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The McGraw-Hill Companies, Inc. : Platts: April Petrochemical Prices Edge Lower on High Supply, Weaker Oil Prices

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05/03/2012 | 07:10pm CET

LONDON, May 3, 2012 /PRNewswire/ -- Prices in the $3-trillion-plus global petrochemicals market took a slight downturn in April, averaging of $1,444 per metric ton (/mt). The April average price is down a mere $1 from the March average, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals.

While the monthly average was largely static, on an end-of-day, end-of-month basis, the PGPI market-on-close value was $1,412/mt - a 3% drop compared to the end-of-day, end-of-month value for March of $1,460/mt. Month-end closing prices are often used for valuing portfolios. The month-end closing price in April was the lowest since February 17. Also, the April 2012 average was 6% lower than the April 2011 average.

PLATTS GLOBAL PETROCHEMICAL INDEX IN DOLLARS PER METRIC TON
The daily price reflected as a monthly average

        Apr-
         '12        Monthly      Annual       Apr-'11       Mar-'12       Feb-'12       Jan-'12       Dec-'11
                       %           %
                     Change      change
    ---              ------      ------
             $1,444         - 0%        - 6%       $1,541        $1,445        $1,401        $1,270        $1,161
             ------          ---          ---        ------        ------        ------        ------        ------

Petrochemical prices traditionally climb in the first quarter of the year, according to Platts, the founder of the index and the physical market price assessment processes for each of its components. Restocking following the start of a new calendar year, coupled with planned production outages in the olefins markets, tend to provide upward support of prices.

However, first-quarter support during the past two years has dropped off in the spring, lasting through most of the second quarter. The lull can be attributed to inventories building following turn-around season and a drop-off in demand as restocking is completed.

In 2010, the spring downward trend started during the second week of April, with the PGPI falling from a high of $1,262/mt on April 12, 2010 to a low of $995/mt on July 12, 2010 - a 21% drop in price. In 2011, the spring downtrend began in the first week of May, with the PGPI falling from a high of $1,579/mt on May 3, 2011, to a low of $1,308/mt on July 1, 2011, a 17% drop in price.

Prices of crude oil, the raw feedstock to petrochemical manufacturing, also trended lower during April, with the Dated Brent crude oil price falling 4% in April.

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.

Six of the seven components' end-of-month April values were less than the March end-of-month prices. The largest end-of-month drops were in the global olefins markets, with both ethylene and propylene falling 6%. The weaker olefins prices also caused a drop in polymer prices, but at a slower pace. Global polyethylene values were down on an end-of-month basis by 3%, while polypropylene values during the same period fell 1.4%. Olefins are the basic building blocks for petrochemicals, namely plastics.

In addition, four of the seven components posted lower monthly averages.

Benzene was the only PGPI component to post gains both on a monthly average and end-of-month basis. Benzene on an average basis climbed $2 - less than 1% -- to $1,208/mt. On an end-of-month basis, the benzene index was up 3% to $1,230/mt.

April's PGPI movements reflected changes in the global equity markets, which were also flat to lower. Through April, the Dow Jones Industrial Average (DJIA) posted a less than 1% gain while the London Stock Exchange Index (FTSE) fell a half of a percent. The Nikkei 225 fell 6% during the month.

To access a summary of the April performance of each of the seven key petrochemicals included in the PGPI, visit this link: http://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.

Platts petrochemicals experts are available for media interviews, consult Platts Media Center. For more information on petrochemicals, visit the Platts website at www.platts.com.

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals and metals information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, and shipping markets. A division of The McGraw-Hill Companies (NYSE: MHP), Platts is headquartered in New York with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About The McGraw-Hill Companies: McGraw-Hill announced on September 12, 2011, its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.

SOURCE Platts

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