Crude oil price movements and the upcoming meeting in Vienna on June 22 among OPEC members and other oil exporters are factors that will influence the performance of Asian petrochemical markets this week. Weak demand in Asia or additional production from new plant start-ups could exert downward pressure on prices of some petrochemical products, such as benzene, toluene, propylene and polyethylene.
AROMATICS
In the Asian paraxylene market, uncertainty looks set to continue this week, with traders largely holding off taking long-term positions ahead of the upcoming OPEC/Non-OPEC producers meeting where they will decide whether oil production should be increased. PX supply in the first half of July is seen to be tight, amid demand from purified terephthalic acid makers for prompt cargo ahead of plant turnarounds in the downstream markets.
For Asian benzene, with supply expected to outstrip demand, market participants are turning to price movements in upstream ICE Brent crude futures and global benzene prices for direction.
For styrene monomer, the market looks to set to follow last week’s downward trend, with July arrival discussions tracking domestic East China prices lower to consolidate around the low $1,400s/mt CFR China, while the June/July backwardation is expected to narrow on more prompt arrivals.
OLEFINS
Firm sentiment in the Asian ethylene market would likely continue this week, driven by limited supplies in Asia as well as Europe. In addition, positive margins for styrene monomer production would continue to keep spot ethylene demand healthy this week. Last Thursday, the CFR Northeast Asia ethylene price was assessed at $1,375/mt, up $25/mt from the previous Friday.
The Asian propylene market would likely be put under pressure this week ahead of the planned startup of a new propylene plant. South Korea’s S-Oil plans to start up its new high-severity residue fluid catalytic cracker, or HS-RFCC, at Onsan very soon. The unit is able to produce 200,000 mt/year of ethylene and 660,000 mt/year of propylene.
MEG prices in the domestic Chinese market are expected to remain firm amid a drop in inventory levels in East China. Inventories fell close to 110,000 mt to 800,000 mt last Thursday as polyester plants continue to drive operating rates higher ahead of a seasonal lull in demand, sources said. Inventories are expected to fall this week amid a higher drawdown in stocks.
POLYMERS
In the Asian high density polyethylene market, demand for HD injection may rise as end convertors are considering using it as substitute for PP copolymer, while demand for blow moulding grade may decrease on bearish buying interest. Asian butene-grade linear low density polyethylene was assessed stable to slightly lower last week amid thin trade and the typical lull in seasonal demand. Demand in India is expected to fall during the monsoon season in July and pick up in September prior to the Deepavali festival.
–Shermaine Ang, shermaine.ang@spglobal.com
–Fumiko Dobashi, fumiko.dobashi@spglobal.com
–Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com
