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ASIA: This week in petrochemicals

Asian olefins are likely to receive continuous support in the week of July 5-9 from limited supply after the plant disruption in South Korea. South Korea's GS Caltex aims to restart its new mixed-feed cracker at Yeosu July 5 after shutting due to a technical issue on June 27 .

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Toluene

** Selling into the gasoline-blending pool July 5-9 to remain an unviable option for Asian participants after toluene prices tested higher grounds

** FOB Korea toluene physical marker climbed to $746/mt on July 2, the sharpest level in three weeks. The marker appeared well-supported above the $700/mt mark since second-half April.

** Benzene and paraxylene margins against toluene were still healthy and continues to support toluene.

Isomer MX

** Isomer-MX to remain July 5-9 an expensive blending component for gasoline blenders.

** The Asian Isomer mixed xylenes market was drawing support from the paraxylene market.

** Paraxylene-MX spread slipped to $136.83/mt on July 2, as paraxylene declined more week on week as opposed to isomer-MX.

Styrene Monomer

** Asian styrene monomer is likely to rise further July 5-9 on the back of bullish feedstock benzene and ethylene.

** Prompt supply may tighten due to scheduled turnarounds in China, coupled with low inventory in east China amid slower-than-expected inventory buildup.

** Some producers may opt to cut run rates on the back of poor margins and difficulty in passing on the increasing cost as demand remains slow.

MEG

** Asian MEG is expected to track the crude oil marker July 5-9, but may likely rise amid tight supply on the back of lower operating rates due to thin margins, although demand remains tepid.

** Meanwhile, India's antidumping investigation on MEG imports may draw the ire of Kuwaiti, US and Saudi Arabian producers as well as the country's textile end-user market, which is concerned the production cost of textiles will increase, industry sources said.

Ethylene

** Improving buy indications and tight local supply July 5-9 may continue to support Asian ethylene as market participants expect to see healthy demand and higher bids for August cargoes due to limited availability.

Methanol

** Fundamentals in the Southeast Asian methanol market is expected to be bearish July 5-9 as Indonesia and Malaysia strive to contain a rising number of COVID-19 cases, restricting movements in parts of the country, while supply in the archipelago remain ample.

** However, Southeast Asian methanol prices could see an upside this week as a Middle Eastern producer has been seeking spot cargoes to cover its shorts as its methanol plant is under planned maintenance this month.

Purified terephthalic acid

** Asian PTA market opened the week July 5-9 firm, with the September futures contract up Yuan 156/mt, or around 3%, at Yuan 5,280/mt at 10:55am Singapore time (GMT 0830) July 5 amid bullish sentiment across the wider petrochemical market.

** Nevertheless, trade participants noted that PTA market fundamentals are likely to remain weak amid ample supply in China and yet-to-recover Indian demand.

Polypropylene

** Market sentiment is expected to remain mixed for Asian polypropylene July 5-9 with sellers attempting to raise offers since the prior week, yet customers are still concerned about demand amid the pandemic and container shortage.

** Chinese trade participants are eyeing the status of several new PP plants, which are expected to come online in July.

Recycled polyethylene terephthalate

** Southeast Asian recycled PET producers are monitoring the availability and cost of post-consumer PET bottle bales, which have become tight and expensive due to the ongoing pandemic, pushing overall production along the recycled PET chain higher.

** Container shortage and expensive freight cost remain challenging for Asian sellers to export recycled PET flakes and pellets to the west to secure more attractive prices there.

Propylene

**The CFR China marker is to remain rangebound July 5-9 after GS Caltex restarted its new mixed-feed cracker at Yeosu July 5. The new steam cracker, which came on stream June 18, has the capacity to produce 750,000 mt/year of ethylene and 410,000 mt of propylene. The company source said it will take some time for them to produce on-spec propylene.

**China's Jinneng Science and Technology aims to start its new propane dehydrogenation plant at Qingdao, Shandong province H2 July. The new PDH plant has the capacity to produce 900,000 mt/year of propylene and the company will bring on stream a 450,000 mt/year downstream polypropylene plant at the same venue.