Asian petrochemical markets were largely subdued this week, as aromatics and olefin products were suppressed by sluggish downstream demand and weak margins. This comes despite gains in major feedstock naphtha prices last week, which rose $11.125/mt last week to $607/mt, driven by healthy fundamentals and buying interest. A widening backwardation for physical naphtha cargoes had also bolstered prices this week as well.
AROMATICS
In Asian paraxylene, the market was generally thin last week due to a major polyester conference taking place in China's Hangzhou and market sources already pointed to the likelihood of April Asian CP negotiations failing to settle, with bids and offers ranging at least $30/mt apart. Expectations for the arrival of new cargoes from Rabigh Refining and Petrochemical Company, which are expected to land in China at end-April or early-May will continue weighing down on prices this week. PX producers are also keeping an eye on the weakening PX-naphtha spread, and downstream PTA producers are hesitant to bid at higher levels given signs of a slowing down in the fibre market. Meanwhile, Asian benzene prices tracked lower last week, as demand for May cargoes was poor, amid planned turnarounds at downstream styrene monomer plants and ample supply of physical cargoes between April and May. Traders said that the sentiment for June cargoes were better compared to that of May, which was "very bearish" as supply exceeded demand, creating a contango structure in the benzene market. This bearish sentiment and the divergence between domestic Chinese prices on an import-parity basis compared to CFR China prices should continue to weigh the market down this week.
OLEFINS
Ethylene prices are expected to remain relatively stable this week, market participants said. This comes on the back of healthy demand from Japanese end-users covering supply requirements amid the heavy steam cracker turnarounds. At the same time however, falling downstream polymer derivatives margins have prompted a cut in plant operating rates which might reduce demand going forward.
Meanwhile, maintenance of propylene units in April will be able to lend some support to prices this week, offsetting lackluster downstream PP margins. Taiwan CPC's Taoyuan RFCC plant with a propylene production capacity of 100,000 mt/year will shut for two months in early April, while South Korea's SK Advanced will close its 600,000 mt/year PDH plant in April.
MTBE
Asian MTBE prices remained firm last week as talk of continued OPEC-led supply cuts propped up the relative strength in crude futures. This week, as ongoing geopolitical tensions in the Middle East and rhetoric of a US-China trade war persist, MTBE will continue to find itself supported.
