Asia petrochemicals: Key market indicators for Nov 1-5

The market sentiment for Asian petrochemicals has been mixed in the week started Nov. 1, due to the recent price volatility across various products.

The demand along the propylene chain and some aromatics products is likely to remain weak, according to market participants.

Paraxylene

Benzene

• Asian benzene market outlook is mixed because of slowing demand in the downstream products sector, according to market participants.
• FOB Korea benzene physical fell 2.8% week on week to average at $968.47/mt over Oct. 25-Oct. 29.
• Views are also mixed on the supply front as production is expected to tighten in some parts of Northeast Asia and rise in others following the completion of some turnarounds.

Isomer-MX:

• China gasoline blending demand for isomer-grade mixed xylenes is likely to be sluggish during the week, participants said. Zhejiang Petroleum & Chemical, or ZPC, was set to ramp up refinery runs after receiving a quota to import 12 million mt of feedstock crude oil, S&P Global Platts reported earlier, likely increasing the supply of finished gasoline.
• Chinese supply of MX remains tight at key ports, such as, Zhangjiagang, and may continue to support ex-tank prices, according to sources. MX inventory in east China shrunk to a 21-month low of 27,600 mt Oct. 29.
• Paraxylene margins remain under pressure in the wake of ZPC's production ramp, with the PX-MX spread ending the week at $88.50/mt on a CFR basis Oct. 29, Platts data showed.

Purified terephthalic acid:

• Market direction is unclear along the Chinese polyester chain and the sentiment is relatively bearish due to the low downstream textile run rates and weak polyester sales, according to trade participants.
• Support is expected for dollar-denominated cargoes due to strong imports from Indian customers amid tight local supply, and scheduled maintenance at a few Northeast Asian suppliers.
• Many trade participants are waiting for prices to stabilize along the polyester chain before making spot trades.

Propylene

• The propylene import market is expected to remain weak because of a supply glut and a weaker downstream polypropylene.
• Some downstream PP suppliers in North and east China sold their propylene feedstock in the spot market pressuring domestic propylene and import prices, market sources said. The Chinese government announced new emissions control measures mid-September, requiring industries that use coal to generate power to reduce rates or shut.
• The propylene CFR China marker fell $45/mt week on week to $1,165/mt CFR China Oct. 29, based on Platts data.

Polypropylene

• The export arbitrage window was open and Chinese sellers are expected to continue exploring spot trades during the week, following a 15% fall in Chinese domestic PP spot prices since mid-October.
• Trade participants mostly have a bearish outlook for the Chinese PP market, with limited spot interest in PP imports amid weak sentiment in the futures market, rising PP stocks and upcoming startups in November.
• Southeast Asian buyers continue to eye competitive Chinese-origin PP, with limited buying interest in PP imports from South Korea, Middle East, or regional supply.

Oxo alcohol

• The CFR China 2-ethyl hexanol price is likely to remain weak, as weaker downstream plasticizer demand hurts buying interest.
• 2-EH is a feedstock for plasticizers, such as, dioctyl phthalate and dioctyl terephthalate. The downstream plants that relied on coal as fuel supply are mainly located in east China, which is bearing the brunt of the government's emissions cut policy. 2-EH CFR China was assessed down $60/mt on the week at $1,700/mt Oct. 28, Platts data showed.

Recycled polyethylene terephthalate:

• Market fundamentals are expected to remain largely stable in the Asian recycled PET market due to tight supply in most Southeast Asian regions and steady demand for high quality grade exports.
• Some trade participants are closely monitoring rising virgin PET prices, which could lend support to the Asian recycled PET market.