Asia petrochemicals: Key market indicators for Nov 8-12

Asian petrochemicals entered the trading week starting Nov. 8 with ample supply seen for paraxylene and toluene and higher refinery runs and increased gasoline blending activity in China likely to support the Asian MTBE market.

Markets in China were also seen to be finding their feet again after emissions controls and coal price caps roiled domestic prices in October.

Paraxylene

** Asian PX prices are likely to continue taking directional cues from related markets this week, while the spread between paraxylene and naphtha remains under pressure from weak demand.

** Market sentiment is expected to remain weak amid amply PX supply and thin buying appetite. The market is also monitoring progress in the ramp-up of Zhejiang Petrochemical's PX units, which may be slightly delayed.

Benzene

** The Asian benzene market is expected to see high freight costs continue to hinder the trade flows this week, and ongoing cautiousness among some producers.

** The FOB Korea benzene physical market has remained rangebound in recent weeks, averaging $968.42/mt over Nov 1-5 and $968.47/mt over Oct. 25-29.

Toluene

** Toluene prices have moved lower in line with upstream prices in recent sessions and could see support from India and Southeast Asia this week, trading sources said.

** Sellers are seeing inquiries from India for cargoes from second-half November through to December, despite the slowdown in trade during Diwali, sellers said.

** In China, domestic demand is expected to soften amid healthy supply in the country's east and south.

Styrene

** Discussion in the import market is expected to be thin this week amid logistics logjams at China's main river ports and buyers preferring domestic supply.

** Some price correction is expected in the domestic Chinese market after a steep price fall last week, with upstream benzene prices remaining relatively stable.

MTBE

** The FOB Singapore market is expected to be volatile this week amid fluctuating gasoline and crude oil.

** Higher refinery runs and increased gasoline blending activity in China are also likely support the MTBE market this week.

Propylene

** A bearish downstream polypropylene outlook was expected to weigh on propylene buying interest this week.

** Many PP plants in China have reduced run rates due to emissions cuts and are selling their propylene feedstock in the spot market, sources said. The Chinese government announced new emissions mitigation measures mid-September that require industries that use coal for power generation to reduce rates or shut down.

** The CFR China propylene import market remained under pressure last week, falling $15/mt on the week to be assessed at $1,050/m Nov. 5.

Methanol

** Price direction is expected to be clearer in Asian methanol markets this week after China's domestic prices, which have plunged Yuan 1,200/mt or $185/mt in two weeks, were seen to have potentially bottomed Nov. 5.

** Discussion in Asia for spot cargoes has moved to December, with trading activity in India, China and South Korea expected to pick up this week.