Singapore — The Asian petrochemicals market will be affected by downstream margins, turnaround seasons and the depreciation of the Chinese Yuan against the US dollar.
Paraxylene and ethylene prices are expected to buoy given a bullish run in downstream margins. Meanwhile supply is turning tight in the face of turnaround seasons for benzene, ethylene and propylene.
AROMATICS
The CFR Taiwan/China paraxylene price surged 6.6% week on week to hit a near four-year high last Friday. The demand for September cargo had also coincided with a particularly bullish run in the downstream September purified terephthalic acid futures contract which settles on the Zhengzhou Commodities Exchange. Thus, ensuring that margins for PX producers from CFR Japan naphtha hit a near four-year high on August 2, 2018, with the bull run expected to continue for another two weeks until the September futures contract expires.
This bull run has also seen producers like Sinopec Jinling shelve maintenance plans for the end of Q3, in order to capitalize on the handsome spread from naphtha, along with Thai producer PTT Global Chemical issuing another spot tender for 5,000 mt of cargo loading at the end of August.
In Asian benzene, plant troubles are expected to affect cargoes loading in September and October. This has resulted in the market structure flipping into a backwardation last week, as market participants are more keen to buy benzene for September loading. The September/October spread stood at $3/mt last Friday, from parity a week earlier. Meanwhile, unplanned shutdowns in September would amount to a loss of approximately 26,600 mt/year in nameplate capacity. South Korea’s Hanwha Total’s No. 2 BTX unit will be shut for two weeks in September, while Japanese JX Nippon Oil & Energy’s Wakayama unit will be shut for a month from mid-September.
OLEFINS
In the Asian ethylene market, sources said a balanced demand and supply for September would likely turn tight compared with August, as spot supplies from Southeast Asia are expected to be thin in line with planned steam cracker turnarounds in Singapore and Thailand. On the demand side, spot demand is expected to remain healthy especially in China due to persistent positive margins for some downstream production, notably styrene monomer.
China’s domestic propylene prices could continue to rise this week in light of a shortage of spot supply. There are more turnarounds among some crackers in Southeast Asia, and more cargoes are being diverted there, resulting in shorter supply, a South Korean trader said.
POLYMERS
Asian low density polyethylene prices inched $5/mt lower week on week Wednesday, amid the seasonal demand lull. While China’s polymer inventories were heard to be low, many Chinese market participants are likely to continue to adopt a wait-and-watch approach due to the depreciation of the Chinese Yuan against the US dollar.
In plant news, China’s Zhongan Lianhe plans to start up its new 350,000 mt/year coal-based high density polyethylene/linear low density unit at Anhui in 2019, a source close to the company said. Market sources expect the full commissioning and startup to last a few months, typical of all polymer units, which require some time to startup.
–Shermaine Ang, [email protected]
–Edited by Norazlina Juma’at, [email protected]
Source: S&P Global Platts
