Global Price Collapse for Petrochemicals and Plastics
The ICIS petrochemicals and plastics index (IPEX) predicts a global price drop.
The monthly ICIS Petrochemical Index (IPEX) shows a drop in commodity petrochemical and polymer prices around the world as economic and cost pressures on the sector mount.
The leading indicator indicates that further price declines are on the way, as well as significant margin pressure on some of the world's largest chemical companies. China's stumbling economy, which has been hit by COVID-lockdowns as a result of the Ukraine war, has put intense pressure on commodity prices, which have begun to fall sharply in the world's major petrochemical and plastics producing and consuming regions.
The monthly IPEX, released today, demonstrates how prices have fallen sharply in NE Asia while remaining under intense pressure in northwest Europe and the US. The global index, which fell 8%, is made up of three regional sub-indices. The indices are based on ICIS Supply and Demand Database prices for 14 commodity petrochemicals and polymers weighted by capacity to produce.
“The collapse in petrochemical prices worldwide is ongoing,” said Nigel Davis, Insight Editor at ICIS. “Some contracts for August have been settled already and are down sharply month on month. The price collapse, which began in Asia is spreading around the world.”
The most recent monthly IPEX chart primarily shows contract prices in the three regions in July. August contract prices for the key aromatic petrochemicals, benzene and toluene, fell sharply after rising sharply in recent months due to tight availability. Disruptions in the refined products markets (for gasoline and other fuels) in North-West Europe caused by sanctions imposed on Russian refined product imports due to the Ukraine war had an impact on aromatics for chemical use.
The major correction for aromatic petrochemicals (which are commodities used to make essential plastics, such as nylon, polystyrene and polyesters, flexible foams, such as memory foam used in bedding, and insulation for the construction and packaging industry), came sooner than ICIS analysts had expected. “Benzene contract prices in both Europe and the US plunged in August as markets adjusted downwards from the upwards spike in spot prices seen in late June,” said ICIS Senior Analyst, Rob Peacock.
“Spot prices had been declining throughout July on lower crude and gasoline prices, coupled with reduced demand. Demand from the gasoline market faded quickly in the US and hence Europe dropped off faster because it was not leading the gasoline-led spike,” Peacock added.
Most petrochemicals and plastics volumes are traded globally on a contract basis. Alongside 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 optimise the world’s resources.
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