Sentiment in the Asian petrochemicals markets is likely to remain bearish this week as most buyers take a wait-and-see approach. Trading activity could be slower as China is closed for a national holiday till Tuesday.
Lackluster demand for most commodities in China amid ample stocks is likely to affect spot trading as well.
But while the olefins markets are expected to be stagnant amid muted activity, the region could see some uptick on rising demand for downstream derivatives.
In India, the fiscal year ended March 31, which could affect spot trading for about two weeks as accounts are being finalized and closed. Demand is expected to remain bullish although importers stay cautious amid a volatile rupee.
AROMATICS
Toluene supply is expected to remain long in the FOB Korea market for April and May as a key South Korean aromatics producer has switched the feedstock of its toluene disproportionation plant from 100% toluene to a 70:30 combination of toluene and C9 mixed aromatics. The switch was made due to weaker benzene and ample availability of lower cost C9 mixed aromatics amid firmer toluene.
Styrene monomer rebounded last week, inching up $5/mt to $1,187.50/mt CFR China week on week after hitting a four-month low the previous week. Price recovery this week could be dampened by increasing inventory in East China, estimated at 176,200 mt last week.
Last week's growth in stocks was more modest at 3,900 mt compared with the previous week's surge of 15,500 mt, the trader added.
Asian benzene gained $74-81/mt or 9.2-11% last week on improved market confidence and an increase in spot demand for May and June arrivals. However, demand stayed low on high domestic inventory and weaker premiums, although buyers might could be keen to import more based on that.
OLEFINS
Most market participants stayed on the sidelines this week, while Asian ethylene has been flat for the past two weeks at $1,140/mt CFR Northeast Asia and $1,035/mt CFR Southeast Asia. Market participants attributed this to most April discussions having been finalized while the demand-supply balance for May were still murky.
In Southeast Asia, spot supply could be curtailed with ExxonMobil expected to take its steam cracker offline for maintenance of one to two months from April, sources added. The steam cracker has the ability to produce 1.9 million mt/year of ethylene, 100,000 mt/year of butene-1 and 450,000 mt/year of butenes. But ethylene supplies from Indonesia and Malaysia are expected to continue.
Propylene prices in Asia continued to decline on lackluster demand from key derivatives like polypropylene. High polypropylene stocks would continue to suppress prices this week, according to market participants. The CFR China marker fell the most week on week -- $30/mt to $855/mt -- on Friday.
Butadiene prices dropped $50/mt or 2.7% to $1,800/mt CFR China and $1,750/mt FOB Korea on sparse buying interest. Sellers refused to budge while buyers held on to $1,600-1,700/mt CFR China levels, leading to few trades last week. And this is expected to continue this week. Spot supply could be short due to a fire at Yanzi Petrochemical's 120,000 mt/year butadiene unit.
POLYMERS
The Asian polyethylene market was stable to firm last week as low density polyethylene gained following a draw on Chinese inventories. Re-exports from China to Latin America and Africa could also reduce domestic stocks.
Upcoming plant turnarounds pushed up market sentiment as high density polyethylene film and Asian butene-grade linear low density polyethylene prices closed slightly firmer this week on active trading.
Looking ahead, tightening spot supply due to planned maintenance in Asia would likely translate into higher prices if demand remains stable.
Polypropylene edged down $10/mt to $1,025/mt in Far East Asia while the CFR Southeast Asia and South Asia PP raffia markers remained unchanged at $1,080/mt and $1,140/mt respectively.
China exports to Southeast Asia closed on a higher notional FOB China price at $1,073/mt. Demand looks to remain slow on high domestic stocks.
METHANOL & MTBE
Asian methanol fell $7/mt or 2.4% to $293/mt last Friday as sellers accepted lower prices to reduce high stocks. China's Fund Energy shut its methanol-to-olefins plant last Friday and plans to keep it closed for 5-6 months on the poor economics.
In India, inventory was estimated at 80,000-100,000 mt, above the average monthly level, while demand remained subdued.
The Asian MTBE market was up $15/mt or 2.5% to $621/mt FOB Singapore on firmer buying interest.
