Asian petrochemical markets generally trended lower last week as most aromatics products softened under supply side pressure, despite strength in the energy complex.
Meanwhile in olefins, narrowing margins in the downstream segments will create greater resistance in upstream buying activity and call into question the possibility of any further uptick in ethylene this week.
AROMATICS
Asian paraxylene prices slipped over the week, ahead of first cargoes due to load from Saudi Arabia’s new PX plant. Rabigh Refining and Petrochemical Co., or Petro Rabigh, achieved on-specification production of PX at its 1.34 million mt/year plant in trial runs last week, according to market participants. The first cargoes will load at the end of March and will continue to weigh on trading activity this week.
Asian benzene was also on a downtrend last week, weighed by low prices in China amid high domestic inventory levels and ample spot offers in the market. Inventories in eastern China were at 175,200 mt Friday — a relatively high level. Participants expect high domestic inventories to continue impeding price rises until turnarounds have ended, and new downstream plants ramp up run rates to absorb excess supply.
Sentiment weakened further last week as downstream styrene monomer took a hit as the Chinese futures market dived. Caution will continue to envelop discussions this week as participants search for clearer direction.
OLEFINS
Asian ethylene climbed to a two-month high last Friday, driven by bullish demand in Japan. Some Japanese end-users emerged last week, seeking spot cargoes to cover supply shortfall amid heavy steam cracker turnaround season. The sustainability of this uptrend remains in question this week however, as prices of downstream monoethylene glycol and SM plunged last week.
Asian propylene was stable to lower last week, as the Chinese market was pressured by softer domestic downstream polypropylene prices and futures. Meanwhile, sentiment in South Korea was relatively stronger on tight supply due to the ongoing turnaround season and producers were unwilling to lower their offers. However, due to the bearish downstream PP segment, Chinese end-users similarly remained on the sidelines. This week, PP is expected to continue to hold sway over discussions in China and South Korea.
Butadiene markets in Asia are similarly facing downward pressure due to weakening demand in the downstream synthetic rubber markets. The expected start-up of a butadiene unit operated by China’s CSPC over end-March to early April will also increase domestic butadiene supply and will likely contribute to weaker sentiment this week as well.
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MTBE
Asian MTBE prices were lifted by stronger energy markets and bullish sentiment from a drawdown in US gasoline stocks last week. This week, supply in Asia remains tight, and although demand from China is heard to have tapered off slightly.
POLYMERS
Asian polyethylene grades generally traded lower last week, as market participants had stocked up sufficiently, and are now more focused on clearing existing inventory in the domestic market as opposed to purchasing — a move likely to continue pressuring the market this week.
And in India, changes in credit issuance announced by the Reserve Bank of India will continue to impede buying appetite for import cargoes moving forward, according to trade sources. RBI has decided to discontinue the practice of issuing letters of undertakings or letters of comfort for trade credit for imports into India, the bank said in a statement last Tuesday.
- Platts.com
