Singapore — A variety of factors will affect the Asian petrochemicals market in the week ahead. Steam cracker turnarounds and plant hiccups in olefins markets could tighten supplies. Meanwhile, paraxylene and styrene monomer markets will remain bullish in the face of increased buying interest, while arbitrage remains unattractive for benzene and styrene markets.
AROMATICS
After last week's $14.83/mt week-on-week rise, Asian paraxylene prices look set to extend its bullish trend as traders' expectations of additional demand in August heighten, amid a possible turnaround of a purified terephthalic acid plant at Dalian. Additionally, the continued PX output from Vietnam has meant that discounts for spot cargo offered on a floating basis have also narrowed, with the results of the latest sell tender issued by Thailand's PTT Global Chemical expected to be "similar to the previous tender at minus $9/mt," according to traders participating in it.
The Asian benzene prices was up $18.33/mt week on week, with the FOB Korea benzene marker assessed at $832/mt last Friday, as prices rose steadily amid firm buying interest across August and September. However, the arbitrage window for cargoes heading to the US from South Korea is expected to remain unviable this week, with market participants of the view that supply and demand in the US market is more balanced currently.
The Asian styrene monomer market looks set to remain bullish this week, after recovering from earlier lows, fueled by increased buying interest from end-users for August-loading cargoes in anticipation of further price gains ahead. However, spot discussions will likely remain thin given limited availability of cargoes from non-ADD countries due to unattractive arbitrage economics resulting from the recent devaluation of the Yuan. Offers for August cargoes are likely to remain in the low $1,400s/mt CFR China, against buying interests at below $1,400/mt CFR China. On the supply side, healthy operating rates of above 85% from domestic producers point to easing tightness, with inventory levels in East China expected to rebound further in the week ahead.
OLEFINS
Asian ethylene would likely remain stable this week, driven by tight supplies. Japan's steam cracker operations are seen to be lower-than-expected due to some plant hiccups, namely at Maruzen Petrochemical and JXTG Nippon Oil and Energy. However, at the same time, spot ethylene demand is seen to be fading in line with narrowing derivatives production margin.
China's Jiangsu Sailboat Petrochemical, also known as Jiangsu Shenghong, plans to shut its methanol-to-olefin unit and downstream plants on July 20, for major maintenance over 35-40 days, a company source said last Thursday. The MTO plant has a nameplate capacity of 400,000 mt/year of propylene and 315,000 mt/year of ethylene.
For propylene, the market sentiment is seen to be mixed this week, with market participants closely monitoring developments at plants.
POLYMERS
Asian low density polyethylene prices fell $5-$20/mt week on week last Wednesday due to thin demand amid the seasonal lull. The depreciation of Asian currencies against the US dollar is likely to continue to dampen import buying interest, market sources said.
China's plan to impose an additional 25% tariff on LDPE imports from the US would likely be limited, as volumes from the US are relatively low, accounting for less than 6% of China's total imports last year, Chinese custom statistics showed. The implementation deadline was July 6.
