Asia petrochemicals outlook, w/c May 14 -Asian petrochemical prices are seen likely to continue to trend higher this week amid support from bullish crude futures – Asia petrochemicals outlook - Arhive

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Asia petrochemicals outlook, w/c 

Singapore (Platts)-

 Asia petrochemicals outlook Asian petrochemical prices are seen likely to continue to trend higher this week amid support from bullish crude futures, after discussions last week were mostly higher as the strength upstream buoyed sentiment.

AROMATICS

Asian paraxylene prices crossed the $1,000/mt mark last week for the first time since May 6, 2015, rising $43.33/mt on the week to $1,014/mt FOB Korea and $1,033/mt CFR Taiwan/China Friday amid bullishness upstream.

June ICE Brent futures were up $4.12/b week on week at $77.47/b at the 0830 GMT close of Asia trade Friday.

June/July backwardation in the Asian PX market widened to $9/mt last week and was seen likely to widen further this week due to the startup of a new PX complex in Vietnam. The Nghi Son Refinery and Petrochemical Complex project in Vietnam is expected to produce on-spec PX in July “subject to a successful commissioning in May,” a Japanese trader said.

Also tracking firm crude, Asian benzene prices were assessed up $27/mt week on week at $868.33/mt FOB Korea Friday amid active trading ahead of June declaration dates for FOB Korea cargoes.

Gains in downstream styrene monomer added support, with SM assessed up $13/mt week on week at $1,404/mt CFR China Friday.

OLEFINS

Asian ethylene prices fell $10/mt last week, pressured by ample spot supply and record low ethylene prices in the US. However, the Asian ethylene market was able to draw some support from bullish crude oil futures.

Spot ethylene demand in Northeast Asia looks rather patchy this week. In Taiwan, the inventory level in Kaohsiung seems to be high due to a shutdown at CPC’s ethylene pipeline. On the other hand, spot demand remains healthy in China due to positive ethylene derivatives margins, such as for SM.

The Asian SM margin hovered in a range of plus $170-$190/mt last week, while the spread between polyethylene and ethylene widened $10/mt day on day to plus $120/mt Friday.

The price spread between ethylene and naphtha hovered at a nine-month low of $570-$580/mt last week, but was still well above the typical breakeven spread of $350/mt, Platts data showed.

Propylene on a CFR China basis was assessed up $20/mt week on week amid firm demand and tight supply. Price gains in the downstream PP market also helped improve sentiment in the propylene market, with sources in China saying they expected propylene prices still had room to rise.

In South Korea, spot availability was heard to have improved as plants restarted after completing annual maintenance.

POLYMERS

Asian PVC was assessed unchanged week on week Friday as activity remained thin ahead of the release of fresh June offers this week.

Asia’s PVC market was seen to have bottomed out and fresh offers were expected to be flat to $20/mt higher than May, reflecting high crude oil futures, according to market participants. PVC exports would likely be limited from Japan and Taiwan as well because of turnaround season.

On the other hand, some market sources said it would be difficult to increase prices for June as India was entering its off-peak demand period due to seasonal monsoons.

Asian polypropylene was assessed up $20/mt last week on the back of bullish futures.

Supply from the Middle East was expected to decline once Ramadan starts next month, market sources said. Despite an estimated 2 million mt/year of new PP expected to start up in 2018, market participants were not worried about oversupply as demand was expected to match or even exceed the new supply.

Producers said spot propylene-PP margins were currently unprofitable at minus $20/mt, but integrated margins were healthy. Margins have increased as rises in polymer resins outpaced gains upstream.

–Tess Tseng, tess.tseng@spglobal.com

–Rohan Menon, rohan.menon@spglobal.com

–Edited by Wendy Wells, wendy.wells@spglobal.com

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