Asian petrochemicals generally received a boost last week from strength in upstream crude, as ICE June Brent crude futures surged $4.50/b over the week to $72.50/b at 0830 GMT last Friday.
Correspondingly, major feedstock naphtha also jumped, with Mean of Platts Japan naphtha assessed $30.25/mt higher at $613/mt last Friday. This week, ongoing tensions in the Middle East could lend support to downstream petrochemical products.
AROMATICS
Asia's paraxylene market will likely be buoyed this week by bullish demand for June cargoes coinciding with a major turnaround in South Korea, which will result in approximately 17 cargoes needing to be covered for the month. Meanwhile, Vietnam's Nghi Son Refinery & Petrochemical is expected to commence shipping its first PX cargoes around May, one of the four shareholders in the project said.
Asian benzene prices rose over the week on the back of demand for June cargoes as well. While sporadic interest was observed for July, market participants were mostly bullish on expectations moving forward, as demand would improve in June once downstream styrene monomer plants resume operations after turnarounds. End-users also noted an increase in offers from India, citing the startup at Petro Rabigh's Phase 2 project as a reason behind the recent change in trade flows.
In upstream toluene, the market is expected to see support this week from limited inventories at Chinese ports and tight supply in Taiwan, which may lead to demand for seaborne cargoes. The Chinese domestic market should also continue to find support this week from firmer gasoline blending spreads prompting buying.
OLEFINS
In Asian olefins, an undisclosed issue at a Shell Singapore steam cracker has disrupted supply in Southeast Asia's C2, C3 and C4 markets last week. Ethylene and propylene allocations to domestic customers of Shell Singapore were cut last Thursday, due to a steam cracker unit operating at an undisclosed lower rate, according to market participants. Butadiene supply balances in the region were also affected as less C4 feedstock will be produced from the cracker.
Asian ethylene prices ended last week stronger, as downstream derivatives SM and monoethylene glycol picked up, prompting buyers to secure more feedstock cargoes. This week, ethylene prices will continue to take their cue from downstream segments and the duration of Shell's volume cuts.
Tight supply in South Korea should keep Asia's propylene market buoyant, with multiple producers heard to have no spot availability. Adding to this, inventory levels in China were also heard to be decreasing, which would point to a likely pickup in the market this week.
Asia's butadiene market is expected to find support from supply issues in both China and Southeast Asia last week. Aside from issues at Shell Singapore's steam cracker, Shenhua Ningxia Coal Industry unexpectedly shut its 65,000 mt/year butadiene plant last Tuesday and it remains unclear when the plant may resume operations.
MTBE
Asian MTBE soared to new multi-year highs last week, supported by higher crude and gasoline prices. Inter-octane gasoline spreads also widened over the week, giving more support to MTBE prices despite market concerns that prices have risen too strongly, reducing its blend value. This week, if inter-octane spreads do not continue widening, MTBE prices will see resistance as other blending alternatives are increasingly more competitively priced.
