The outlook for the Asian petrochemical market remains unclear this week as activity was thin last week after participants across Northeast Asia returned to the market after extended holidays.
With demand remaining thin and supply ample in China, prices were stable to lower in Northeast Asia last week, and the market in Southeast Asia followed suit, with few trades heard.
In South Asia, trading activity is expected to remain thin this week amid Diwali holidays.
AROMATICS
Activity in the paraxylene in Asia was the exception last week, with four physical cargoes traded during the Platts Markets on Close assessment process. However, interest for November waned late week and shifted to December, with the November/December contango assessed at minus $7/mt last Friday.
"Given the trend of the last few months, it's quite clear there will be one or two shorts in the H2 November laycan, and therefore the contango to December will narrow in the days ahead," a Singapore trader said.
The PX-naphtha spread narrowed to $327.38/mt last week from $332.375/mt in the first week of October. Rising feedstock naphtha costs and a late-week spike in crude oil futures saw Asian PX limit its week-on-week decline to $4.67/mt last Friday to be assessed at $832.33/mt FOB Korea and $850.33/mt CFR Taiwan/China.
In benzene, spot demand failed to rebound as domestic East China prices began to slip mid-week amid persistent high inventory and volatile crude oil futures. While there was still demand for November cargoes, buyers were hesitant to trade Friday as they were uncertain about the market's direction. Weak Chinese demand and lower downstream styrene monomer prices also dampened sentiment in the FOB Korea market.
In Taiwan, demand had been covered prior to the Golden Week holidays amid excess supply in the region, and activity remained thin last week.
The continuing supply overhang also put a dampener on demand in Southeast Asia. As a result, Asian benzene fell $4/mt week on week to $780/mt FOB Korea and fell $5/mt to $790/mt CFR China last Friday.
OLEFINS
Ample spot supply in the region pressured Asia's ethylene market last week, with China's buying appetite remaining muted after the week-long holiday the week before. Despite this, prices remained stable as sellers were reluctant to reduce offers, and market activity was largely at a standstill.
One market source said some sellers were opting to take a wait-and-see stance as low inventory levels of ethylene derivatives in China could push up ethylene derivative prices in the coming weeks. The CFR Northeast Asia marker was unchanged week on week at $1,295/mt last Friday as a result.
The Asian butadiene market also remained stable week on week, despite a continuing price decline in the domestic China market.
The CFR China butadiene marker was somewhat supported as import prices remained lower than the domestic China price, which prompted some buying of spot cargoes. But overall, butadiene market sentiment continued to weaken, with end-users increasingly adopting a wait-and-see approach amid persisting deepsea supplies from Europe. The CFR China and FOB Korea butadiene markers were assessed unchanged week on week at $1,230/mt and $1,180/mt Friday.
METHANOL, MTBE
Asian methanol markets were mixed last week, with the CFR China marker falling $4/mt week on week to $333/mt while domestic China prices rose Yuan 25/mt over the same period to Yuan 2,735/mt.
Downstream demand was stable as port inventories in East China were lower than the week before.
MTBE rose $4.50/mt day on day to $676/mt FOB Singapore last Friday on the back of a pickup in gasoline prices, and was down $3.50/mt week on week.
A Singapore-based market participant said he expects MTBE prices to weaken further in the coking weeks, in line with the seasonal softening of gasoline demand as winter in Northeast Asia draws closer.
POLYMERS
Asian linear low density polyethylene prices were mostly stable last week, although the CFR Southeast Asia marker fell $20/mt week on week to $1,180/mt last Wednesday due to poor demand. Domestic China LLDPE prices fell Yuan 50/mt over the same period to Yuan 9,600/mt, equating to $1,170/mt on an import parity basis, higher than imported cargo prices.
Futures in China also fell amid the subdued demand, with the most-actively traded January 2018 LLDPE contract on the Dalian Commodity Exchange tumbling Yuan 145/mt week on week to settle at Yuan 9,365/mt ex-warehouse last Wednesday.
Domestic prices were expected to fall further this week as Wednesday's 19th National Congress of the Communist Party of China was expected to spur stringent environmental checks, resulting in many plastic converters/recyclers reducing their operations.
