Market sentiment is upbeat, providing room for prices of selected petrochemicals to post strong increases, aided by gains in upstream crude markets.

A strong recovery in demand, however, is still out of the question amid the coronavirus pandemic.

Spot prices of naphtha, the main feedstock for petrochemical production in Asia, rose to a near three-month high on Wednesday at $349/tonne CFR (cost & freight) Japan, buoyed by healthy prompt-month demand, tracking movements in global crude futures.

Brent crude was trading at above $40/bbl on expectations that OPEC and its allies will extend their output cuts in the next one to three months in view of weak demand.

For ethylene, current prices in northeast Asia are at a 14-week high on the back of restocking activity in China and Taiwan amid tight supply for June and first-half July delivery cargoes.

At midday, spot prices stood at $710/tonne CFR (cost & freight) NE (northeast) Asia.

In the monoethylene glycol (MEG) market, sellers hiked offers to $435-440/tonne CFR CMP (China Main Ports) on the back of rising crude and naphtha prices but high inventory at Chinese ports dampened buying appetite.

Bids were at $430-432/tonne CFR CMP, with sporadic deals were heard done at $432-435/tonne CFR CMP, sources said.

The price spike was largely cost-driven, amid elevated prices of feedstock ethylene, while overall demand from downstream polyester industry has yet to recover.

Rising ethylene values was also supporting the ethylene vinyl acetate (EVA) market, which was experiencing increased buying enquiries following easing of lockdown measures in most of Asia.

But the market outlook is clouded by concerns of longer supply as new capacities will come on stream in China in the third quarter.

In the methyl tertiary butyl ether (MTBE) market, spot prices posted strong gains for three consecutive trading sessions to hit their highest in nearly three months on 2 June.

For polyvinyl chloride (PVC), spot demand for June-loading cargoes in southeast Asia has improved, while in China, domestic prices for both carbide- and ethylene-based material remained supported as downstream manufacturing activities have recovered in the country.

Manufacturing data out of China showed three consecutive months of expansion, although with some weakening from the initial spike in March, coming from a record low in the previous month.

China, from which the novel coronavirus outbreak started late last year, was first to place its cities under lockdown from late January to contain the deadly flu-like virus, and consequently, the first to emerge from the economically paralyzing measure.

The rest of Asia, including India, Singapore, Malaysia, Indonesia, the Philippines, implemented different modes of lockdowns sometime in March and April, which were extended up to the end of May.

Japan’s state of emergency was in effect from early April up to mid-May for most of the prefectures, with full lifting done on 25 May.