Singapore — Buying interest was expected to increase across most Asian petrochemicalmarkets this week, boosted by positive sentiment arising from latest developments in US-China trade talks and seasonal post-Lunar New Year holiday requirements.
The propylene import market in China remained weak last week, as domestic buyers were wary of lower downstream polypropylene demand and preferred cheaper domestic supplies that were ample. However, buying interest is expected to improve this week.
Domestic supply is expected to get tighter as a major propane dehydrogenation plant operator, Ningbo Haiyue, plans to shut its 600,000 mt/year plant on Friday for a turnaround.
Meanwhile, the FOB Korea butadiene marker was flat day on day at $1,115/mt Friday, while the CFR China marker rose $35/mt to $1,135/mt Friday. Market sentiment was mixed, as sellers raised offers amid the upcoming turnaround season in March, while the others expect the market to weaken ahead of the startup of a butadiene unit in March by Malaysia’s RAPID.
The Chinese methanol market appears to be stable this week, with high inventory at the eastern ports and buyers preferring to buy product domestically. The arbitrage to export cargoes from China to Southeast Asia has opened, and that should gradually ease tightness in Southeast Asia. A Brunei producer heads into a turnaround in March, while a Malaysian producer’s 1.7 million mt/year plant continues to operate at 50% of capacity.
The Asian paraxylene market saw a slight retreat in spot prices, down $4.66/mt day on day to be assessed at $1,117.67/mt CFR Taiwan/China and $1,098.67/mt FOB Korea Friday. Week on week, however, the CFR China marker rose $11.67/mt from last Friday, supported by firm demand for April delivery cargoes.
For April delivery, seven cargoes traded in the Platts Market on Close assessment process last week in the range of $1,111/mt to $1,118/mt CFR Taiwan/China.
Elsewhere, European spot paraxylene gained $11/mt Thursday to close at $1,020/mt FOB ARA for February marker and $1,014.50/mt FOB ARA for March marker. A discount of around $100-$110/mt to the CFR Taiwan/China proved to be attractive for exports, with a 5,000 mt cargo bound for the Far East reported booked last week.
Week on week, FOB Korea benzene rose $25.33/mt to $620.33/mt, while CFRChina climbed $15.50/mt to $627.50/mt Friday. The flurry of activity on an FOB Korea basis corresponded to a fall in CFR China sell interest from traders working the South Korea-China arbitrage, with the CFR China-FOB Korea spread at $7.17/mt Friday, down $9.83/mt on the week and down $7/mt on the day. With freight rates between South Korea and China for a 3,000 mt parcel reported at $26.50/mt, the current spread is insufficient to cover freight costs.
Asian linear low density polyethylene film prices were stable to slightly higher last week on firming futures. Actively traded May 2019 LLDPE futures on the Dalian Commodity Exchange increased Yuan 190/mt week on week to settle at Yuan 8,705/mt ex-warehouse by Wednesday’s close. Traders expect more LDPE imports on the back of the scrap ban in China, pointing out that Chinese LLDPE imports increased 30%-40% last year due to the same reason.
Asian polypropylene was generally higher in the week. PP demand was expected to increase, accounting for up to 69% of propylene demand in 2019, according to S&P Global Platts Analytics.
The Asian acrylonitrile market moved up $20/mt to $1,580/mt CFR Far East Asia last week. Supply for ACN was reported tight globally after European petrochemical producer Ineos declared force majeure on ACN supplies from ts 545,000 mt/year Green Lake plant in Texas. The producer earlier declared force majeure on ACN supplies from its 280,000 mt/year Seal Sands plant the week before. A term buyer in Asia said the producer said it may have to reduce term shipments for April and May arrival.
But spot supply in Asia is already reported thin, as Taiwan’s Formosa Plastics shut its 280,000 mt/year ACN plant in Mailiao on February 12 for maintenance and is expected to restart only by March 9.
Overall demand along the Asian polyester sector is expected to improve this week in China, post the Lunar New Year holiday. Nevertheless, Asian monoethylene glycol trade participants are generally not optimistic about MEG due to ample supply, which hit a record high of around 1.2 million mt at eastern ports of China last week.
In related markets, Asian purified terephthalic acid’s overall social inventories in China rose to around 1.3 million mt last week. The spread between PTA and PX feedstock narrowed to $97/mt for the CFR China marker andYuan 515/mt for Chinese domestic PTA on Friday, according to Platts data. Major Chinese PTA producers may plan to cut production if the PTA-PX spread stayed below Yuan 600/mt for a while, sources said.
(Recasts lead and parts of story)
–Miranda Zhang, [email protected]
–Edited by Ikhhlaq Singh Aujla, [email protected]
Source: S&P Global Platts