June 2024: Asian Petroleum Resin Prices Decline, While Surges in US Amid Rising Freight Rates

In June 2024, the global Petroleum Resin market exhibited mixed trends influenced by increased freight rates, decreased raw material prices, and geopolitical factors. In India, the price of Petroleum Resin fell by approximately 2%, driven by lower production costs as feedstock crude oil prices decreased. This price drop occurred as OPEC's oil output rose for the second consecutive month, with higher supply from Nigeria and Iran offsetting voluntary supply cuts by other members of OPEC+.

According to the EIA, Brent crude futures declined in May and early June due to weak oil demand growth and inventory builds, indicating a well-supplied market. Brent futures fell by $6/bbl in May and dropped further in early June after OPEC+ announced plans to gradually reverse last year’s extra voluntary output cuts starting in Q4 2024. Although initial market reactions were bearish, with prices reaching around $77.50/bbl, they rebounded to $81.50/bbl, still $11/bbl below early April 2024 highs. These fluctuations in crude oil prices significantly impacted the pricing dynamics of Petroleum Resin.

In the Chinese market, the Petroleum Resin industry experienced a downturn due to low demand from the downstream construction sector. Data from the National Bureau of Statistics revealed that from January to May, national investment in real estate development reached 4,570.1 billion RMB, marking a year-on-year decrease of 7.2%. Residential investment within this period totaled 3,480.9 billion RMB, down by 6.4%. The sales area of commercial housing dropped by 0.9% year-on-year to 464.4 million square meters, despite a 2.3% increase in residential sales area. The total sales value of commercial housing rose by 8.4% to 4,978.7 billion RMB, with residential sales up by 11.9%. This sluggish real estate industry offered limited support to the Petroleum Resin market.

Conversely, in the USA, the price of Petroleum Resin surged due to expensive imports from overseas, particularly China. This surge was driven by a significant shift in market dynamics since May, characterized by a scarcity of capacity and rapidly increasing freight rates, reminiscent of the pandemic era. The supply-demand imbalance was worsened by congestion at major Asian ports, including Singapore, Tanjung Pelepas, Port Klang, Shanghai, and Ningbo. Shippers faced growing equipment shortages in China due to high export demand and disruptions to long-haul and intra-Asia services, caused by ongoing vessel diversions around southern Africa.

According to ChemAnalyst, the recent rainy weather is expected to further increase the inventory of Petroleum Resin, while short-term demand is unlikely to rise significantly. As a result, ChemAnalyst anticipates that the Petroleum Resin market will primarily experience a slight decline in the near term.