In a week when crude oil futures traded above the $80/b mark as well as fell precipitously from that high, the trend in the Asian petrochemical markets was similarly mercurial last week. With these fluctuations, margins against feedstock naphtha either crunched or widened, a factor that will play a major role in trading this week.
AROMATICS
Amid significant upheaval in the downstream purified terephthalic acid sector, paraxylene continue to stay afloat above the $1,000/mt mark, even as the market awaits developments regarding new supply from the Middle East this week.
Asian PX prices were $1.50/mt higher on the week at $1,023.17/mt CFR Taiwan/China Friday, even as July ICE Brent crude oil futures marked a significant retreat from the $80/b mark.
Asian benzene, however, could not emulate PX's stability, with the FOB Korea marker falling $31/mt on the week to $845.33/mt Friday as crude prices fell below the $78/b mark at the Asian close.
Trading activity this week remained suppressed by the closed arbitrage to China, as local prices were cheaper than imports due to persistent inventory pressure.
While downstream turnarounds were expected to end by June, market participants expect heavy inventory to impede import demand until at least July, and this is expected to continue weighing on CFR China discussion levels this week.
Toluene and isomer-grade mixed xylenes were also lower on the week in line with the falling upstream, while margins for production of benzene and xylenes from toluene disproportionation units continue to be constrained.
OLEFINS
Asian ethylene managed to end the week on a high note, but traders expect the market to weaken going forward, considering additional supplies are coming from the Middle East, Europe and Southeast Asia.
Spot supply from Southeast Asia is especially available due to downstream plant issues, while the recent strength in the Northeast Asia market is likely to attract deepsea cargoes from Europe and the Middle East.
The Asian propylene market gained traction on the week Friday as tight spot supply in Asia due to turnarounds at many plants in South Korea and China pushed up both the bid and offer levels, with the CFR China propylene price assessed up $10/mt from the week before at $1,130/mt.
The chances of the rise sustaining were seen as unlikely, however, by some market participants, amid news of a large propylene plant in South Korea restarting as early as next week.
POLYMERS
Due to a seasonal fall in demand in Northeast and Southeast Asia during the Muslim holy month of Ramadan, Asian low density polyethylene prices were down by $15/mt week on week Wednesday at $1,205/mt CFR Far East Asia, and were expected to continue on a downtrend going forward.
However, some traders are already looking ahead to the third quarter, when a string of turnarounds in Southeast Asia will crimp supply and boost prices.
Asian butene-grade linear low density polyethylene with a melt flow index of 1-2 was characterized by thin trading, with CFR Far East Asia assessed stable at $1,190/mt Wednesday.
Several regional producers said they have lowered their PE production in favor of feedstock ethylene sales amid better netbacks.
In line with the lower production in East Asia, spot volumes from the US and Saudi Arabia have begun to flow into Asia, especially to China and India, where domestic demand continues to outstrip import volumes, traders said.
Elsewhere, Asian polystyrene markets saw an adjustment in price levels across the board, as producers adjusted offers for June cargoes higher to reflect the recent spike in feedstock SM prices, as prompt Chinese demand persisted amid domestic turnarounds.
