The Week In Asian Petrochemicals Market

The week in Asian petrochemicals market

04-Apr-17

Sentiment in the Asian petrochemicals markets is likely to remain bearish this week as most buyers take a wait-and-see approach, as per Platts. Trading activity could be slower as China is closed for a national holiday till Tuesday. Lackluster demand for most commodities in China amid ample stocks is likely to affect spot trading as well. But while the olefins markets are expected to be stagnant amid muted activity, the region could see some uptick on rising demand for downstream derivatives. In India, the fiscal year ended March 31, which could affect spot trading for about two weeks as accounts are being finalized and closed. Demand is expected to remain bullish although importers stay cautious amid a volatile rupee.

OLEFINS
Most market participants stayed on the sidelines this week, while Asian ethylene has been flat for the past two weeks at $1,140/mt CFR Northeast Asia and $1,035/mt CFR Southeast Asia. Market participants attributed this to most April discussions having been finalized while the demand-supply balance for May were still murky.
In Southeast Asia, spot supply could be curtailed with ExxonMobil expected to take its steam cracker offline for maintenance of one to two months from April, sources added. The steam cracker has the ability to produce 1.9 mln tpa of ethylene, 100,000 mln tpa of butene-1 and 450,000 mln tpa of butenes. But ethylene supplies from Indonesia and Malaysia are expected to continue.
Propylene prices in Asia continued to decline on lackluster demand from key derivatives like polypropylene. High polypropylene stocks would continue to suppress prices this week, according to market participants. The CFR China marker fell the most week on week -- $30/mt to $855/mt -- on Friday.
Butadiene prices dropped $50/mt or 2.7% to $1,800/mt CFR China and $1,750/mt FOB Korea on sparse buying interest. Sellers refused to budge while buyers held on to $1,600-1,700/mt CFR China levels, leading to few trades last week. And this is expected to continue this week. Spot supply could be short due to a fire at Yanzi Petrochemical's 120,000 mt/year butadiene unit.

POLYMERS
The Asian polyethylene market was stable to firm last week as low density polyethylene gained following a draw on Chinese inventories. Re-exports from China to Latin America and Africa could also reduce domestic stocks.
Upcoming plant turnarounds pushed up market sentiment as high density polyethylene film and Asian butene-grade linear low density polyethylene prices closed slightly firmer this week on active trading.
Looking ahead, tightening spot supply due to planned maintenance in Asia would likely translate into higher prices if demand remains stable.
Polypropylene edged down $10/mt to $1,025/mt in Far East Asia while the CFR Southeast Asia and South Asia PP raffia markers remained unchanged at $1,080/mt and $1,140/mt respectively.
China exports to Southeast Asia closed on a higher notional FOB China price at $1,073/mt. Demand looks to remain slow on high domestic stocks.