2014 and in February were in the 16.50 – 20.50 UScents/gal. range.
In Europe, petrochemical prices have been falling with lower crude and lower naphtha costs and have generally continued to drop in February 2015, often significantly. Prices for some commodities rolled over in the quarter in euro terms but were lower in US$. European ethylene and propylene prices fell by more than the equivalent of US$100/t in February. Polyolefin prices fell by a greater amount. At the end of January, Europe spot pipeline ethylene prices were at a five year low. Naphtha prices in February in the region were US$511/t on average, 44% lower than in February 2014.
Edited from report by Claira Lloyd
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