The paraxylene market weakened last week, amid oversupply in the forward and volatile energy markets.
AROMATICS
Discounts for floating price cargoes for August and September increased in value, with offers for cargo based on 50% of the average of the August CFR Taiwan/China marker and 50% of the August Asian Contract Price seen at $6.50/mt. This stood in contrast to the term discounts, which are about $2.50/mt.
The Asian benzene market was under pressure due to weaker market fundamentals last week. Market sentiment in Asia turned bearish after USGC prices fell mid-week, while crude oil futures remained volatile.
Also, Chinese demand did not rebound last week despite lower market prices, as Chinese end-users were heard having near-full inventories in July and were not actively seeking August-delivery cargoes.
The toluene market ended lower last week because of a wide buy-sell gap and oversupply in the Chinese market.
Local supply in the Chinese market was on the rise, following restart of several Chinese plants, higher inventory levels, and increased cargo arrivals.
East China inventories stood at 85,000 mt, stable week on week, while South China inventories rose 28.5% to 9,000 mt as of Friday last week.
OLEFINS
The ethylene markets were firmer last week, supported by positive margins for styrene monomer production. The rebound was limited amid market concerns of sufficient supplies into Asia.
Several market sources said some export quantity from South Korea was seen to be available after steam cracker operations there went back to normal.
From the Middle East, exports are also seen to be increasing, especially from Saudi Arabia.
The market could be balanced as Asian ethylene production is expected to thin as several steam cracker turnarounds are due over July and August.
The propylene market was mostly stable last week, amid thin discussions on limited spot availability. In China, import demand remained lukewarm as buyers were able to purchase domestic cargoes at lower prices.
Similarly, the Asian butadiene markets were stable last week amid a tight supply situation in China, as end-users began seeking spot cargoes for late-July and August.
However, several market particpants expect ample supply, as several traders attempted to ship US-origin cargoes to Asia. There was also spot availability from Southeast Asian butadiene producers.
METHANOL AND MTBE
Methanol prices in China were firmer last week, on bullish domestic prices, especially in the futures market. "But there is no major fundamentals-driven reason for a rally right now, since summer is typically a low-demand season," a trader said, adding that the futures surge is expected to abate in a week or two.
In Southeast Asia, demand was weak on low demand from the biodiesel sector. End-users had backed out of the market due to insufficient downstream biodiesel demand and ample methanol inventories.
The MTBE market ended last week on a low note, on weaker crude and gasoline markets. Amid the weakness, the arbitrage window from Southeast Asia to South China and East China remained closed, market participants said.
As such, market discussions were quiet, with concerns from participants on the ability to move cargoes for August due to weak blending demand.
POLYMERS
Reaction from India's large polymer market to the new Goods and Services Tax regime appeared to range from business as usual, for the larger "organized sector" players, to uncertainty for the downstream retail sector, industry sources said.
Retailers who sell polymer finished-goods to end-consumers, liquidated their stocks in the weeks before the GST to avoid taxation on existing inventory, and will look to restock in the next one-two weeks, once they adjust to the new system, sources said.
The GST came into effect on July 1, superseding India's plethora of multi-tiered state and central taxes and bringing it under a sigle tax system.
OTHERS
The Asian monoethylene glycol market is expected to pick up in the second half of 2017, especially toward the end of the year, thanks to a healthy downstream demand from China, the region's key buyer.
Polyester growth is estimated at 4%-5% in China and 7%-8% in India, according to figures released during the Asia Petrochemical Industry Conference held in Sapporo in May.
