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Asia petrochemicals outlook, w/c Mar 4

Singapore — The Asian petrochemicals market saw a general firmness across many products in aromatics, olefins, polymers and intermediates. This is largely as many buyers had fully returned after the Chinese New Year holidays and began restocking activity. Some market players in the butadiene and benzene markets were also headed into turnaround season, adding further support to prices.

OLEFINS

The Shandong domestic propylene market in China was in recovery mode after it hit the bottom price of Yuan 7,000/mt ex-tank East China last Tuesday, based on S&P Platts data. Chinese buyers were willing to bid higher to secure imported materials as spot supply for March-April arrival is expected to be tighter. This is as major propane dehydrogenation plants operator, Ningbo Haiyue will shut down its 600,000 mt/yr propylene plant Monday, as reported by Platts previously.

Prices in the Asian butadiene market were up $10/mt week on week on an FOB Korea basis March 1 amid improved demand from the downstream styrene butadiene rubber markets. “We are increasing our SBR plant operating rates as demand is improving and we are buying more [butadiene feedstock] cargoes to build up inventory ahead of the regional maintenance shutdown in South Korea”, a butadiene market source said. The butadiene market is expected to be strong as buyers continue to restock.

AROMATICS

The benzene market started the month of March in a steep contango, with March/April cargoes assessed at minus $11/mt FOB Korea, while the April/May cargoes stood at minus $4/mt FOB Korea on March 1. The structure comes amid an expectation that the prices of benzene derivatives, such as styrene, phenol, and caprolactam, would increase moving forward, which would support the production margins of downstream products. Turnarounds at Chinese styrene plants are concentrated in the second quarter, thereby pushing prices of CFR China material higher. Simultaneously, styrene plants within China would maintain high operating rates before entering the turnaround season, amid shrinking Asian styrene supply outside of China, while supporting demand for CFR China benzene. Several market participants continued to be optimistic on end-user demand in China, but others were skeptical, as benzene stocks continued to hover at high levels.

Chinese methanol prices will see firmness this week as methanol futures continued its bullish ascent from last Friday. The uptick in methanol futures was likely sentiment-driven, trade sources said, because the inventory at China’s eastern ports were not only heavy, but swelled a further 2.7% from the previous week to 979,000 mt last Thursday. Over in India, planned shutdowns in Qatar and Iran will decrease supply to West Coast India by an estimated 80,000 mt this month. Elsewhere, Southeast Asia remains amply supplied at the main ports with Middle Eastern product.

POLYMERS

Asian low density polyethylene prices rose higher week on week as discussion levels moved higher amid generally lower inventories outside of China. Although the inventory level in China was considered high by market participants, some buying interest has emerged for restocking ahead of the traditional peak demand season. Some mLLDPE substitution by LDPE was seen as LDPE was currently comparatively cheaper to use, converters said.

Asian polypropylene prices were generally stable. While there were some plant outages reported, traders said demand was lukewarm. In plant news, the UAE’s petrochemical complex Borouge 3 is on track to restart early March after scheduled maintenance works, senior executives from Austria’s Borealis, one of the partners, told S&P Global Platts. The turnaround started in January and affected the entire complex, including the 1.5 million mt/year steam cracker, and polyethylene and polypropylene plants.

INTERMEDIATES

Asian purified terephthalic acid is likely to remain strong this week with bullish sentiment that persisted after a major settlement of the March Asian Contract Price for upstream paraxylene at $1,080/mt CFR Asia last Thursday. With firmness in the upstream PX market, Chinese PTA producers have been trying to correct the current PTA profit margin since last Friday. In addition, around 50% of PTA producers were considering production cuts to lower inventory levels and to further support PTA prices, a source said. Rising PTA prices supported the related monoethylene glycol market last Friday. However, market participants generally held a dim view this week, worrying about a correction in MEG prices due to supply glut and subdued demand.

— Elizabeth Low, [email protected]

— Edited by Liz Thang, [email protected]

Source: S&P Global Platts

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