Asia petrochemicals: Key market indicators for June 13-17

A number of Asian petrochemical markets were expected to be supported over June 13-17 by persistently high feedstock costs and tight supply.

A flurry of arbitrage cargoes from Asia to the US and Europe due to wide price gaps were also expected to lend support, although this was likely to be countered by demand concerns, a stronger US dollar and inflation fears adding downward pressure.

Toluene

** Asian toluene prices were seeing continued strength from strong buying interest from gasoline blenders in Southeast Asia, trading sources said. The rise in MTBE prices has further increased interest in toluene as its price continues to lag behind other solvents and mixed xylenes, industry sources said.

** The FOB Korea toluene marker extended its nine-year high to $1,300/mt June 10 while the FOB US Gulf price assessment was 703 cents/gal ($2,143/mt), resulting in a wide price spread of $843/mt between the two regions.

** Asian toluene prices enter the June 13-17 week at an all-time high against naphtha, with the spread between the two hitting $489.13/mt June 10 amid tight toluene supply and weak naphtha demand.

MTBE

** The Asian MTBE FOB Singapore marker has been on an uptrend on the back of lucrative MTBE blending values amid bullish upstream crude and gasoline markets. The MTBE gasoline blending value was estimated at $322.51/mt June 10, according to S&P Global Commodity Insights data, softening from a near nine-year high of $377.63/mt on May 27, but still at a level deemed lucrative by the market.

** Malaysia's Pengerang Refining and Petrochemical, or PRefChem, restarted the 750,000 mt/year MTBE plant at its integrated RAPID refinery complex in Johor in early June after postponing earlier plans to restart it in the first quarter, a source close to the company said June 7. The plant was currently ramping up run rates, the source said, without providing further details. The MTBE plant was taken offline in March 2020 after full operations had been delayed since its startup in April 2019 due to glitches, including fires, at the integrated refinery.

Methanol

** The Asian methanol market was seen long over June 13-17 as ample supply from Iran and the Middle East cargoes continued to weigh on prices. Shipping inquiries for around 100,000 mt of methanol loading from Saudi Arabia, Qatar and Oman in June to China, Taiwan and South Korea were heard in the week to June 10.

** However higher global crude oil prices and feedstock coal prices in China will cap the downside, and prices were expected to remain elevated in the near term as oil refineries globally grapple with the loss of Russian crude, market sources said.

Propylene

** The Asian propylene market was expected to receive some support over June 13-17 from an increase in demand after lockdown restrictions in Shanghai were eased June 1. Some sellers said it would take time for the propylene market to recover fully, but increases in run rates by downstream producers was likely to lend some support in the near term.

** Propylene was assessed up $5/mt week on week at $1,030/mt CFR China June 10.

PP

** After a week of cautious optimism, polypropylene market sentiment in China could be impacted by reports June 13 that authorities had reimposed some COVID-19 restrictions in several districts of Shanghai and Beijing, market sources said. Any bearish sentiment was expected to have a knock-on effect on prices in Southeast Asia as overall demand continues to lag.

R-PET

** Recycled PET prices enter the June 13-17 trading week on a stable note as producers find it difficult to pass on higher production costs by raising prices amid buyer cautiousness and general stagflation. Bale supply remains tight, while export opportunities remain open between Southeast Asia and Europe.