Asia petrochem market highlights for week ended July 31: benzene stable, ethylene rises


Asian ethylene rose US$20-30/mt week on week, supported by a firm downstream derivatives market. Higher production margins for downstream SM and monoethylene glycol makers supported prices, as per Platts. Offers were raised on lesser spot supply in Northeast Asia amid upcoming maintenance. Propylene was mixed in Northeast Asia amid a slowdown in China demand and tight supply in South Korea and Taiwan.
Taiwan's Formosa Petrochemical Corp. plans to shut its No. 3 naphtha-fed steam cracker in Mailiao from August 15 for a 40-day annual maintenance. In South Korea, Taekwant Industrial will shut its plant on August 1 and Hyundai Oilbank from mid-August for a month for maintenance. Slowing demand from downstream polypropylene is expected to cap rising prices.
Butadiene was stable week on week amid thin spot market activity and low buying interest from end-users. A buyer said butadiene requirements for August had already been secured. About 20,000 mt of deepsea material is due to arrive in Asia in August and September. The extra deepsea cargoes would be absorbed for synthetic rubber production with butadiene production reduced due to upcoming maintenance.

Asian high density polyethylene film rose US$10-30/mt week on week last week. Buying interest for virgin material had increased in the wake of reports that China plans to end imports of scrap plastic, which could force recycled converters to turn to virgin material.
In India, the implementation of the goods and services tax (GST) continued to affect market activity as downstream converters try to upgrade their accounting systems.
PVC prices were largely stable as August discussions have mostly concluded. Traders said that market demand was likely to be firmer for September and October as buyers were likely to stockpile closer to the end of the monsoon season. A reduction in the supply of Chinese carbide-based PVC on higher feedstock coal prices and stricter local environmental policies, will continue to support to prices this week, market sources said.

Benzene remained mostly stable last week on quiet Chinese spot demand and mixed movements in the downstream styrene monomer market. Due to weaker Chinese demand for August supplies, the August/September market structure was in a contango of US$3-4/mt. Stocks at East China main ports were 120,000 mt last week, up 4,000 mt from the previous week. High domestic inventory and weaker East China prices meant scant interest in September cargoes.SM stocks held by traders in East China fell to a six-month low of 49,000 mt on lower imports in May and June due to maintenance at Asian plants. Also, there was a lack of deep sea cargoes from the US during the period.
Market participants said, however, that the trend would reverse in Q3 with active discussions already underway to bring 35,000-40,000 mt of US SM to China in September.
Paraxylene was weaker last week, bucking the upward trend seen earlier amid continued fall in downstream futures. The spread between the CFR Taiwan/China PX and CFR Japan naphtha narrowed by US$3.38/mt week on week to US$366.05/mt, well above the breakeven level of US$300/mt for producers. September cargoes moved steadily up last week, tracking upstream crude and naphtha.

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