Platts: March Petrochemical Prices Rise 3% on Moderate Oil Market Gains

London – Prices in the $3-trillion-plus global petrochemicals market rose 3% in March to $1,445 per metric ton (/mt), according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals.

While March marks the third consecutive month of gains in the PGPI, the increase seen in March was relatively small compared to the 10% jump in February prices. The February PGPI average was $1,401/mt, up from $1,270/mt in January.

The PGPI increase seen in March was supported by moderate gains in the global crude oil markets. Brent crude oil prices during the month climbed 5% to $124.50 per barrel (/b), while West Texas Intermediate crude prices rose 4% to $106/b.

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 in blue.

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

Five of the seven PGPI components’ monthly averages were stronger in March. The largest increases were in the global olefins markets, with both ethylene and propylene climbing 5%. The stronger olefins prices also pushed polymer prices higher, with polyethylene climbing 3% and polypropylene climbing 4%. Olefins are the basic building blocks for petrochemicals, namely plastics.

The Platts Global Benzene and Paraxylene indices both fell 2% in March. Toluene prices posted small gains in March, climbing 2%, with gasoline blend values acting as a price floor ahead of the summer driving season in the United States. Benzene, paraxylene and toluene – collectively known as aromatics – are not only used in the manufacture of gasoline, but are the raw materials inputs to a host of consumer products such as plastic packaging, casings for electronic goods, bottles and polyester fibers.

On an end-of-day, end-of-month basis, the PGPI market-on-close value was $1,460/mt March 30 – a 2% increase compared to the end-of-day, end-of-month value for February of $1,433/mt. Month-end closing prices are often used for valuing portfolios.

March’s PGPI increase outpaced movement in the European and U.S. equity markets, but was slightly lower than gains in the Asian Nikkei 225. Through March, the Dow Jones Industrial Average (DJIA) posted a 2% gain while the London Stock Exchange Index (FTSE) fell 2%. The Nikkei 225 climbed 4% during the month. [www.platts.com/newsfeature/2012/pgpi/index].

The PGPI reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the United States. Used as a price reference, a gauge of sector activity, and a measure of comparison for determining the profitability of selling a barrel of crude oil intact or refining it into products, the PGPI was first published by Platts in August 2007.

Published daily in Platts Petrochemical Alert, a real-time news service, and other Platts publications, the PGPI is anchored by Platts’ robust and long-established price assessment methodology and the firm’s 100-year history of energy price reporting. [ www.platts.com].