Asia petrochemicals: Key market indicators this week

Singapore — Asian petrochemicals markets are expected to remain mixed in the week ending March 27. While falling crude oil prices are expected to exert downward pressure on some petrochemicals, supply constraints are likely to push other petchems higher.

Toluene

Outlook for the Asian toluene market appeared to be softening, as demand from the toluene disproportionation stream eased on the back of lower downstream aromatics products prices such as paraxylene and benzene.

Isomer-MX

The outlook for Asian isomer mixed xylenes market was sluggish, as isomer-MX was still one of the weakest blending components in the region. FOB Korea isomer-MX retreated $33/mt to $710/mt on March 19. However, the level was uncompetitive in the domestic East China market for gasoline blending.

The main driver of demand was stemming from refiners for paraxylene production, which had also slowed, as price of paraxylene had started to show signs of weakening on downstream turnarounds in PTA sector.

Paraxylene

Asian paraxylene supply-demand remains tight but narrowing PTA/PX spread on Yuan basis may work as a cap on PX price hike amid cautiousness following the sharp fall in crude oil futures and aromatics market in the previous session. More Chinese domestic PTA plants announced maintenance works on weak margins amid concerns that continuing pressure on Chinese PTA margins would lead to an impact on PX demand.

Purified terephthalic acid

Asian purified terephthalic acid fundamentals are expected to stay mixed with high stocks in China and tight supply in many other Asian regions. Around 16-17 million mt/year Chinese PTA capacity is likely to shut between March and May for maintenance in response to poor margins, though some plans were not fully confirmed yet, sources said. The price spread between CFR China and China domestic PTA is as high as $73/mt on average in the week ended March 19, according to Platts data.

Propylene

The propylene market in China is poised to receive firmer support as SK Advanced is bringing onstream with its new downstream polypropylene unit around March 20-23, which will reduce propylene supply to China.

The FOB Korea propylene market hit its highest in nearly six and half years on March 19, with the startup of two new downstream polypropylene units in the country, reducing spot supply and pushing up trade levels. FOB Korea propylene was assessed at $1,175/mt on March 19. The price has risen $630/mt, or over 115%, since hitting a four-and-a-half year low of $545/mt on April 6, 2020.

Polypropylene

Asian polypropylene market fundamentals remained largely firm in most Asian regions with tight supply and expensive prices due to global shortage. Nevertheless, some customers have shown strong resistance to rising PP prices. Chinese sellers continue exporting PP, especially to Southeast Asia, slowing down any further price increment.

Polyethylene

Asian low density polyethylene prices are expected to tread higher on snug supply and improved demand. With the massive rollout of vaccine worldwide, sources pointed out that demand was returning. The strengthening of Asian currencies against the dollar as well as the worldwide vaccine rollout are seen fueling demand.

Monoethylene glycol

Outlook for monoethylene glycol was bullish as inventories in China fell to a 14-month low of 635,000 mt as of March 22. The outlook is bullish despite Asian MEG prices falling on March 19 amid lower trade discussions in the wake of falling crude.

Acrylonitrile

The Asian acrylonitrile market is likely to firm up further this week amid ongoing spot shortages. Acrylonitrile prices in the Far East hit a record high as ongoing tight spot supply and strong ABS margins pushed up indicative bids and offers. The ACN CFR Far East marker rose by $300/mt on the week to be assessed at $3,000/mt March 16, the highest level since Platts started assessing it in 1996.