Crude oil prices rose sharply on 22 July reacting to the fears of a significant storm in the Gulf of Mexico. Benchmark crude settled at US$ 79.30 up US$ 2.74 on that day as a potential tropical storm threatened energy installations and strong earnings boosted investor sentiment. However, the week ended with a dip as worries eased about potential damage to Gulf Coast oil operations from Tropical Storm Bonnie. The storm, expected to hit the Gulf of Mexico this weekend, had prompted some companies to evacuate crews from rigs. On an average, prices gained during the week. The Benchmark crude gained US$ 2.97 to settle at US$ 78.98 a barrel on the New York Mercantile Exchange while in London, the Brent crude was up US$ 1.90 settling at US$ 77.45 a barrel on the ICE futures exchange.

Polyester Chain: PSF prices down

The polyester chain was largely guided by the trend in crude oil prices and spot demand/supply fundamentals this week. Ethylene prices declined in Asian markets while they were steady in Europe but inched up slightly in the USA. In Asia, prices dropped due to gloomy derivatives market. Paraxylene prices gained amidst thin transaction and few bids. In China, markets opined that the forward paraxylene curve would be in backwardation. Intermediates, MEG and PTA markets made some soft upward correction in prices supported by rising crude oil values. However, fall in ethylene had slightly weakened the MEG market sentiments. In China, embargo at Dalian Port was affecting transportation of PTA cargoes and some sellers marked up prices. Asian polyester chips markets showed signs of weakening. Producers were controlling prices at a level that is accepted by both suppliers and buyers. Polyester filament yarn markets made minor corrections, though prices of coarser denier and finer denier were mixed. While prices rose in China, those in Malaysia/Indonesia, Pakistan and India saw downward corrections. Asian polyester staple fibre market sentiment continued its downtrend. Demand was slow to pick up since downstream spun yarn values were not improving.

Nylon Chain: Caprolactum jerks up

Asian benzene price regained slightly against the background of mixed sentiments in US and European markets. In Europe prices were seen increasing faster than in US. However, Asian players were bearish over the future market trend due to oversupply. The markets opined that fundamentals would change if producers cut their run rates to support prices. Dramatically, caprolactum prices jumped sharply in Asian markets on concerns over supplies from Russia. Russia's Kemerovo Azot unexpectedly shut down its unit for two weeks reducing supplies to China. Chinese buyers were cautious over buying European and US cargoes as anti-dumping duty is likely to be imposed soon. China had initiated launched anti-dumping investigation in April on US and Europe origin goods and duty will be announced in July or October/November. Rebounding of crude oil and caprolactum prices supported nylon chip and producers raised their offers to release cost pressure. The cost pressure on nylon filament producers increased with the sharp rise in caprolactum and nylon 6 chip prices.

Acrylic Chain: Acrylonitrile price softens

Propylene prices gained marginally in Asia as spot activities were mainly concentrated on China while markets were watching Korean market. South Korean YNCC's inventories were at a low level with no spot cargos to offer and had to supply propylene to Polymirae Co, which was running its unit at full rate. Overall buying interest was low and market had no interest in buying August-delivery cargoes. Acrylonitrile prices softened across markets reflecting the lusterless spot demand. Buyers withdrew anticipating further fall in prices in August. Demand from acrylic fibre market was hard to improve. Asian acrylic staple fibre markets were subdued and prices edged down further. In China, acrylic fibre producers continued to cut run rates reducing supplies, but downstream demand dropped faster leading to inventories piling up.

Viscose Chain: VSF prices down

Wood pulp prices were stable to weak across markets. The NBSK Index value was down US cents 16 a ton on the European market while the same in US market rolled over previous week’s number. In China, the BHKP Index fell US$ 11.14 a ton. In spot, offers for Brazil and Canada origin pulp were absent while those from Sweden rolled over the firm number. Viscose staple fibre market continued to remain lustreless and prices plunged further in China. Demand too stayed low and inventories piled up. Asian viscose filament yarn markets continued its sluggish trend and offers for most specs were in stable to weakening state. As the market was stepping into the off-season, players were fast losing confidence on the future trends.

Cotton: Prices weakens further in Pakistan

The Karachi Cotton Association spot rate slumped harder by Pak Rs 850 per maund due to low demand. Prices are said to continue fluctuating until end- August depending on the behaviour of the monsoon and inordinate delays in deciding over the removal or extension of the 15 per cent regulatory duty on cotton yarn exports. In India, prices of few varieties gained INR 100 - 200 per candy. The Cotlook ‘A’ index gained US cent 0.70 per pound while China Cotton index lost RMB 80 a ton.

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