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Saturday, October 23, 2021

Asia petrochemicals outlook, w/c Apr 30

Asia’s aromatics market is expected to be mixed this week, with upstream toluene finding support from continuous strong demand after a sharp drawdown in China’s inventories, while downstream turnarounds will continue to pressure benzene.

Ample spot supply will likely cap ethylene and propylene this week, but supply tightness is expected to underpin the methanol and butadiene markets.

Major feedstock naphtha meanwhile rose, with Japan naphtha prices up $14.875/mt week on week at $631.375/mt last Friday, adding pressure to the naphtha spread with several downstream petrochemicals.

AROMATICS

Asian paraxylene prices rose last week, led by the surge in crude oil futures although weaker Chinese purified terephthalic acid futures have put a cap later in the week. PX will continue to take its cue from both segments this week.

In Asian benzene, traders noted that few buyers for CFR cargoes were in the market, as maintenance at downstream phenol and styrene monomer plants were heard ongoing. Weak fundamentals were also seen from persistently high inventory levels in China, with stocks at major eastern Chinese Jiangsu port heard rising 3,300 mt over the week to 215,200 mt as of last Friday.

Upstream, Asian toluene prices rose last week on tight supply heard across the region in India, China and Taiwan, as well as healthy demand especially for prompt cargoes. This week, the market is expected to remain supported by firm buying interest for May cargoes amid a sharp drawdown of inventories in China. East China’s port inventories declined 37.5% to 25,000 mt last week, from 40,000 mt the previous week.

OLEFINS

Asia’s ethylene market is seen remaining bearish this week, from rising supplies and muted downstream demand. Prices had dived last week with additional volumes from Europe and Southeast Asia headed to the market. Buying appetite also faded because of turnarounds at downstream monoethylene glycol plants.

Propylene prices in Asia lost traction last week on a combination of sluggish buying interest, ample spot availability and weak downstream polypropylene. This week, the market is expected to see greater activity after China returns from the Labor Day holiday.

Asian butadiene prices soared to a seven-month high last week, with continuous firm buying interest and supply tightness expected to keep the market supported this week. Maintenance of naphtha-fed steam crackers and butadiene extraction units in China and Taiwan, as well as 5,000 mt of arbitrage supply fixed for first-half May loading from South Korea to the US, have all restricted cargo availability.

MTBE, METHANOL

Asia’s benchmark Singapore MTBE prices had slipped 4% over last week, with traders heard looking at much cheaper gasoline blendstock alternatives since prices peaked in mid-April. This week, as downward pressure fades with prices having retreated to more competitive levels, activity will likely be more muted.

Asian methanol prices saw strength last week on the back of supply tightness from plant turnarounds in the Middle East.

Three major producers, namely Oman’s Salalah Methanol Company, Iran’s Fanavaran Petrochemical Company and Iran’s Zagros Petrochemical Company, all have plants currently under maintenance with a combined capacity of 3.65 million mt/year. This was further exacerbated last week by the unexpected outage of another 1.65 million mt/year Zagros plant. However, this plant was understood to have restarted, according to sources close to the company Sunday, which will partly ease supply pressure this week.

Nonetheless, limited supply will continue to underpin the market, with inventories in China potentially declining further because of ongoing exports to India and South Korea.

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