Petrochemical Prices Oil Price Makes Petrochemicals a Bargain: Prices Down by 40 %

Editor: Dominik Stephan

With sliding oil prices also the prices for petrochemicals gave in: Compared with January 2014, prices dropped by a staggering 40 %, market analyst Platt says. Current prices are the lowest since crisis–ridden 2009.

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The chart above shows the daily end-of-day Platts Global Petrochemical Index (PGPI) price in red and also displays the 20-day PGPI moving average (MA) in blue.
The chart above shows the daily end-of-day Platts Global Petrochemical Index (PGPI) price in red and also displays the 20-day PGPI moving average (MA) in blue.
(Picture: Platts)

rices in the US $ 3-trillion-plus global petrochemicals market slid 14 % month over month in January, continuing a six-month slide triggered by falling crude oil and naphtha prices. Petrochemical prices, expressed as a monthly average, fell $133 per metric ton (/mt) from December to US $ 850/mt in January, according to the just-released monthly Platts Global Petrochemical Index (PGPI). This is the lowest level since June 2009, when global markets were recovering from the 2008 collapse of Lehman Brothers. During the past 12 months, petrochemical prices have fallen 40 %.

The PGPI is a benchmark basket of seven widely used petrochemicals and is published by Platts, a leading global energy, petrochemicals and metals information provider and a top source of benchmark price references.

Minus 40 % in a Single Year

“Crude prices fell nearly 25 % and naphtha prices were down 16 % month over month in January,” said Jim Foster, Platts director of petrochemical analysis. “With feedstock prices falling like that, there’s really no other direction for petrochemicals to go than down. There have been signs of price increases since the end of January. The question being asked by the industry now, though, is if this current rally is sustainable – or just a short-term correction.”

Petrochemicals are used to make plastic, rubber, nylon and other consumer products and are utilized in manufacturing, construction, pharmaceuticals, aviation, electronics and nearly every commercial industry.

Olefin Price Down by 10 %

Prices of olefins – a group of hydrocarbon compounds which are the building blocks to many petrochemical products used to produce everyday goods – posted double-digit declines in January. Ethylene prices tumbled 15% from December to $834/mt and propylene prices were down 10 % toUS $ 786/mt.

Polyethylene and polypropylene, plastics manufactured from ethylene and propylene respectively, posted similar month-over-month drops in price. Global polyethylene fell to US $ 1,230/mt, down 12 %, while polypropylene fell 14 % to US $ 1,165/mt.

Benzene Prices Decline

Prices of aromatics – a group of scented hydrocarbons with benzene rings used to make a variety of petrochemicals – also saw a sharp price decline in January. Benzene posted the largest drop of any component in the PGPI, with prices shedding 18 % from December to US $ 604/mt in January. Toluene prices fell more than 17 % to US $554/mt, while paraxylene prices slid 12 % to US $ 729/mt.

Global equity markets were mixed in January. The London Stock Exchange Index (FTSE) posted a 1 % gain and the NIKEEI 225 gained 3 % during the month. However, the Dow Jones Industrial Average fell 4 %.

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