Asian petrochemical prices nosedive to historic lows amid COVID-19 pandemic

Asian petrochemical prices nosedived to historic lows Monday, crippled by plunging crude oil values amid the havoc caused by the COVID-19 pandemic and an oil price war between Saudi Arabia and Russia.

Petrochemicals hit multiyear lows

The FOB Korea benzene benchmark plunged $22.67/mt day on day to hit a price level below $500/mt Monday, after persistent bearishness in upstream oil markets took a toll on benzene sentiment. The marker was assessed at $497.33/mt Monday. Selling interest was more obvious Monday, with a flip in market structure from one of flat to contango.

Downstream, Asian styrene plunged following the collapse in crude oil and Asian benzene values, diving $24/mt from last Friday, or $94.50/mt on the month, to $733/mt CFR China Monday, the lowest since February 11, 2009. Prices were last assessed lower at $728.75/mt on February 10, 2009.

Domestic China styrene prices also followed suit during Monday trading session to register a new low since February 25, 2009. The prompt marker fell Yuan 190/mt from the last trading day at Yuan 5,825/mt ex-tank Monday, down 13% on the month.

Asian paraxylene also tumbled to hit a fresh 11-year low at $580.67/mt CFR Taiwan/China and $562.67/mt FOB Korea Monday, on further sharp falls in the upstream oil complex. Prices have breached the $600/mt mark for the second time this month, weighed down by the plunge in oil and deep falls across the aromatics chain. The CFR Taiwan/China marker was last assessed lower at $575.50/mt on November 21, 2008.

Downstream, the Asian purified terephthalic acid CFR China marker tumbled $15/mt from last Friday at $480/mt Monday amid weak upstream and poor demand -- the lowest since S&P Global Platts started assessing it on April 7, 2008. Similarly, the Chinese domestic prompt PTA marker also fell to the lowest level since then at Yuan 3,675/mt Monday, equivalent to around $464/mt CFR China on an import-parity value.

On gasoline blendstock front, the Asian toluene market plummeted to the weakest level in nearly 12 years at $436/mt FOB Korea on Monday's close as the week opened with most aromatics products in the red. The FOB Korea toluene marker was last lower at $430/mt on December 11, 2008. At 0130 GMT Tuesday, prompt-loading toluene cargoes continued to be seen offered by participants in the region. An offer for a 2,000 mt H1 April-loading toluene parcel on FOB Korea basis was heard at $390/mt.

The Asian isomer-grade mixed xylenes market was also not spared. The FOB Korea isomer-grade mixed xylene physical landed at $483.50/mt on Monday, and the marker had only been last lower at $467/mt on December 11, 2008. Activities during Tuesday's Asian midmorning hours remained thin, as participants continued to bide for more directional signals in the market.

The FOB Singapore MTBE marker nosedived to $304/mt Monday, down $48/mt, or 13.64%, day on day, which marked the lowest level ever since Platts started assessing it on June 6, 2014. The benchmark has hit new all-time lows every trading cycle since last Thursday, Platts data showed.

Asian monoethylene glycol fell $5/mt to $471/mt CFR China Monday following the collapse in crude oil, a historic low since March 2009, Platts data showed.

Soaring dollar, poor Chinese economic data

The plunging petrochemical prices were largely triggered by collapsing crude oil prices, led by an ongoing price war between Saudi Arabia and Russia as well as volatile global financial markets amid the COVID-19 pandemic.

Front-month ICE Brent crude futures collapsed to a fresh over-four-year low at $31.57/b at 4:30 pm Singapore time (0830 GMT) Monday, down $3/b, or 9%, from last Friday, even as emergency quantitative easing by the US Federal Reserve and an interest rate cut failed to boost market sentiment.

Amid the volatility, paper trading was also noted with higher volumes cleared, while physical cargo discussions were concentrated during the Platts Market on Close assessment process, with few bids or offers heard prior to that.

Strengthening dollar values against major Asian currencies further weighed on commodities market prices on Monday. Historically, the price of oil is inversely related to the price of the dollar.

Curtailed demand and disrupted supply chains undermined by the coronavirus pandemic has wrecked the petrochemicals sector significantly, as it is closely related to various manufacturing industries.

Although more than 60% of Chinese firms resumed operations in March, orders have sharply dropped as the rapid spread of COVID-19 in the US and Europe have impacted demand, market sources said.

Chinese industrial production in January and February dropped 13.5% year on year to record the sharpest fall in decades amid a widespread shutdown of manufacturing operations. Retail sales, a key metric of consumption, fell 20.5% over the same period.