By: Arif Habib Limited
Petrochemical margins (ex- PTA margins) decreased during Oct-15, attributable to higher oil prices, up 1.8% MoM (WTI). PSF (USD 249/ton) and PVC (USD 335/ton) margins decreased by 18% MoM and 19% MoM, respectively during the month. Conversely, PTA margins were up by massive 36% MoM to USD 112/ton. The latest monthly figures are positive for LOTCHEM, however negative for ICI.
Bearish demand sentiment kept PSF margins down PSF margins were down 18% MoM (down 40% YoY) to USD 249/ton due to higher PTA prices (USD 611/ton) which rose 6% MoM. Moreover, there was a 3% MoM decline in PSF prices to USD 1,110/ton. However, the drop in margins was muted by lower MEG (USD 664/ton) prices, down 4.8% MoM. The decline in MEG prices was mainly due to weaker downstream product demand.
Ample product availability + Sluggish buying = Low Margins PVC margins dropped by 19% MoM (up 9% YoY) to USD 335/ton during Oct-15 attributable to increase in Ethylene prices by average 17% MoM to USD 910/ton. Ethylene prices were on the higher side due to tighter product availability. Also, sluggish regional buying led to an oversupplied market, keeping the PVC prices on lower side.
Stronger buying pushed up prices and margins: PTA margins were up by a massive 36%MoM (down 2% YoY) to USD112/ton during Oct- 15. This is primarily due to 6% MoM increase in PTA prices to USD 611/ton. PTA prices were up due to a rise in futures prices, lead by strong buying. In addition, the prices of PX also increased by 1.3% MoM to USD 756/ton.