Singapore — Asia's petrochemical market will be largely driven by demand and supplyfundamentals this week, with extra length in paraxylene and weak demand forbenzene weighing down the markets, while tight supply would underpin butadieneand polyethylene. Market participants would also continue to watch for signsof China's planned levying of additional tariffs on imports from the US.
AROMATICS
For Asian PX, with discussions for the July PX Asian contract price endedfor the fourth straight month without a major settlement, the market has begunlooking at supply fundamentals for July. Middle Eastern producer RabighRefining and Petrochemical Co. is due to load more cargoes from its 1.34million mt/year PX plant in July, while Vietnam's Nghi Son Refinery andPetrochemical is set to load its second batch of PX the following week, addingto the length in July. Further downside was also seen from a plannedmaintenance at Chinese downstream purified terephthalic acid manufacturerNingbo Liwan, which will shut its 700,000 mt/year plant at eastern China'sNingbo on July 3 for 20 days. Demand in the benzene market is expected to remain weak, extending thesoft sentiment seen in the previous week with arbitrage opportunities out ofAsia closed. Market participants were heard adopting a wait-and-see approachas benzene plants in South Korea and Japan come back online in first-halfJuly.
OLEFINS
Asia's ethylene market would likely remain tight this week despite thestartup of a naphtha-fed steam cracker in Japan. Keiyo Ethylene plans torestart its steam cracker in Chiba this week after planned maintenance butoperations would likely remain low because of some mechanical issues. Runrates could be as low as 70% capacity.
In the Asian butadiene market, supply was seen as tight this weekdue to delays of some European cargoes to Asia. But spot prices on a CFR Chinabasis would likely be capped by Chinese end-users' ability to buy from thedomestic market. Last Friday, the CFR China butadiene price was assessed at$1,630/mt, while Chinese domestic prices were hovering below $1,500/mt on animport parity basis.
POLYMERS
Asian PVC producers would likely start issuing fresh PVC offers forAugust in few weeks' time. Market participants were expecting producers tokeep their offers for August flat from a month earlier, after an increase of$20/mt for July.
In Asia's polyethylene market, supply might fall in the fourth quarteralongside lower ethylene supply due to a switch in steam cracker feedstockmix. LPG prices are likely to increase in winter because of a redirection ofLPG for heating in China. However, carbide-based PE production would continueto fare well, as Chinese domestic coal costs are expected to remain low.
As for low density polyethylene, the impact from China's plan to imposean additional tariff on LDPE imports from the US would likely be limited, asvolumes from the US are relatively low, accounting for less than 6% of China'stotal imports last year. Furthermore, China did not specify when theadditional tariffs would take effect.
