Asia petrochemicals: Key market indicators for Oct 18-22

Outlook for most Asian petrochemical markets appeared mixed for the week of Oct. 18-22 on the back of bullish crude oil prices and improved demand.

While prices of some petrochemical products moved up in view of upstream oil market, fundamental demand for some products seemed not as firm as rally in crude oil.

Methanol

** Fundamentals in the Asian methanol market are expected to be mixed in the week as market participants await clearer price direction, especially in China following volatility in the week ended Oct. 15.

** Production cuts at major downstream MTO facilities, along with higher port inventory levels in East China, further weakened sentiment that saw the CFR China methanol physical fell to $445/mt on Oct 15.

** In Southeast Asia, however, prices will likely remain supported on the back of production issues in the region that curtailed supply.

Propylene

** The Asia propylene import market is likely to stay rangebound this week as buyers are wary of picking up imports after witnessing a spike in price for propylene for feedstock last week.

** Propylene CFR China marker hit $1,125/mt Oct. 15, up $90/mt on the week from $1,035/mt.

** Firmer crude oil and other feedstock are likely to lend support to both domestic and imports market.

Oxo-alcohol

** The CFR China 2-ethyl hexanol price is likely to stay firm this week amid resilience in restocking needs.

** Price of 2-EH CFR China soared up $300/mt on the week, at $1,920/mt Oct. 14 after the Chinese government earlier rolled out new initiatives mid-Sep whereby heavy pollutants in the country were mandated to shut or cut down their run rate.

** Many plasticizer plants in Shandong, such as the dioctyl phthalate and dioctyl terephthalate plants, were forced to slow or cut down their operating rate. This hit demand and eventually the price for 2-EH.

Polyethylene

** Asian polyethylene prices rose to the highest level since February 2014 on rising energy futures. Market sources said demand was strong due to the year-end shipments as buyers were placing orders early due to port congestion.

Recycled polyethylene

** The outlook for Asian recycled polyethylene prices was bleak as prices moved lower on falling prices of recycled bales. R-LDPE bales were heard discussed at $600-$650/mt CFR China, with up to $300/mt as a pelletizing cost, according to a recycler. This was down around $100/mt from a month earlier, recyclers said.

Monoethylene glycol

** The outlook for monoethylene glycol, or MEG, was, however, mixed as the downstream polyester sectors were operating at low rates due to the power consumption curbs in the wake of China's energy control policy, traders said.

** MEG was assessed up Oct. 15 on higher discussions led by crude futures which rose to as high as $84.84/barrel at 0830 GMT on Oct 15.

Benzene

** Lofty prices levels in the Asian benzene market are less likely to ease anytime soon, as various factors support prices.

** Fundamentally, challenging logistics for shipping and some recovery in demand in downstream products led prices to rebound. However, buyers were a little cautious, as expectations of month-ahead demand were not keeping up with surging oil prices.

** FOB Korea benzene physical stood at $1012.33/mt on Oct. 15 and was the highest level in more than two months.

Isomer-MX

** With upstream prices still firm, isomer-MX prices are likely to push to new multi-year highs in the coming week, also as the domestic market in China remains tight on supply.

** Gasoline blending demand was heard to be one of the factors supporting MX prices in China domestic market at the moment, also due to a shortage of blendstocks, sources said.

** The outlook for the downstream markets were mixed and not giving a clear direction to MX at the moment.

Paraxylene

** Asia paraxylene is expected to keep pace with the movement in the energy complex in the week starting Oct. 18 and underpinned by lower run rates across Asian producers.

** However, uncertainty around Chinese PTA run rates, as a result of poor fundamentals, and China's energy control has led PX market sources to take a cautious stance on the demand outlook.