Eyes on Asia’s petrochemical markets this week remain focused on Qatar’s diplomatic crisis, as well as potential antidumping duties being slapped on major aromatics and intermediates.
Qatar’s ongoing diplomatic crisis could have an impact on the Asian petrochemical market, amid the possibility of more supply from Southeast Asia, or even China, heading to Qatar.
This comes after an ethylene cargo from Southeast Asia was heard sold to Qatar.
China is considering imposing antidumping duties on South Korea styrene monomer imports, as a result of a recent petition filed by Chinese producers to decrease competition from South Korea, according to market sources.
While market participants are now watching out for results of the investigation, some are skeptical that the ADDs would be imposed any time soon.
In South Asia, India’s imports of dioctyl phthalate are likely to fall if ADDs are imposed on material from Taiwan and South Korea.
Export opportunities into India would increase for ADD-exempt suppliers in Southeast Asia as they would be able to achieve better netbacks from the Indian market, industry sources said.
Moreover, this potential fall in supply from Taiwan and South Korea could be offset by ADD-exempt suppliers in Southeast Asia.
AROMATICS
Amid a rollover of the laycans and also bolstered by higher feedstock prices, Asian paraxylene prices rose $2.33/mt day on day to $777/mt FOB Korea and $797/mt CFR Taiwan/China Friday.
Indicative of a long market as far out as October, bids for October floating price cargoes based entirely on the October average of the Platts CFR Taiwan/China marker were seen at a discount of $7/mt, while similar discussions for August were seen at bids at a discount of $7/mt versus offers at a discount of $5.50/mt.
The highest level traded for July was recorded on June 13, at $800/mt with Wanxiang Singapore selling twice at that level to GS Caltex.
Falling inventory levels added much support to Asian SM prices last week, as it climbed to $1,157/mt CFR China Wednesday, the highest since April 13.
Inventories in East China fell by 10.21% week on week to 73,000 mt, the lowest since January this year.
Although prices took a tumble on Thursday and Friday due to a slip in upstream Brent crude oil futures and benzene prices, sources are optimistic that healthy downstream acrylonitrile-butadiene-styrene margins would continue to buoy SM prices in the near term.
The Asian toluene market is expected to remain quiet amid thin discussions as downstream demand continued to stay weak.
Inventories in East China fell 5.88% week on week to 80,000 mt while South China inventories stood at 11,000 mt, down 15.38% from the previous week.
The CFR China marker last Friday was down $7.50/mt from the previous week.
Trading momentum in the FOB Korea market remained slow in the past four weeks despite prices being at their lowest for the past seven months because of weak gasoline blending demand.
The FOB Korea marker was assessed at $609/mt June 16, up $1/mt day on day, but down $3/mt week on week.
OLEFINS
Butadiene prices were at their lowest in nearly 16 months last Friday as domestic prices in eastern China fell on market concerns of thin demand and oversupply.
The situation is likely to remain as several downstream synthetic rubber producers have cut their production rates to cope with the glut, reducing their butadiene requirements in the process.
Synthetic rubber producers said natural rubber prices were higher last week on the Thai government’s plan to help its domestic rubber market but were concerned that the impact will be short term rather than long term.
Propylene prices moved up in Northeast Asia, following unplanned supply outages in South Korea.
The downstream derivatives market however, remained weak in both Northeast and Southeast Asia.
This week, prices are expected to stabilize as some of these outages are resolved.
Ethylene prices climbed $5-$11/mt week on week as some spot demand emerged alongside stronger ethylene derivative margins, notably SM and monoethylene glycol.
According to S&P Global Platts data, Asian SM margins were at $90-$100/mt while MEG margins were about $70-$80/mt.
Supply was seen as possibly tightening a little, on expectations that some spot cargoes from the Middle East and India would likely move to Europe instead of Asia.
POLYMERS
Polyethylene film prices are likely to continue their downtrend this week, on low offers amid a seasonal lull and few shipments from the Middle East because of the Muslim holy month of Ramadan.
Import discussions were still lackluster and trade volumes remained low.
In Asia’s propylene market, prices are expected to remain stable, during the typical demand lull.
The polypropylene futures market was also weaker and would cap any potential rise in prices.
Meanwhile, inventory levels were heard relatively high while there would be fewer fresh offers, as the Eid al-Fitr holiday draws closer.
MTBE, METHANOL
Asian MTBE prices fell to a year-to-date low of $556/mt last Thursday, following the sharp fall in gasoline prices.
According to the US Energy Information Administration, there was a build of 2.096 million barrels in US gasoline stocks to 242.444 million barrels in the week ended June 9, indicating a demand slump.
Prompt demand remained sluggish because of weaker-than-expected gasoline demand during the Ramadan season.
The reforming spread between benchmark 92 RON gasoline and Singapore naphtha narrowed 48 cents/b to $12.03/b Wednesday — almost parity with the minimum economical margin of $12/b for blending at the moment by some traders.
However, some blenders in Singapore were heard seeking cargoes, following the recent slide in Southeast Asian MTBE price levels.
A Malaysian-origin cargo for early July loading was heard to have concluded at a premium of around $20/mt to the Mean of Platts Singapore MTBE assessments on a CFR basis, for delivery into Singapore.
Given current sharply lower prices, traders said the arbitrage window to South and East China had reopened for July cargoes.
Chinese domestic MTBE prices have stabilized following the recent slide, with South China prices heard at around Yuan 5,350-5,400/mt.
Prices in East China have also stayed flat, at around Yuan 5,200-5,250/mt.
Traders said with import parity prices into South China at around $620-$625/mt CFR, potential trades were possible at around premiums of $45-$50/mt to MOPS MTBE assessments on a CFR China basis.
Methanol prices were higher last week because of the unplanned shutdown of Petronas’ plant in Malaysia.
State-owned Petronas has since restarted the 1.7 million mt/year No. 2 methanol plant at Labuan over the weekend, after having delayed the restart by nearly a week due to another power trip, this time caused by boiler instrumentation.
The CFR China marker had risen $5/mt to $270/mt last Friday, while the CFR Korea marker firmed $7/mt to $287/mt.
