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Asia petrochemicals outlook, w/c Nov 19

Watch: Market Movers Asia, Oct 29-Nov 2: Benzene naphtha spreads prices at three-year low

China's biggest state oil companies Sinopec and PetroChina will be releasing their Q3 results this week. Traders are watching out for their crude buying strategy as the US re-imposes sanctions on Iran starting November 5; and their operational outlook for the fourth quarter after China's GDP fell to multi-year lows at 6.5% in Q3.

The recent fall in upstream crude oil futures has kept benzene-naphtha spread below breakeven levels over the month of October. Firm paraxylene prices have supported overall aromatics margins, with producers keen to ride the wave of strong PX, resulting in growing supply of benzene at the same time.

In agriculture, Chinese soybean prices are on a steep downward move, with CFR North China soybeans basis shedding 15 cents per bushel to 350 cents per bushel week on week. The Chinese soybeans market is softening as the US mid-term election is looming. Buyers are hoping for the current administration to lose its appetite in the trade war.

View Full Transcript

This week: Benzene naphtha spreads at three-year low, soybean prices continues its downtrend, and China likely to import thermal coal for winter.

But first, in oil, China's biggest state oil companies Sinopec and PetroChina will be releasing their Q3 results this week. Two things to watch out for, their crude buying strategy as the US re-imposes sanctions on Iran starting November 5; and their operational outlook for the fourth quarter after China's GDP fell to multi-year lows at 6.5% in Q3.

In petrochemicals, the recent fall in upstream crude oil futures has kept benzene-naphtha spread below breakeven levels over the month of October.

Ample supply of benzene has capped growth in prices in spite of fluctuations in naphtha, but negative margins have had little effect on run rates at aromatics units. Firm paraxylene prices have supported overall aromatics margins, with producers keen to ride the wave of strong PX, resulting in growing supply of benzene at the same time.

With new supply from the region, and PX prices expected to stay high, will end-year demand provide some relief to benzene pricing?

In agriculture, market prices for soybeans in China are on a steep downward move, with CFR North China soybeans basis shedding 15 cents per bushel to 350 cents per bushel week on week.

The Chinese soybeans market is softening as the US mid-term election is looming.

Chinese buyers are hoping for the current administration to lose its appetite in the trade war.

In coal, China is keeping Australian and Indonesian thermal coal producers guessing on when it is likely to lift its tight restrictions on imports of seaborne-traded thermal coal. Beijing brought in import controls in the middle of the year with the sudden realization that imports were running ahead of annual quotas for 2018. China is likely to need imported thermal coal for peak winter demand, and so many traders believe it's only a matter of time until imports are allowed to flow into China again. Here's our SOCIAL MEDIA POLL QUESTION of the week: Will Beijing lift restrictions on imports of seaborne thermal coal?

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That's it for this week. Thanks for kicking off your Monday with us. Have a great week ahead!