Oil prices surged around 3 per cent higher on Friday, 10th September, back to over the US$ 76 mark as an oil leak prompted a major US oil pipeline to shut down, while the markets covered positions in WTI oil. Oil futures jumped more than US$ 2 after an oil leak prompted US firm Enbridge to shut down the export pipeline, which carries crude from Alberta to the US Midwest. Meanwhile, the IEA announced that world’s oil demand would keep rising as the economies expand but the increase in fuel consumption will be lower in 2011 than 2010 and demand could be a lot weaker if global growth slows. It has raised its estimate of 2010 demand for crude oil from the Organisation of the Petroleum Exporting Countries by around 1,00,000 bpd to 28.9 mn bpd, indicating consumption had risen marginally in many areas including several developed economies and in the Asia-Pacific region. The benchmark West Texas Intermediate October futures contract settled at US$ 76.56 a barrel gaining US$ 1.96 over last week while in London, the Brent crude, racing ahead of US futures, settled at US$ 78.22 a barrel on the ICE futures exchange was up US$ 3 from last week.
Polyester Chain: Feedstock market strengthens
This week the polyester feedstock markets were firm as prices of ethylene surged further in Asian markets while they continued to sober in Europe and USA. Asian sellers believed that the firmness was due to strong naphtha costs as well as tight supply. However, downstream derivative markets were in no rush to make new purchases ahead of the holidays as their stock levels were sufficient to meet their needs for the first few weeks post holidays. Paraxylene markets in Asia were calm and prices rolled over previous week’s numbers after an upward correction last week while European numbers more than regained its last week’s loss. MEG markets marked upward correction in prices on support of rising ethylene values, although demand weakened. PTA prices in Asia too made upward correction as the week began on a wait-and-see tone. Supported by the uptrend in the downstream polyester filament yarn segment, prices of semi dull polyester chips increased in Asian markets. Asian polyester filament yarn markets were quiet although some upward movements in prices were seen in China. Prices mostly rolled over previous week’s numbers in other Asian markets of Malaysia/Indonesia, India and Pakistan. Polyester staple fibre market sentiment was optimistic, particularly in China, as busy season of H2 2010 for downstream textile industry was setting in.
Nylon Chain: NFYs dearer
Benzene was dearer this week across Asia, Europe and USA as crude oil prices jumped significantly due to oil leak which prompted shutting down of a major US oil pipeline. However, demand for benzene was modest but was not supportive of any significant price change. In USA, September benzene contract prices were raised 8 per cent. In China, Sinopec Shanghai, Sinopec Zhenhai Refining & Chemical, Sinopec Yangzi Petrochemical and Sinopec Jiujiang however, reduced their offers for Asian markets. The uptrend in benzene prices was supportive to derivative caprolactum market as prices firmed up. Tight supplies were also supporting caprolactum markets. Nylon chips market sentiment was positive and firm caprolactum was a strong cost support. Downstream nylon yarn prices inched up and replenishment brought stronger demand for chips. However, this asserted substantial cost pressure on nylon yarn producers, who had no option but to increase prices. They would also resort to cutting production to support prices, which would cover cost and strengthen run rate. However, demand was hard to improve, as downstream mills mainly were slow in replenishments.
Acrylic Chain: Demand for acrylic fibre picking up
Propylene prices were down in Asian markets this week as demand remained relatively weak and rising supplies weighed down spot prices. Most buyers expect sellers to reduce their prices towards the end of September while sellers left their offers unchanged heading into the holidays, citing strong upstream costs and limited availability. Acrylonitrile prices slide in a narrow range with limited spot demand while those in Europe and USA strengthened a bit of supply constrains. Downstream demand changed little since some units were still under maintenance. ABS market had low stocks while acrylamide market had moderate demand. Demand from acrylic fibre expanded slightly with downstream yarn sales picking up and buying interest increased. Although acrylic staple fibre market sentiment warmed up future demand was still uncertain, thus, prices remained stable across markets.
Viscose Chain: VSF, VFY dearer in China
Prices of wood pulp sobered in USA and Europe while they inched up a bit in China. The NBSK Index value was down US$ 2.6 a ton (down Euro 9.45) on the European market while the same in US market was down US$ 9.29 a ton. In China, the BHKP Index closed the week, up US$ 2.67 a ton from last week. The dissolving pulp market had comfortable orders and September goods were almost sold out, leaving lesser supplies for the spot markets in Asia. Downstream, viscose staple fibre markets saw prices jumping in China while those in India and Pakistan rolling over previous week’s numbers on stronger future expectation. Viscose filament markets too were optimistic as demand was apparently picking up. In China, the rally in export offers eased the pressure on producers with high inventories somewhat. Producers were actively raising offers for export markets but domestic prices were stagnant. Prices in India rolled over previous week’s numbers.
Cotton: Prices gallop
Prices of cotton increased further across markets as supplies were adversely affected by unusual weather, which ruined crops in Asia, China and Pakistan this season. Cotton futures ended the week at US cents 90.87 per pound while the Cotlook ‘A’ index gained US cent 1.80 per pound. The China Cotton index, after many weeks of decline, gained RMB143 a ton. In Pakistan, the Karachi Cotton Association spot rate gained Pak Rs 100 per maund while India cotton was dearer `500 - 2,800 per candy.
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