In the Asian petrochemical market this week, demand remained depressed in China amid a government-directed environmental clean-up ahead of the 19th National Congress in Beijing on October 18.
Port restrictions at Jiangyin, Zhangjiagang and Nantong had pushed up prices for many products mid-week but it started normalizing when it was heard that petrochemicals would not be badly affected. However, the meeting was causing many plastic converters/recyclers to reduce operations.
Several plants in the US were working to restart their operations following Hurricane Harvey but no spot demand from the US Gulf Coast was heard as yet for most products.
Market participants continued to take a wait-and-see stance for spot demand from the US, with supply for most products remaining ample.
AROMATICS
With Asian paraxylene prices mostly remaining within a narrow band of $840-$850/mt CFR Taiwan/China so far this month, downstream purified terephthalic acid makers enjoyed improved margins, with one such maker based in Northeast Asia saying plants were looking to maximize operating rates.
"However, we're also keeping a close eye on any potential restarts like the Xianglu PTA plant, which would see a slide back to the previous situation," he said. Market traders said that with a flurry of buying activity for November cargo, with approximately 70,000 mt heard purchased by a Japanese trading company so far this week, all indications pointed to increased demand in November from new plants.
PX ended last week at $829.50/mt FOB Korea and $847.50/mt CFR Taiwan/China on Friday, both up $10.83/mt week on week.
In benzene, Asian sellers continued to take direction from the Chinese market as there was no spot demand from the USGC, and in turn, curbed the uptrend in the FOB Korea market that was seen later this week. With the arbitrage window into China closed, FOB Korea prices continued to retreat.
As operations gradually resumed in the US Gulf Coast, market prices there continued to rise due to shortage of prompt materials, and the prices in Asia moved in tandem with east-to-west arbitrage barely open on paper. Consequently, Asian benzene rose $5-$10/mt from the week before to track firmer fundamentals. FOB Korea ended the week at $787/mt, and CFR China at $800/mt on Friday.
OLEFINS
Asian ethylene prices jumped $30/mt day on day to hit a six-month high last Friday at $1,350/mt CFR Northeast Asia. Trading activities in the Asian ethylene market started on a quiet note last week due to limited spot availabilities in the region. There were some deals heard on an FOB basis last few weeks but those cargoes were for short covering by traders and thus, were not sold to end-users.
Spot ethylene demand for SM production remained healthy amid positive production margins. As a result, SM production margin was hovering at around plus $180/mt, S&P Global Platts data showed.
As for propylene, Asian prices largely moved in different directions this week. FOB Korea propylene was assessed at $950/mt Friday, up $5/mt from the week before. Over the same period, the CFR China was assessed unchanged at $1,000/mt Friday. Market sources said that a softening downstream polypropylene market had contributed to the bearish propylene sentiment. Higher inventories and a weaker futures market were heard to have put pressure on polypropylene.
METHANOL AND MTBE
Methanol prices were on a downward trend last Friday, with the CFR China marker diving $25/mt on the week to $335/mt following softer Chinese domestic prices and the weaker futures market. The January methanol futures contract on the Zhengzhou Commodity Exchange fell Yuan 118/mt week on week to close at Yuan 2,687/mt last Friday, while domestic prices were down Yuan 100/mt over the same period at Yuan 2,690/mt.
Asian MTBE was stable last week as gasoline prices inched up amid a firmer energy complex. It was last assessed at $679/mt FOB Singapore on Friday. Trading activity was limited, with no firm bids, offers or trades seen during the Platts Markets on Close assessment process.
POLYMERS
Looking forward this week, traders expect cash supply to tighten, and hence, the traded volumes might decrease as interest rates hike. PE supply and demand balance may remain stable as well since Chinese pollution controls would likely continue, dampening demand for PE resin, sources said.
However, as part of the government clean up, scrap plastic imports are also expected to increase, prompting demand for virgin PE. For Southeast Asia, most producers' strategy is to bring large volumes of PE directly from Iran to Vietnamese traders, distributors and end-users, without going through intermediaries.
Banking restrictions, logistical uncertainties and differences in resin preferences in Vietnam may pose challenges for Iranian PE exports, a Vietnam-based source said, citing ongoing negotiations.
