Outlook for Asia's aromatics markets is mixed this week, while the olefins markets is lookingweaker and extending the downward trend seen last week amid ample domestic inventories and weak demand in China.
In other markets, demand remained largely stable in Southeast Asia while some uplift is expected from a strong Indian market.
AROMATICS
Asian benzene prices dived last week, with the FOB Korea benchmark falling $80.50/mt as buying interest from China waned due to high inventory levels and continuous fall in domestic prices.
Further downward pressure also came from closed arbitrage windows, for instance from South Korea to the US, as well as weakening downstream styrene monomer. SM prices hit a four-month low last week on an unexpected build in stocks in East China.
Asian SM was assessed lower by $146/mt from a week ago at $1,172.50/mt CFR China last Friday. The last time prices were any lower was on November 30, 2016. With demand weak, market participants were monitoring how much further SM prices would likely fall.
Paraxylene supply is expected to be ample in the coming weeks due to upcoming plant turnarounds at major purified terephthalic acid producers,such as Hengli Petrochemical which shut a line at Dalian on March 25, and Yisheng Dahua, which will shut its Dalian PTA plant in early April.
These shutdowns at China's Dalian are outweighing the effect of a scheduled turnaround at South Korean PX producer S-Oil's No. 2 aromatics plant at Onsan.
OLEFINS
The Asian ethylene market fell to a two-month low last week, falling by $15/mt week on week to $1,140/mt CFR Northeast Asia and by $25/mt to $1,035/mt CFR Southeast Asia Friday. Bearish derivatives markets such as SM and monoethylene glycol had contributed to sluggish demand.
Thinning spot supply due to steam cracker turnaround season in the region and limited Middle Eastern spot supply could provide some support to the market this week although ethylene inventories held by end-users in Asia were high.
Propylene prices in Asia fell on lackluster demand from key derivatives such as polypropylene. This was despite limited spot supply due to ongoing turnarounds at major steam crackers. The CFR Southeast Asia marker declined the most week on week, by $30/mt to $850/mt last Friday.
Butadiene prices were at their lowest since December 2016 as demand from Chinese buyers faded due to oversupply and a wide price gap between domestic and imported material.
Last week, China Petroleum and Chemical Corp., or Sinopec, cut its ex-works butadiene offers in eastern China to Yuan 14,000/mt, or about $1,704/mt on an import parity basis, effective Thursday, down Yuan 2,500/mt or 15%. Offers in the north were heard at as low as Yuan 12,000/mt. A domestic buyer estimated that prices could fall to Yuan 10,000/mt.
POLYMERS
Asian polyethylene prices were mixed last week, as high density polyethylene film and Asian butene-grade linear low density polyethylene prices were assessed marginally higher on tight supply amid turnarounds, especially in India.
On the other hand, low density polyethylene prices fell $10/mt in Southeast Asia last week on lackluster demand as buying interest in Southeast Asia waned amidst high inventory in China.
Market observers who were trying to gauge price direction noted that all the price correlations of PE versus the various feedstocks had fallen except for coal, thus coal would increasingly be used as an indicator of PE costs.
Looking forward to this week, supply would tighten because of several planned turnarounds in Asia which would lend underlying support to the market if demand remains stable.
Polypropylene prices in Far East Asia rose $5/mt week on week to be assessed at $1,035/mt CFR last Wednesday, while the CFR Southeast Asia and South Asia PP raffia markets edged down $5/mt to $1,080/mt and $1,140/mt respectively.
While PP inventory in Southeast Asia was building up, upcoming plant turnarounds in China were expected to provide market support this week.
METHANOL, MTBE
Asian methanol prices fell $24-$34/mt on weak Chinese demand amid ample inventories last week, with the trend likely to continue this week. In India, inventory was estimated at 70,000-80,000 mt, while demand waned as buyers looked toward China's steep price drop.
The Asian MTBE market is expected to be bearish this week on an excess of gasoline supply although the summer season typically pushes up demand for gasoline and MTBE.
OTHERS
Asia's MEG market plummeted $65/mt week on week to $755/mt CFR China last Friday.
Circuit breakers were activated in the first three days of trade last week on the Huaxicun Commodity Exchange as prices fell by more than 4% while inventory at eastern China's ports continued to build up to 640,000 mt.
Market sentiment remained bearish on weak downstream demand from polyester producers as they themselves are unable to sell their products.
PTA prices dipped in Northeast Asia on precipitous declines in the futures markets. However, some support is expected from a looming tight supply situation, as China's biggest PTA producers, Hengli Petrochemical and Yisheng Dalian are due for two-week turnarounds, beginning March 25 and early April, respectively.
