The Asian petrochemical markets were a mixed bag Wednesday despite crude tumbling in late afternoon trading as the hotly contested US election saw Donald Trump winning the race for the White House.
Typically, lower crude and petrochemical feedstock prices have a mirror effect on petrochemical prices. But on Wednesday, some petrochemical markets fell, some saw participants remain on the sidelines waiting for more clarity in direction, and yet others shrugged off the US elections all together letting bullish fundamentals take lead in driving up activity.
ASIAN BENZENE, POLYPROPYLENE TRACK CRUDE LOWER
Benzene prices fell along with crude, with the FOB Korea benzene market dropping $4/mt from Tuesday's assessed level to $665/mt at the 0730 GMT afternoon pegs in Asia amid thin discussions as participants held back to observe crude futures.
While benzene prices tracked crude lower, it was still too early to predict how the election results will impact Asian benzene exports to the US, sources said.
A source added that some open positions on benzene were closed earlier this month, ahead of the uncertainty surrounding the elections.
Like benzene, Southeast Asian polypropylene raffia grade prices were also weaker following crude, with deals in Vietnam heard at least $10/mt lower from last week, a market participant said.
Last week, the CFR Southeast Asia marker was assessed at $1,030/mt, but latest deals concluded were heard lower at $1,020/mt amid the earlier uncertainty regarding elections.
A Vietnam-based source said he expected PP raffia prices to fall further following Trump's victory. In India, a trader said: "There is a negative impact on the financial markets ... Commodities [will] also go down. That's what everybody is expecting. But it will still [depend] on supply and demand [fundamentals]."
ASIAN PARAXYLENE, MTBE, PVC STAY UNCHANGED
The Asian paraxylene was quiet with participants staying on the sidelines, awaiting a clear direction.
The direct impact on the market following the declaration was "quite minimum," a PX trader said. It all depended on how crude would swing, he added.
Asian PX was up $2.30/mt from Tuesday's assessed level, at $795.80/mt CFR Taiwan/China in the afternoon pegs at 0726 GMT Wednesday, but the contango between December and January was seen widening $1/mt to $7/mt.
In polymers, the polyethylene market was quiet Wednesday, with participants waiting for a clearer outlook.
"A negative impact could be seen next week, as people are holding back from trading [today]," said another source based in China.
Asian MTBE traders also decided to remain on the sidelines amid crude uncertainty and overall weakness in the financial and commodity markets. Trading activity and tender participation levels have dropped. However, fundamentals remain the key in MTBE, with focus on major tenders coming up.
Market sources in the Asian PVC said the current strength may be capped due to plunging Western crude oil futures. But at the same time, sources said prices would not come down by much as the current market was driven by a supply crunch, especially in China.
ASIAN STYRENE, TOLUENE, MEG, CHINA PP SHRUGS OFF CONCERNS
Most aromatics, however, rose on the back of strong fundamentals.
Asian styrene prices were largely stronger Wednesday amid low China inventories and rising domestic prices.
The domestic SM price in China was up Yuan 100/mt, or $14.75/mt, to around Yuan 9,450/mt Wednesday.
Although styrene inventories in East China rose week on week to about 55,000 mt, the level was still lower than the typical 100,000 mt, sources said. A market participant said the China market was "one of the tightest markets," currently.
Asian toluene prices also rose, rising $7/mt from Tuesday's assessed levels to $615/mt FOB Korea and $638/mt CFR China in the afternoon pegs at 0730 GMT, as supply remained tight in South Korea and inventory levels in East China dropped.
Trading, however was subdued with most participants waiting for a clearer direction on crude.
The Asian monoethylene glycol market also did not see much movement following the election results but futures trading was active.
The January MEG futures on the Huaxicun Commodity Exchange had gained through the week, pushing physical prices higher to $700-$712/mt CFR China for second-half November and first-half December loading cargoes.
Some traders had taken long positions in anticipation of more cash injections next year when state-owned Dalian Futures/Commodity Exchange start trading MEG futures officially.
Chinese polypropylene prices remained well supported with the futures market still strong. The actively traded January 2017 contract on the DCE closed at Yuan 8,808/mt Wednesday, surging Yuan 380/mt week on week, according to DCE data.
"The US results will impact commodity markets and we expect some impact on the Asian PP markets as well. But for now, looking at the PP futures, it is yet to be seen as the futures are soaring ... the impact will likely come in tomorrow or several days later," a China-based trader said.
