Asian petrochemical market expected to be mixed this week

10-Jul-19

The Asian petrochemical market is expected to be mixed this week, as per SPGlobal Platts.  While benzene is expected to see continued support from firm buying interest and a strong China market, paraxylene hinges on downstream purified terephthalic acid amid a volatile September PTA futures last week and polyethylene terephthalate/polyester operation cuts. In olefins, market participants will be monitoring supply conditions closely.

Asian paraxylene prices were assessed down US$0.67/mt from Thursday at US$837/mt CFR Taiwan/China and US$818/mt FOB Korea Friday. Week on week, the CFR Taiwan/China marker was assessed down US$1/mt. Discussions were mostly rangebound last week, with buyers remaining cautious due to declines in the downstream Chinese PTA futures market, while sellers were hesitant to offload their cargoes as upstream crude oil and naphtha prices stayed firm. In plant news, JXTG Nippon Oil & Energy shut its PX units in Kawasaki and Oita early last week due to technical issues. Duration of the shutdowns is currently unclear.
FOB Korea benzene prices jumped US$30/mt on the week to US$660.33/mt FOB Korea Friday, amid firm buying interest for August-loading cargoes, and riding on strong domestic East China prices. Market sources said that with vessel chartering underway for shipments bound for the US in August, traders working the trade route would be keen to procure additional cargoes ahead of declaration. Amid strength in August, the backwardation between August and September widened to plus US$14/mt FOB Korea last Friday.

In the East China market, the downtrend in domestic prices towards the end of last week was said to be a "price correction". The East China market rose Yuan 276/mt between last Monday and Wednesday, only to fall Yuan 50/mt between Thursday and Friday. Firm prices could still continue, as low import levels will likely persist until H2-July. Bullishness last week also stemmed from the fact that Sinopec, a major Chinese benzene producer, increased its domestic ex-tank price twice during the week, which stood at Yuan 5,050/mt on Friday. Asian styrene monomer prices inched US$16.50/mt higher week on week to US$1,074/mt CFR China and US$1,034/mt FOB Korea Friday amid an unclear short-term market outlook. More supply is expected and the market is monitoring the supply situation closely, especially after South Korea's Hanwha Total Petrochemicals restarted its styrene monomer units early-July after the safety checks earlier, sources said. Styrene monomer production margins remained firm, hovering at around $170-US$180/mt last week.

Asian ethylene would likely remain firm this week, but some market sources said the price increase would likely be limited as steam cracker operations would be increasing with the turnaround season coming to an end. The Asian butadiene market rose US$15/mt last week, with prices delivered to Northeast Asian markets (barring China) at US$1,120/mt CFR levels. This was amid active trading and tighter supplies across Asia. Several trades were heard done, with prompter cargoes trading at higher prices. The market is expected to remain stable, or weaken, should supply issues ease, sources said.

Asian low density polyethylene was assessed up US$10/mt in China on a slight improvement in demand. Sentiment firmed after the US and China reached a truce during the latest G20 meeting, end converters said. Asian polypropylene prices rose amid a bullish sentiment from futures. Actively-traded September PP futures on the Dalian Commodity Exchange climbed Yuan 436/mt week on week to Yuan 8,835/mt ex-warehouse by last Wednesday's close.

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