Global Price Collapse in Petrochemicals and Plastics

Global Price Collapse in Petrochemicals and Plastics ICIS petrochemical and plastic index (IPEX) signals global price collapse London, 9 August 2022 – The monthly ICIS Petrochemical Index (IPEX) signals a collapse in commodity petrochemical and polymer prices worldwide as economic and cost pressures mount for the sector. The leading indicator points to further price declines and significant margin pressure on some of the world's leading chemical companies. China's economy, severely affected by COVID quarantines, the consequences of the war in Ukraine, and looming recession have created intense pressure on commodity prices, which have begun falling sharply across the world's leading petrochemical and plastic-producing and -consuming regions. The monthly IPEX released on 9 August 2022 shows how sharply prices have fallen in Northeast Asia and are under intense pressure in northwestern Europe and the US. The three regional sub-indices make up the global index, which fell 8%. The indices are based on prices of 14 commodity petrochemicals and polymers, weighted according to production capacity drawn from the ICIS Supply and Demand Database. Nigel Davis, ICIS Insight Editor, said, "The decline in petrochemical prices worldwide continues. Some contracts for August have already been done and are falling sharply month on month. The price collapse that started in Asia is spreading globally." The latest monthly IPEX charts show largely contract prices across the three regions in July. August contract prices for major aromatic petrochemical products, benzene and toluene, have experienced sharp declines after rising strongly in recent months due to limited availability. Disruptions caused in the refined product markets in Northwest Europe (for gasoline and other fuels) by sanctions on refined products imported from Russia due to the war in Ukraine have affected aromatics for chemical use. The major correction in aromatic petrochemicals—which feed key plastics such as nylon, polystyrene and polyester; flexible foams like memory foam used in bedding; and commodities used for insulation in the construction and packaging industries—came earlier than ICIS analysts expected. Rob Peacock, ICIS Senior Analyst, said, "Benzene contract prices in both Europe and the US fell in August as markets made downward adjustments to the spot prices seen at the end of June. Peacock added, "Spot prices were falling through July due to lower crude oil and gasoline prices and declining demand. Demand from the US gasoline market fell rapidly, and therefore Europe fell faster because it did not lead the rise from gasoline." Most petrochemical and plastic volumes are traded on contract basis worldwide. In addition to the monthly IPEX, a Spot Price index is produced each week for the same commodities. ICIS provides independent chemicals, energy and carbon market intelligence and connects data, markets and partners to optimize resources worldwide.