Asia petrochemicals outlook, w/c June 10.

Petrotahlil:

AROMATICS

Asian PX prices were assessed up $45.67/mt from Thursday at $859.67/mt CFR Taiwan/China and $840.67/mt FOB Korea Friday, amid gains in upstream crude oil futures. However, naphtha merely inched up $5.13/mt to $458.13/mt CFR Japan at the close of Asia trade. Week-on-week, however, the CFR Taiwan/China paraxylene marker only gained a modest $6/mt, after heavy falls earlier in the week. Buoyed by a rebound in upstream crude oil futures and naphtha prices Friday, downstream purified terephthalic acid plants were heard to have emerged, seeking additional spot cargoes for July delivery. Some traders attributed the prompt demand to some term volumes heard to have been cancelled for July, and also some delays in long-haul shipments of PX from the Middle East and India. The PX/naphtha spread also crossed above the $400/mt mark to $401.55/mt on Friday, the highest since April 17 when it was at $421.92/mt.

Amid volatility in the Asia benzene market Friday, the FOB Korea marker inched down despite the gains in crude oil futures, and was assessed $2.67/mt lower on the day, and up $1/mt on the week, at $618.33/mt FOB Korea. The FOB Korea benchmark had started the week on a weak note, falling below the $600/mt mark Monday, with bearishness in the market largely driven by losses in crude oil futures, as well as widespread weakness in the aromatics markets. Mid-week, Asia benzene prices had tracked the uptrend in US prices, amid a wide price spread between August FOB USG paper and the FOB Korea benchmark.

Asian styrene monomer slid $29/mt on the week to $1,051/mt CFR China Friday amid the losses in crude earlier in the week. The downtrend eased later in the week amid holiday in China. Asian SM continue to face tight supply outside of China as South Korea's Hanwha Total Petrochemical SM units remained shut, while the market continued to monitor the planned restart of the units. Buying interest from the downstream markets remained weak as end-users continued to wait and see amid expectation of a price correction in feedstock SM.

OLEFINS

Asian ethylene would likely remain bearish this week after hitting a four-year low last Friday. Selling pressure would likely continue this week amid lower downstream plant operations and negative margins. Despite this, the steam cracker operations in Asia would likely remain high this week due to a healthy ethylene/naphtha spread.

Domestic China propylene price was under pressure with a polypropylene producer lowering operating rate amid falling margins. However, imported material was supported amid tight supply in Northeast Asia due to a delay in Hanwha Total's cracker restart.

The Asian butadiene market closed on a firmer note Friday amid tighter supply, with delivered prices to Northeast Asian markets up $35/mt on week to $1,095/mt Friday, particularly due to short supply in South Korea. This was due to South Korea's LG Chemical shutting its 170,000mt/year butadiene unit Wednesday, as well as its 160,000mt/year styrene butadiene rubber and 180,000mt/year polybutadiene rubber unit in Daesan, leaving only its SSBR and NBR units open. The market is expected to be firm to stable in the days ahead, depending on the cracker situation with South Korean plants.

POLYMERS

Asian linear low density polyethylene was assessed down $20/mt last week at $920/mt CFR Far East Asia Tuesday. Actively-traded September LLDPE futures on the Dalian Commodity Exchange fell Yuan 285/mt over the same period to Yuan 7,630/mt ex-warehouse Tuesday. The outlook was bearish for the third quarter as downstream applications such as cable and infrastructure demand have been weak, although packaging demand has been relatively stable, participants said.

Asian polypropylene prices fell last week amid lackluster demand and ample supply. Market participants adopted a wait-and-see approach amid recent slides in Chinese PP futures, which dampened sentiment. Some traders pointed out that homopolymer PP production was being taken over by the coal and PDH-based producers, while naphtha-based producers were switching production to copolymer based for better netbacks.

INTERMEDIATES

Asian purified terephthalic acid prices tumbled $40/mt week on week to $710/mt CFR China Friday amid weak PTA fundamentals in China, despite a spate of unplanned shutdowns for PTA for this week. There were a total of four unscheduled shutdowns of PTA plants in China last week, resulting in around 40,000 mt PTA production loss, according to sources. Still, the unexpected production loss failed to support Asian PTA prices amid ample supply and tepid demand in China.

END