Asia petrochemicals: Key Market Indicators for Sep 27-Oct 1

The outlook for most Asian petrochemical markets remain bearish for the week ahead Sept. 27-Oct. 1.

High container freight rates were an added challenge to the shipping of products, while some China-based companies were affected by 'dual-control' regulations introduced by the authorities.

Purified terephthalic acid

** Container shortage and high freight remain the biggest challenges for Asian dollar-denominated and international PTA trades.

**The recent 'dual-control' energy consumption and efficiency-related measures in China will continue putting pressure on both PTA supply and demand, resulting in mixed sentiment and an unclear market outlook, sources said.

Polypropylene

**Physical spot trades are expected to remain thin in Asia for dollar-denominated and international trades due to mixed sentiment and wide bid-offer gaps.

**The supply cut for coal-based PP in China is likely to continue to support Chinese PP prices, though customers have shown resistance amid thin margins and lackluster demand, due to energy control and container shortage for export.

Recycled PET

**Asian R-PET sellers are expected to release new offers for October in the week starting Sept. 27, though some are still facing a backlog of orders amid container shortage and high freight.

**With the lifting of lockdowns in various Southeast Asian countries, there are signs of demand improvement in consumer markets, especially for packaging and flexible film, which could potentially provide some supply for more recycled plastics, though the overall market fundamentals will remain tight in Southeast Asia.

Propylene

**China's propylene market is expected to inch lower this week as C3 downstream products demand took a hit after the Chinese government announced new initiatives where heavy pollutants in the country were mandated to be shut, or have their run rates reduced.

**FOB Korea propylene demand remained thin as South Korean producers were still facing swelling supplies at ports due to stormy weather, which continued to dent prices.

**The CFR China-FOB Korea price gap stood at $30/mt Sept. 24, down $5/mt on the week, as propylene demand in China waned.

Oxo Alcohols

**CFR China 2-ethyl hexanol price is likely to extend its downtrend this week as the restart of more production majors in China is expected to depress prices.

**Five 2-EH plants in China are scheduled to restart this week

**2-EH CFR China marker was under pressure and assessed down $75/mt on the week, at $1,975/mt Sept. 24

Methanol

**The upward momentum in Asian methanol is expected to reach new highs in the week of Sept. 27, with direction coming from China and India.

**Chinese methanol futures opened the trading week 5.47% higher from the last session at Yuan 3,412/mt Sept. 27, causing ex-tank prices in east China to be discussed Yuan 200/mt higher from Sept. 24 morning trade.

**With bids for imported spot cargoes to Taiwan and China at $440-$450/mt Sept. 27, and India discussed around $460-$465/mt Sept 24, Asian methanol prices are likely to end the week on a bullish note.

MTBE

**Asian MTBE is expected to be volatile amid fluctuating gasoline and crude oil markets.

**Nevertheless, MTBE demand from major buyers, including China and Malaysia, is expected to remain tepid amid weak domestic gasoline blending demand.

**Taiwan's Formosa Petrochemical Corp. was heard to have sold 10,000 mt of H2 October-loading MTBE at a high single-digit discount to the mean of Platts FOB Singapore MTBE assessments. The differentials were lower than the September-loading cargoes.

Isomer-MX

**The bearish trend for isomer-MX is expected to continue although Taiwan's CPC may have to keep one of its reformers with an MX capacity of 193,000 mt/year shut for up to 2-3 months after a fire on Sept. 17, Platts reported earlier.

**Major maintenance in October, alongside difficulty in shipping to China amid port congestions has led to an oversupply of FOB Korea cargoes, which has caused the benchmark to fall to more than an eight-month low against naphtha.

Toluene

**India's balanced toluene market with supplies arriving and appetite easing; should see more demand until prior to the Diwali holidays

**Little demand from gasoline blenders and chemical producers in Southeast Asia

**China domestic demand remains thinly traded as factories and operations are reduced to meet the state's 'double control' regulations.