LONDON, Aug. 9, 2022 /PRNewswire/ -- The monthly ICIS Petrochemical Index (IPEX) is recording a collapse in commodity petrochemical and polymer prices worldwide as economic and cost pressures for the sector mount.
The leading indicator points to further price falls to come and significant margin pressure on some of the world's major chemical companies.
China's stumbling economy ? stricken by COVID-lockdowns ? consequences of the war in Ukraine, and threatening recession have put intense pressure on commodity prices which have begun to fall sharply in the major petrochemical and plastics producing and consuming regions of the world.
The monthly IPEX, released today, shows how prices have dropped sharply in NE Asia and have been under intense pressure in northwest Europe and in the US. Three regional sub-indexes comprise the global index, which fell 8%. The indexes are based on prices of 14 commodity petrochemicals and polymers weighted by capacity to produce taken from the ICIS Supply and Demand Database.
"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 latest monthly IPEX charts largely contract prices in the three regions in July. August contract prices for the key aromatic petrochemicals, benzene and toluene have suffered steep falls having risen strongly in recent months on tight availability. Disruptions in the refined products markets (for gasoline and other fuels) in North-West Europe, brought about by sanctions imposed on refined products imports from Russia due the war in Ukraine, had impacted aromatics for chemicals 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.
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