Crude oil prices declined to the lowest level in the initial two weeks of October, as the dollar strengthened, curbing the appeal of commodities as an alternative investment. The US$, which tracks the US currency against six of its major peers, rebounded from a 10-month low after technical indicators suggested further declines would be difficult to sustain. Goldman Sachs Group Inc has forecast substantially higher prices for oil in the second half of 2011 as global stockpiles fall. It said that oil prices may rise above US$ 100 a barrel within the next year if the Fed enacts a second round of quantitative easing. JPMorgan Chase & Co too raised its forecast for 2011 oil prices to US$ 85 a barrel from US$ 80. Oil for November delivery declined US$ 1.41 to settle at US$ 81.25 a barrel on the New York Mercantile Exchange. Brent crude for November jumped over US$ 1.43 to US$ 82.45 a barrel on the ICE Futures Europe exchange in London.

Polyester Chain: PSF trends cotton markets

With China back from their holidays and buying and this coupled with supply constraints and firm crude prices fuelled petrochemical prices. Ethylene markets in Europe were largely isolated from the fall in prices seen in other markets, leaving prices at a considerable premium to other regions. This spurred incentives for increased imports and more products moving to this area from the Middle East. Meanwhile ethylene markets were mixed in other regions with prices moving up rapidly in USA while Asia numbers were up in SE and down in NE markets. Paraxylene prices hit a two-year high on speculative activity and production problems at a couple of Chinese plants. The range bound ethylene prices provided ample support to downstream MEG markets where demand was better with relatively active production of downstream polyester producers on normal sales. PTA was traded at 25-month high, jumping more than 10% in this week alone following the dramatic increase in paraxylene prices. As MEG and PTA markets intensified, PET chips producers were caught between the soaring feedstock and weak demand from downstream as they raised their offers to maintain margins. Buying activity in PFY markets were thin and interest remained uninfluenced by hikes of feedstock numbers. Prices in Malaysia/Indonesia were seen rising while those in China and India rolled over. Polyester staple fibre markets were sound and prices continued rising driven by sustained rise in paraxylene market and rebounding cotton futures.

Nylon Chain: Value chain ups

Benzene prices continued to rise across markets in Asia, European and USA influenced by the mid-week firming energy complex and strong demand in Europe amidst falling supplies. Prices of benzene continued to rise in USA, as buyers covered shorts. October was still short and November was following. Downstream, caprolactum prices were largely supported by benzene values while supplies were constrained by planned turnarounds in many units in East Europe and a few more scheduled for the same in October. Demand was picking up briskly as operating rates of downstream resin producers were seen ramping up with balanced sales and production ratio. On strong support of caprolactum, nylon chip market pushed up prices. Further, an expectation of anti-dumping of the feedstock in China asserted greater pressure on the future of chip market. Demand from downstream segment was strong while some textile units actively purchased nylon fibres. Demand for nylon filament yarn pushed yarn prices up. Rising feedstock values also pushed producers to hike offers.

Acrylic Chain: ASF markets on the boom

Propylene prices were up across Asia and USA, as downstream demand from ABS improved. However, softening polypropylene demand and expectations that US monomer supply would lengthen in October, price rise was limited. Climbing propylene values supported downstream acrylonitrile prices and bullish sentiments prevailed. Acrylonitrile supply was low as maintenance shutdowns at many plants led to lower spot inventory but spot availability was reportedly abundant. Downstream demand continued to remain firm with an overall high rate at acrylic fibre plants while ABS market was range bound. Acrylic fibre prices firmed up in Asia as trading sentiment turned bullish on rising feedstock acrylonitrile values and low inventories. The markets were also supported by booming downstream yarn spinning sector and offers for spots supply surged.

Viscose Chain: VSF dearer

The NBSK Index value sobered US$ 2.13 a ton (Euro 9.07) on the European market while the same in US market declined US$ 10 a ton. In China, the BHKP Index was down US$ 2.09 a ton from last week. In China, cotton linters were dearer, though trading volume was low and poor quality. Similarly, prices in cotton pulp increased and most producers raised their offers for staple-grade pulp since returning from the week-long holiday. In dissolving pulp market, prices kept rising throughout the week reflecting booming markets. Viscose staple fibre prices surged rapidly, particularly in China. It saw bouts of price hikes with total of US cents 20 a kg. However, downstream buyers were still busy replenishing. Viscose filament market was pushed significantly by surging feedstock in China. At a viscose filament industrial conference held of 12 October, producers generally showed intentions of raising prices. After the conference, producers’ realised the price rose actively, with the adjusting range of certain producers.

Cotton: China demand pushing up prices

Cotton prices were at all-time high across markets on rising demand and hovering uncertainties about the future actions in India. The other obvious factor is the soaring prices on the NY market following impressive demand from China. Markets believe that prices may rebound after a fall in the cotton market in the coming days because prices have crossed the all-time high level. Cotton for December delivery settled at US$ 1.0987 a pound while the Cotlook ‘A’ index gained US cents 10.60 per pound. The China Cotton index gained RMB 1,467 a ton and the Karachi Cotton Association spot rate jumped Pak Rs 450 per maund. Indian cottons were dearer by `600 - 2,000 per candy.

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