Asia petrochemicals outlook, w/c Apr 27

Volatile upstream crude and naphtha prices will keep setting the tone for the Asian petrochemical sector this week.

ICE Brent June crude futures were down 30 cents/b from last Friday at $21.14/b at 10:15 am Singapore time (GMT 0215) Monday amid oversupply concerns.

Paraxylene

Asian paraxylene market participants will keep an eye on movements in related upstream and downstream markets.

The pessimism in the PX market is expected to maintain on poor fundamentals and a bleak short-term market outlook.

Isomer-MX

China has been and will likely remain the key driver of isomer-MX demand in Asia in the near future, although tight tank space in east China has sailed up as an issue, especially for May-arrival cargoes.

The paraxylene-MX spread has been narrow, below $100/mt since April 6, and that is continuing to squeeze margins for PX producers.

PTA

The Asian purified terephthalic acid market fundamentals are expected to remain bearish this week.

Total PTA stocks in China hit a record high of around 3.4 million-3.5 million mt amid poor demand, yet further room for prices to fall are limited at the near-record low prices, sources said.

The PTA CFR China marker remained stable Monday morning at $405/mt, similar to Friday.

Benzene

Demand for Asian benzene supply is expected to come from Taiwan and China, with a closed arbitrage to the US despite ongoing May US contract price negotiations.

The extended upstream volatility was seen adding to the confusion in day-to-day trading.

Toluene

The Asian toluene market looks to the strength of China's demand for sustenance in the backdrop of the coronavirus outbreak that has wiped out nearly all demand in Asia.

Demand from China is mainly driven by the need for gasoline blending.

The CFR China toluene marker rose to an April high at $353.50/mt last Friday, a premium of $57/mt above the FOB Korea toluene marker.

Polyethylene

The PE outlook remains dim amid the worsening COVID-19 outbreak and the traditionally slow season during the Muslim holy month of Ramadan that started April 23, sources said.

Although there was a slight support from increased demand of food packaging and medical supplies applications, sources said this was not enough to offset the overall lackluster demand.

Asian PE has fallen to a month low on weak demand amid COVID-19 and the related volatility in crude oil prices.

MEG

Market sources noted that MEG would keep trending in line with crude volatility this week, given that warehouses were already quite full.

Production was smooth, sources noted, as naphtha and ethylene-based MEG units' margins were profitable, observers noted.

Asian monoethylene glycol prices fell $14/mt day on day to $387/mt CFR last Friday as a decrease in both international crude and Chinese MEG futures prices dampened buying interest.

Propylene

Asian propylene is likely to stay stable this week as the emergence of buying among some downstream fiber-grade polypropylene producers is lending support.

On Monday morning, the market indication level for propylene stood at $665/mt CFR China, same as last Friday.

Buying could gain pace as some propane dehydrogenation plants in China, such as Tianjin Bohua, shut unexpectedly last Wednesday and are not expected to restart until H1 May.

Polypropylene

Even though Asian PP market fundamentals are expected to remain bearish this week, there are still support on some PP grades, like fiber for medical supplies and raffia for the impending PP May futures contract settlement, according to sources.

The Chinese prompt raffia PP cargoes were discussed at around Yuan 7,300-7,450/mt ex-works Monday morning, up from Yuan 7,275/mt Friday.

Acrylonitrile

The acrylonitrile market is expected to move weaker even though Zhejiang Petrochemical is postponing the restart of its new 260,000 mt/year plant to the first week of May.

Demand is weak and some downstream orders, such as white household appliances bound for Europe, have been canceled for April-early May cargoes.

CFR Far East Asia ACN was assessed down $80/mt on the week at $930/mt last Tuesday, the lowest since March 8, 2016.