Asia Petrochemicals: Key market indicators this week

Singapore — The Asian petrochemicals market is expected to remain mixed in the week ending May 22, with attention focused on the surging COVID-19 cases in India, which has already hampered petrochemical demand in the country.

Some port deflections from Mumbai were heard, as the country braces for a cyclone. Sources said some petrochemical producers may delay their planned turnarounds, while downstream factory operations are coming down due largely to a lack of workers.

Ethylene

Asian ethylene spot market sentiment remains unclear as limited cargo availability and sluggish importing demand are resulting in thin discussions and firm trade deals.

Most of the demand from China likely will be fulfilled by domestic supply, and the expectation of US-Asia arbitrage will likely to re-open in early H2 2021.

Propylene

The CFR China marker is slated to gain traction this week, as planned shutdown and stronger replenishing needs are likely to lend support.

In plant news, South Korea's Lotte Chemical had shut its naphtha-fed steam cracker in Daesan from May 15 to June 23 for annual maintenance. South Korea's Hanwha Total started its new 400,000 mt/year polypropylene unit at Daesan Feb. 24. South Korea's SK Advanced started its new 400,000 mt/year polypropylene unit at Ulsan in March. The increase in demand for propylene feedstock from these two new PP plants reduced spot material in the market.

Propylene supply from Korea will increase when SGS Caltex and LG start out new crackers in June.

Polyethylene

Asian polyethylene prices were expected to be weak due to low demand on the back of Eid al-Fitr holidays in Southeast Asia, the traditional manufacturing lull in China and amid an overall downtrend in Indian demand and lack of offers for import cargoes amid tcoronavirus-driven uncertainty.

Monoethylene glycol

A combination of renewed lockdowns, prolonged recessions and an ongoing pandemic presents a bleak image at a time of limited visibility, MEG sources said. Expectations of ample supply from new production facilities in China and the US by H2 will also pose headwinds to recovery going forward, sources said.

Recycled polyethylene

Undersupplied recycled high density coupled with weak import demand are leading to thin trade, sources said.

Recycled HDPE import prices have been falling gradually in line with virgin HDPE, traders said. Recycled HDPE is typically priced at 85%-95% of the virgin imported price, sources said. Recycled PE is only competitive when virgin prices are high and virgin PE supply is short, sellers said.

Toluene

Trading sentiments in the Asian toluene market will likely remain precariously placed in the week that began May 16, as fresh gains in the oil market and impact on adjacent aromatics stay in focus amid otherwise weak demand in Asia from the solvents and gasoline-blending sector.

While the key FOB Korea toluene marker fell $10/mt in the week of May 14 to land at $765/mt, the price softness has led to healthier US-Korea arbitrage opportunities, market sources said.

Methanol

Asian methanol prices are expected to remain supported in the week ending May 21 on the back of bullish supply fundamentals. Coal prices in China had surged threefold to Yuan 800-900/mt in recent days, not only affecting margins of coal-based methanol producers, but downstream methanol prices in China. Vessel delays and vessel quarantine measures in India could exert upward pressure on Southeast Asia methanol prices even as demand remains lackluster, sources said. Overall, the near-term outlook for Asia is expected to be stable to bullish this week.

2-ethyl hexanol

The 2-ethyl hexanol market is likely to trend higher this week as the recent hike in domestic supply lend support for imports. Domestic 2-eh supply in China was reported tight after a few domestic producers shut their units for planned turnaround. China's Qilu petrochemical was heard to have shut down its 250,000 mt/yr 2-eh production unit in eastern China in late April for 50 days' worth of planned turnaround.

The RMB price for 2-EH China was heard concluded at Yuan 16,800/mt in the week to May 12, up Yuan 1,200/mt on the week.