Asia petrochemicals: Key market indicators for Sept 20-24

Holidays in several key Asian markets, such as China and South Korea, at the start of the week, is expected to keep trading activity quieter than usual early in the week.

At East China ports, cargo flows continue to be slow due to COVID-19-related restrictions and measures, while a general shortage of containers also hamper trading activity.

Methanol

* The upward momentum in Asian methanol prices is expected to prevail in the week of Sept. 19 on the back of high coal prices in China and limited availability of spot cargoes in Northeast Asia and India.

* Middle Eastern producers, keeping a close watch on Chinese methanol prices, will likely raise selling indications for India and South Korea.

MTBE

* Asian MTBE is expected to be rangebound this week, amid fluctuating gasoline and crude oil markets.

* However, the restarts of MTBE plants in Singapore and India are going to add more supplies amid the absence of strong demand from Southeast Asia and China.

Isomer-MX

* Outlook remains weak with major maintenance shutdowns coming in October and with demand from China's gasoline sector sluggish.

* The spread between Isomer-MX and feedstock naphtha has shrunk to $79.50/mt on Sept. 16, the lowest level in more than eight months, in a clear sign that the market balance is getting more well supplied, with demand slowing down.

Toluene

* The Southeast Asia toluene market is expected to pick up due to stability in the region with more relaxed pandemic controls and the new cycle is bringing more activity for October loading cargoes.

* Buying from India continues as inventories in the domestic market continue to be low, with Kandla talked at around 9,500 mt and Mumbai with only 3,000 mt, sources said. Healthy supplies are typically around 25,000 mt in tanks, sources added.

* China inventories are high and the weak fundamentals plaguing the Chinese toluene market are likely to remain for the October loading cargoes. Similarly, in South Korea, demand seems to be slow as less material is being exported and kept in domestic market.

Solvent-MX

* Lack of availability of vessels and port congestion are likely to continue to support prices in China during the week.

* In South Korea and Southeast Asia , discussions have been thin. However, a higher energy complex and replenishment by buyers supported the sentiment in the region.

Propylene

* The propylene market in China is expected to receive firmer support this week after the Chinese government had announced new initiatives where heavy pollutants in the country were mandated to be shut, or their run rates reduced. Many propylene producing units were told to shut or reduce run rate as these units use coal to generate power.

* The Korean producers however, were confronted with swelling supplies at the ports due to stormy weather and also, it was difficult to sell propylene to Chinese buyers given the lack of propylene carrying vessels.

Oxo Alcohols

* The CFR China 2-ethyl hexanol price is poised to move further lower in the week as the restarting of more production majors in China is expected to depress price.

* The government has just rolled out new initiatives whereby heavy pollutants in the country were mandated to shut or cut down on their run rate. Many downstream plasticizers plants in Shandong, such as the DOP and DOTP plants were forced to ease or cut down their operating rate.

Polyethylene

* The outlook for Asian polyethylene prices were mixed amid snug supply but weak demand. The slow offloading of petrochemicals at ports along East China has not only led to a long queue of waiting ships but has also pushed up prices for LLDPE. The main cause for the congestion has been the dearth of available pilots to navigate ships into the inner sea of China.

Recycled PE

* The outlook for Asian recycled low density polyethylene was stable amid thin trading. Producers said it could take longer for recycled PE demand and supply to reach an equilibrium, due to the prevailing container shortages.

MEG

* The outlook for monoethylene glycol was bullish on snug supply, amid port closures due to the disruption caused by Typhoon Chanthu, sources in China said.

* In addition, local governments in east China provinces, such as Jiangsu and Zhejiang, have issued electricity usage limits for energy intensive industries, including the MEG sector, effective from the third quarter.

Polypropylene

* Market views for Asian PP are expected to remain mixed in the week starting on Sept. 20 with sellers trying to stand firm amid strong international PP prices, while buyers prefer a wait-and-see approach amid uncertain outlook.

Purified Terephthalic Acid

* Asian physical spot trades are expected to be limited in earlier part of the week starting Sept. 20 due to holidays in Northeast Asia.

* Trade participants are closely monitoring the demand along the polyester chain in China and India, as the outlook remain unclear for now.

Recycled PET

* Market fundamentals are expected to remain largely stable for Asian recycled polyethylene terephthalate market in the week starting Sept. 20.

* The whole recycled plastics value chain continue to face manpower shortage from collection, sorting, and reproduction amid pandemic across Southeast Asia, resulting in tight supply and expensive raw materials for R-PET production, sources said.

* Container shortage and port congestions have further added pressure to the R-PET market for international trades, especially for exports of high-quality R-PET flakes and food-grade pellets.