In Asia's petrochemical markets this week, firming crude oil futures amid geopolitical concerns could continue to underpin prices this week. Last week, several aromatics such as benzene and paraxylene registered gains, supported by rising crude prices.
Major feedstock naphtha prices last week were also uplifted by the buoyant upstream market, surging $20/mt over the week to $574.25/mt CFR Japan Friday. The last time the benchmark was higher was on June 15, 2015 at $576.50/mt, S&P Global Platts data showed.
It remains to be seen if the uptrend in naphtha can extend into the weeks ahead and continue to buttress Asian petrochemical prices.
As for Northeast Asia, in a first for the China-focused paraxylene market, November 3 saw the last offers submitted into world's largest purified terephthalic acid maker by capacity, Yisheng Petrochemical's tender seeking term PX supply for January-December 2018.
The move marks a departure from previous years' negotiations in the PX and PTA industries, when long-term contracts were normally discussed on a bilateral basis. AROMATICS
Soaring demand for December cargoes buoyed the Asian PX market last week, as demonstrated by the rise in bids for December cargoes during the Platts Market on Close assessment process last Friday.
The bullishness also underpinned a widening spread against the CFR Japan naphtha marker, enabling it to recover from the 31-month low seen at $295.08/mt on October 27 to $308.08/mt Friday, after PX surged $33/mt to $864.33/mt FOB Korea and $882.33/mt CFR Taiwan/China Friday.
Meanwhile, strong market fundamentals still prevailed last week as Asian benzene rose $17.50-$24/mt week on week to $820/mt CFR China and $815/mt FOB Korea. With the FOB US Gulf Coast January price for benzene assessed at 284 cents/gal last Thursday, or $849.16/mt, and based on prevailing freight rates for moving a 10,000 mt cargo from Northeast Asia to the US Gulf at $44-$45/mt, the arbitrage window was open on paper at least.
While no additional spot cargoes were heard fixed for November loading, some market participants said they expected an increase in movements from South Korea to the USGC in December as US demand was likely to rebound. OLEFINS
A firm sign had started to be seen in the Asian ethylene market, buoyed by stronger demand for December-arrival cargoes. Market sources said spot demand was seen as firm for December compared with November -- especially in Northeast Asia -- as end-users build up inventories ahead of the 2018 term contract negotiations.
As a result, the CFR Northeast Asia ethylene marker rose $10/mt week on week to $1,250/mt Friday, ending the recent bearish sentiment that started from early October. The CFR Southeast Asia marker remained stable at $1,140/mt, as trading activities for December would likely be limited as cargoes from Southeast Asia would likely move to Northeast Asia due to the open arbitrage window.
In the butadiene market, concerns were abound over thin demand from China due to domestic oversupply. Due to the glut, Sinopec cut its ex-works butadiene offers in East China to Yuan 8,500/mt, or $1,078/mt on an import parity basis, effective Friday, down Yuan 700/mt, or about 7.6%, market sources said.
In other spot market activity, at least three to four sell tenders were issued in Southeast Asia for November parcels last week. One tender was heard awarded at the FOB equivalent of a low three-digit discount to the average of CFR Northeast Asia. METHANOL, MTBE
Asian methanol prices rose $4/mt to $342/mt CFR China on the back of supply tightness. In China, market participants cited the redirecting of natural gas, a feedstock for methanol production, towards heating purposes in winter as a cause of the supply tightness.
Meanwhile, the CFR Southeast Asia marker inched up $2/mt to $365/mt, following talk of a delay in the restart of regional producer Brunei Methanol Company's plant to mid-November, from November 1.
MTBE prices rose $20.50/mt week on week to $677.50/mt FOB Singapore last Friday, tracking an uptick in gasoline prices. The gasoline market was firm on healthy demand, falling inventory levels and tight supply in Asia. POLYMERS
Asian high density polyethylene prices were mixed last week but largely lower amid low demand from falling futures in China. Bucking the trend was CFR South Asia HDPE because of tight supply in India, observers said.
But further out, India's exports to China are set to increase with the start of Reliance's new plant as the country will become self-sufficient for the first time, India-based traders said.
