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Asia petrochemicals: Key market indicators this week

Singapore — Asian petrochemical markets are likely to remain mixed in the week of April 11, amid uncertain global recovery pace and upstream crude oil prices.

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Ethylene:

** The Asian ethylene spot market discussion is expected to be thin in the week of April 11, amid ample supply in the domestic China market and tight local cargo availability.

** China's domestic prices are likely to be pressured by new capacity startup in East China. Zhejiang Petrochemical phase 2 will likely achieve on-specification ethylene in the coming weeks with a capacity of 1.4 million mt/year.

Propylene:

** The CFR China marker is likely to stay rangebound in the week of April 11 as some Chinese buyers were mulling spot purchases after a sustained price fall since early April.

** CFR China marker retreated $30/mt on the week and landed at $1,070/mt CFR China on April 9 amid weaker downstream polypropylene.

** The spread between CFR China and FOB Korea has increased to $10/mt in the week ending April 9, up $5/mt from the week before.

** Supply in South Korea remained tight as SK Advanced managed to produce on-specification polypropylene from its new 400,000 mt/year plant in the week ending April 9; this will reduce spot supply to China.

Acrylonitrile:

** The acrylonitrile market in Far East Asia and South Asia are likely to trend down in the week of April 11 after both markers hit a record high in mid-March.

** Acrylonitrile supplies in the US and Europe have been tight since February due to the force majeures announced by Cornerstone and Ineos, respectively.

** Chinese buyers were not in a rush to buy spot materials as domestic producers were now running at full rate, and this added downward pressure on prices.

Purified terephthalic acid:

** Asian PTA trade participants are seeking market direction amid mixed sentiment. Physical spot availability remains tight in most Asian regions due to the intensive turnaround schedule in April and May.

** Nevertheless, China's overall high PTA stocks and India's uncertain demand due to partial lockdown have pushed many market participants waiting at the sidelines adopting a wait-and-see approach.

Polyethylene:

** The sentiment in CFR Far East Asia and CFR Southeast Asia market may remain bearish on the back of resistance from buyers at higher offer levels.

** For South Asia market too, the near-term sentiment seemed to have turned slightly bearish as the region witnesses the second wave of coronavirus pandemic with new cases at record levels.

** The sentiment in the region until the beginning of April was bullish due to upcoming plant shutdowns over the next three months.

Polypropylene:

** Asia PP market sentiment stays stable-to-weaker due to competitive Chinese PP prices, putting pressure on the international PP market.

** Chinese PP demand has not shown much signs of improvement since early April with many downstream converters still showing strong resistance amid squeezed profit margins.

** Market views are divided on PP prices in many Asian regions, with sellers standing firm on offers amid limited stocks and customers almost covered with competitive Chinese PP cargoes.

Recycled PET:

** Sentiment stays relatively bullish for the Asian recycled polyethylene terephthalate market amid improved regional demand and strong global prices.

** Nevertheless, container space and expensive feedstock supply remained the key challenges for many Asian recyclers, sources said.

Methanol:

** Fundamentals in the South Korean methanol market are expected to be slightly bullish in the week of April 11 from logistical delays and tight inventory, especially at Pyeongtaek, while demand continues to be healthy.

** Supply disruption in Trinidad and Tobago in April will likely be felt in the coming weeks and exert upward pressure on South Korean, Taiwan, and Southeast Asia methanol prices.

Toluene:

** The Asian toluene market was lackluster and is likely to remain so in the short term, as participants shunned away from the frontline amid a lack of fresh spot physical demand.

** The price of other blendstocks, such as MTBE, was still more competitive than non-oxy Asian toluene prices. FOB Korea toluene physical averaged $685.20/mt over the week ended April 9, which was marginally lower than FOB Singapore MTBE marker that averaged $702.50/mt in the same period.

** Buying appetite from China was muted, and weak in India, although some participants were optimistic that the latter would soon return to restocking as the new financial year has started. CFR India cash differentials to FOB Korea toluene physical stood at plus $62.84/mt on April 9.

Isomer-MX:

** The outlook for isomer-MX may stays stable-to-firm as turnarounds are coming in Japan and demand saw support from Chinese end-users.

** The spread over naphtha widened $15.25/mt on the week to $167.25/mt on April 9, while the PX-MX spread narrowed $11.34/mt to $60.33/mt over the same period, signaling firmer MX fundamentals over the period.

Benzene:

** Benzene-naphtha is set to ease after hitting a four-year high in the week ended April 9 as North Asian material moves towards the US, while East Asian cargoes were heard moving towards the EU.