Asian petrochemicals outlook, w/c Dec 3

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Singapore — The Asian petrochemicals market was affected by the continued decline in upstream prices, with the ICE Brent futures down 4% week on week Friday.

This lent an overall bearish sentiment to some downstream petrochemical markets, while others saw a rebound in prices due to tighter supply.

OLEFINS

The Asian ethylene market would likely remain bearish this week, dragged down by weak demand for downstream production amid narrowing derivative margins. Deepsea cargoes are likely to continue to head to Asia in the near-term, which would also affect Asian ethylene market sentiment. In addition to this, ethylene supplies in Asia are increasing as the steam cracker turnaround season ends. ’s LG Chem restarted its naphtha-fed steam cracker in Yeosu last Wednesday after completing annual maintenance, the company source said. The cracker, which is able to produce 1 million mt/year of ethylene and 550,000 mt/year of propylene, was shut at the end of October, S&P Global Platts reported earlier.

The imported propylene market is expected to recover some ground this week as more shutdowns among propylene dehydrogenation (PDH) plants in China is expected to add relief to the domestic supply glut and spur demand for imported materials. CNOOC Ningbo Daxie Petrochemical, which has an annual propylene capacity of 460,000 mt/year, shut its PDH plant at Daxie in eastern China’s Ningbo for scheduled maintenance of around 45 days from November 27. The production outage owing to this turnaround is more than 55,000 mt. Another PDH producer, China’s Oriental Energy, which has an annual capacity of 600,000 mt/year, also plans to shut its PDH plant at Zhangjiagang in eastern China’s Jiangsu province this month for 20 days due to a technical glitch.

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Meanwhile, the Asian market was stable week on week Friday, with a slight uptick towards the end of the week. The outlook is expected to be stable, or slightly firmer due to some supply concerns over major Chinese producer Secco’s delay in restarting its unit.

AROMATICS

Asian paraxylene prices are expected to be firm, following announcements that Chinese tariffs on US imports, including paraxylene, will remain unchanged at 10% for 90 days to facilitate trade negotiations, instead of the original plan to raise tariffs to 25% effective January 1, 2019. Amid the recent tumble in PX prices, discussions for the December paraxylene Asian contract price ended without a major settlement for the third straight month, with the gap between the highest bids and the lowest remaining offers at $40/mt. The best bids stood at $950/mt CFR Asia against the best offers of $990/mt CFR.

Asian benzene prices continued on a general downtrend last week, ending the week at a two-year low. FOB Korea benzene was assessed lower by $20.67/mt week on week, and down $7.33/mt day on day at $634/mt Friday. FOB Korea was last assessed lower on October 19, 2016, at $633/mt. Prices are expected to remain relatively weak in the , with most market participants optimistic that prices may firm early next year.

POLYMERS

The market tumbled further last week, with styrene-butadiene down on the week Friday due to weak demand, particularly from China, which is reeling from trade tensions with the US, market sources said. Chinese buyers had little incentive to seek imports, especially given that domestic prices were comparatively lower. This trend is expected to continue as further US-tariffs hang over the market.

Asian PVC was stable week on week Wednesday after bulk of December trade was concluded. Firm Indian demand has been the main driver behind the Asian PVC market, with more upside expected given that prices in the Indian domestic market are currently hovering at around $920/mt-$940/mt on an import parity basis, according to market sources. Demand from China was said to be firm, although not as strong as that of Indian demand, sources added. Prices are expected to remain firm in the week ahead.

INTERMEDIATES

The Asian ethylene dichloride was up $5/mt on week Thursday, hitting the highest level since October 2014, buoyed by tight availability. Supplies from the US remained limited as the high FOB USG EDC price kept the arbitrage closed. On Tuesday, the FOB USG EDC price was assessed unchanged week on week at $330/mt, the highest level since October 30, 2014, when the price was assessed at $355/mt, S&P Global Platts data showed. EDC supplies from the to Asia also turned scarce recently amid some hiccups in a chlor-alkali plant in the . The market is expected to stay firm in the week ahead.

Asian vinyl chloride monomer was stable week on week Thursday, with VCM market sentiment firm this week, in line with strong sentiment in the downstream PVC market. In addition, VCM supplies from the Middle East are seen to be limited due to some chlor-alkali plant hiccups. Prices are expected to stay stable to firm in the week ahead.

–Elizabeth Low, elizabeth.low@spglobal.com

–Edited by Norazlina Juma’at, norazlina.jumaat@spglobal.com

Source: S&P Global Platts