Trading in the Asian petrochemical market could pick up this week as market direction becomes clearer after the 19th National Congress of the Communist Party of China concludes Tuesday.
Last week, trading activity in China was generally muted as market participants preferred to take a wait-and-see stance on further initiatives from the Chinese government that could affect the economy.
As for Southeast Asia, trading activity was stable with not much changes noted as most end-users were heard to have mostly covered their October requirements and were discussing November cargoes.
In South Asia, activity is expected to rebound this week after market participants return from their Diwali holidays.
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AROMATICS
Asia’s paraxylene market saw lively trading activity last week, as seven physical cargoes traded in the week during the Platts Markets on Close assessment process. Notably, there was still some demand for second-half November as a cargo traded at $851/mt last Tuesday, while the first January delivery cargo traded at $864/mt CFR, where Wanxiang Singapore sold to Litasco.
The declaration process for November-delivery cargoes was comparatively better than in recent months, but a few cargoes are still awaiting acceptance of the nominated vessels from their buyers, especially those in trading chains. The startup of Tongkun Group’s new 2.2 million mt/year purified terephthalic acid plant in eastern China’s Zhejiang has been delayed to early November, from an earlier announced startup date of October 20, market sources said last week.
Meanwhile, recording a week-on-week increase of $2.34/mt, Asian PX prices on Friday were assessed $1/mt higher day on day at $834.67/mt FOB Korea and $852.67/mt CFR Taiwan/China.
In benzene, the market started the week on firmer ground, tracking higher crude oil futures as well as a slight increase in downstream styrene monomer. On Friday last week, benzene spot activity centered on December cargoes.
Market sentiment was bullish because of expected derivative styrene demand from China on the back of low inventories. Styrene stocks amounted to 45,700 mt in East China as of Friday, down 16% week on week from 54,700 mt.
The rising downstream demand buoyed demand for feedstock benzene and as a result, Asian benzene rose $5-$8.50/mt week on week from last Friday to $795/mt CFR China and $788.50/mt FOB Korea.
OLEFINS
Rising deepsea supply put Asia’s ethylene market under pressure last week, with China’s buying appetite remaining muted during the ongoing Congress meeting. Market sources said spot discussions on a fixed price basis were limited, as end-users preferred to trade on a formula basis as they were expecting a further decline in prices in the near term amid rising supply from the Middle East.
On the other hand, sellers were also reluctant to reduce their spot offers aggressively as some ethylene derivatives markets — such as SM, monoethylene glycol or polyethylene — were seen to be rebounding, which may spark spot ethylene demand for November. The CFR Northeast Asia marker fell $15/mt week on week to $1,280/mt last Friday based on these mixed signals.
Thin demand in China and availability of deepsea cargoes pushed butadiene prices down to a nine-week low Friday, as CFR China prices fell $15/mt week on week to $1,215/mt. The last time prices were lower was on August 16, when it stood at $1,140/mt CFR China.
Although higher domestic prices were heard in China, buyers were reluctant to pay similar prices for imported cargoes as they expected an increase in domestic butadiene supply in China. Several market participants said Sinopec Qilu Petrochemical shut its 250,000 mt/year styrene-butadiene rubber plant at Zibo, eastern China, as it was unable to meet government pollution standards. They said the SBR plant could be shut for three to six months, thereby releasing the plant’s butadiene requirements into the spot market.
METHANOL, MTBE
The Asian methanol market started the week on a bearish note, pressured by thin buying interest in key demand areas such as China and India. But the CFR China methanol marker made a sharp rebound Friday, ending $8/mt higher week on week to a one-month high of $341/mt Friday, propelled by stronger futures prices.
The most actively traded January methanol futures on China’s Zhengzhou Commodity Exchange jumped Yuan 101/mt week on week to close at Yuan 2,746/mt Friday. Market sources hope this sudden uptrend continues on into this week.
MTBE prices declined to $640/mt FOB Singapore Friday on weak demand, in line with the seasonal softening of gasoline demand as winter in Northeast Asia draws closer. Still, the Asian gasoline market was supported by healthy demand amid refinery maintenance in the Middle East and high feedstock naphtha prices.
POLYMERS
Asian butene-grade linear low density polyethylene, with a melt flow index of 1-2, rose $20/mt to $1,180/mt CFR Far East Asia Tuesday, on the back of higher demand. Some converters were also heard in the market procuring resin for manufacturing activities in the lead-up to the Lunar New Year.
Trade participants pointed to the possibility of another global interest rate hike towards the end of the year, as well as the shutdown of several Chinese polymer converters due to pollution controls, as driving factors behind the market. Demand was still strong, traders said, from the packaging, automobile and construction sectors, particularly in China and India.
- Platts
