Asia petrochemicals: Key market indicators Dec 13-17

Some aromatics and intermediate products were expected to receive a boost in the Dec. 13-17 trading week from a rebound in crude oil prices, while olefins products such as ethylene and propylene were likely to remain under pressure from weak derivative performances.

Aromatics

MTBE:

** The Asian MTBE market was expected to continue rebounding this week on the back of firmer gasoline and crude oil markets as fears of the omicron variant impacting demand fade and the US dollar weakens. However market discussion was likely to remain tepid amid a seasonal year-end trading lull and ongoing term contract negotiations for 2022.

** MTBE term contracts on a CFR Malaysia basis for 2022 were heard to have been settled at around a $10s/mt premium to Mean of Platts FOB Singapore assessments. The differentials signed for 2022 were lower than for 2021 term cargo contracts, which were signed at premiums of around $18/mt to MOPS.

Paraxylene:

** Asian paraxylene prices were expected to move in line with the direction of upstream crude oil and naphtha prices this week, while the PX-naphtha spread remains under pressure due to sluggish demand downstream for PTA and polyester.

** Progress has been heard in 2022 PX term negotiations with a narrower bid-offer range reported in the market, and some expect the term contracts to conclude this week.

Styrene monomer:

** Asian styrene monomer spot prices were likely to be supported by delivery delays ex Zhejiang province, where pandemic movement controls are impacting road logistics.

** SM export discussions are likely to continue in China in the week, with prices and volumes hinging on local inventory levels and overseas prices.

Benzene:

** The Asian benzene market enters the Dec. 13-17 trading week balanced, although the near-term backwardation structure has narrowed as participants price in the upcoming festive season in China.

** The FOB Korea benzene physical price regained ground from the high $800s/mt to reach $905.33/mt Dec. 10, drawing support from higher oil prices.

Intermediates

Methanol:

** China's methanol prices could see some upward pressure this week after methanol futures tracked higher in tandem with the rebound in crude oil prices.

** Methanol prices in South Korea were expected to hold steady or firm this week amid tight spot supply and healthy downstream demand, while Southeast Asia could see some upside pressure from unplanned plant outages in the region.

Olefins:

Ethylene:

** The near-term outlook for ethylene is Asia was bearish amid weak derivatives demand, which continues to dampen spot demand. Some crackers were considering cutting run rates in order to manage margins amid upstream volatility and poor downstream uptake, market sources said.

** Buyers remain concerned about negative margins for several downstream products such as SM, MEG,and HDPE, and ethylene buying interest was expected to remain low as a result.

** Ethylene selling indications last week were stable amid volatile crude and naphtha and high freight costs.

Propylene:

** The CFR China propylene market was expected to continue trending lower this week as weak PP downstream demand and growing spot domestic capacity exert downward pressure.

** The CFR China marker was assessed down $10/mt week on week to $990/mt Dec 10.

** Chinese buyers were heard to be keeping inventories extremely low as the year-end approaches.