Asia petrochemicals: Key market indicators for June 6-10

Tight supply was expected to support a number of Asian petrochemical markets over June 6-10, while China's demand recovery as COVID-19 restrictions ease was seen to be slow despite an economic stimulus package.

Toluene

** Asian toluene prices are expected to gain further support over June 6-10 from tight spot supply in the region as traders continue to move cargoes out of Asia to the US. Toluene prices are still lagging behind others in the solvents and aromatics markets, making it the favorite for gasoline blenders and chemical end-users.

** Toluene prices enter the week at a six-year high against naphtha, with the spread between the two hitting $290/mt June 3 on persistently tight toluene supply and weakness in the naphtha market, sources said.

Ethylene

** Overall sentiment in the Asian ethylene markets remains bearish, with demand curbed by low operating rates downstream and weak production margins.

** Operating rates have been lowered for June and with most producers expected to keep their ethylene for captive use and contractual volumes, spot offers are likely to be limited.

** However discussions for July could pick up this week after the long weekend in China and Taiwan.

Butadiene

** Spot buying was likely continue in South Korea and Japan this week as lower butadiene production prompts short-covering.

** On the other hand, downstream rubber producers would likely keep plant operations low amid negative margins.

PP

** The Asian polypropylene market was unlikely recover fully this week as falling futures prices continue pressure the market.

** Market participants are also closely monitoring China's COVID-19 situation as sentiment has been lifted from the loosening of restrictions in key cities and Beijing's recent announcement of a wide-reaching economic stimulus plan.

PVC

** The Asian PVC market was seen to be stabilizing after two months of weakness as China's PVC demand returns after COVID-19 lockdown restrictions ease

** Offers from China were expected to increase in the coming weeks, reflecting firmer demand locally.

R-PET

** The R-PET market has picked up slightly over the past week as buyers made a delayed post-holiday return. Bale supply remains tight, although recyclers were heard to be keeping their offer levels stable in line with virgin prices.

** The market is expected to remain relatively stable this week as arbitrage windows are kept open by high prices in Europe and the US.