Sentiment is bearish across Asian aromatics and olefins markets this week, carrying forward the downward trend seen last week due to ample supply and weak demand in China. Falling crude oil added to the downward pressure on prices.
In other markets, sentiment is more upbeat, with strong demand in Southeast Asia and India largely supporting prices.
AROMATICS
Asian aromatics markets are bearish this week on weakening demand and a growing supply glut, market sources said.
Asian benzene plunged $88/mt or 9.6% week on week last Friday on thin support from derivative styrene monomer which plunged $107/mt or 7.6% week on week over concerns of a glut in China.
Paraxylene tumbled $49.66/mt week on week, or about 5.5%, to $859.67/mt CFR Taiwan/China under pressure from lower crude oil and falling downstream purified terephthalic acid futures.
Isomer-grade mixed xylene also fell last week by $43/mt or 6% to $670/mt FOB Korea. Demand from key markets China and Taiwan has been sluggish so far this year and if this trend continues, there may not be much room for prices to rise in the short term, market sources said.
In the Asian toluene market, sentiment was bearish in the week to Friday as prices fell due to lackluster buying interest.
OLEFINS
The Asian ethylene market is set to be oversupplied this week, with several derivative plants shut for maintenance. Weak sentiment in the downstream polyethylene and SM markets is also expected to contribute to the bearishness in the Asian ethylene market. Oversupply led to CFR Northeast Asia ethylene falling by $95/mt and the CFR Southeast Asia marker by $45/mt. An arbitrage window was open from Southeast Asia to Northeast Asia as a result.
Market volatility and falling butadiene prices in eastern Chin put downward pressure on Asian spot prices this week. A 20,000 mt butadiene cargo will be heading to the US Gulf Coast from Asia this month. The rare reverse arbitrage is the result of the widening gap between Asian and US prices.
Asian butadiene plummeted $800/mt and $750/mt week on week to $2,100/mt FOB Korea and $2,150/mt CFR China respectively.
Propylene is also bearish after prices fell $8/mt week on week in northeast Asia last Friday to $942/mt CFR NE Asia, on the back of weak demand from downstream polypropylene.
METHANOL AND MTBE
Asian methanol is likely to display a mixed trend this week with China dragged down by ample domestic supply while India remains tight because of maintenance at plants in Iran, a key supplier to the sub-continent.
The wide gap between domestic and imported cargoes led the CFR China price to fall $28/mt or 7.4% week on week last Friday to $349/mt. In India, on the other hand, the price rose by $1/mt to $377/mt CFR India on the back of supply constraints.
The Asian MTBE market is expected to be bearish this week on weak buying sentiment in China. MTBE fell to an 11-month low at $599/mt FOB Singapore on Friday amid weaker gasoline values. China was not buying as much as expected as it has ample stocks of blended gasoline.
POLYMERS
Asian polyethylene-methanol margins are set to remain crunched this week, as the bearishness in PE markets is expected to outpace the downward trend in methanol. PE-methanol hit a record low of $255/mt last Thursday, propelled by low PE and high methanol prices.
Butene-grade linear low density polyethylene fell $10/mt week on week last Friday to $1,220/mt CFR in Southeast Asia and India, tracking the steep fall in China the previous week.
Actively traded May 2017 LLDPE futures on the Dalian Commodity Exchange fell Yuan 215/mt week on week to Yuan 9,405/mt ex-warehouse at Wednesday's close, and were down Yuan 350/mt day on day. Some discussion was about re-export from China, but it was not known if any deals were done, sources said.
Asian polypropylene was lackluster as Chinese end-users adopted a wait-and-see stance. Prices were unchanged in northeast Asia at $1,040/mt CFR, as buying sentiment was not very strong.
OTHERS
The Asian monoethylene glycol market is expected to be weighed down this week by weak downstream demand from the polyester segment in China. It fell $23/mt week on week to $795/mt Friday on weak demand and and distress sales by cash-strapped traders. According to market participants, polyester producers had accumulated enough inventory and had no impetus to stock up on MEG.
The Asian oxo-alcohol market is expected to be mixed this week with upstream 2-ethyl hexanol supported by supply tightness while downstream phthalic anhydride was pulled down by weak demand. Derivative dioctyl phthalate prices rose on the back of bullish 2-EH, which offset the downward pressure from falling PA.
