Asia's petrochemical market is expected to hum with activity this week as most Northeast Asian trade participants return from their long holidays. Last week, while Asian aromatics such as paraxylene and benzene rose, buoyed by firmer upstream crude oil futures, other products notably butadiene, plunged.
It remains to be seen if last week's surge in prices would extend into this week in markets such as Southeast Asia. Last week, trading was subdued as market participants preferred to take a wait-and-see stance on China's price movements.
In India, demand was healthy as market participants were heard building up inventories before the Diwali holidays next week.
AROMATICS
Strengthening upstream crude oil futures buoyed most of the aromatics markets last week as both PX and benzene ended the week noticeably higher.
The PX-naphtha spread widened to $329.125/mt Friday, compared to September 28, where the spread plummeted to a near 30-month low of $310.25/mt, S&P Global Platts data showed.
Spot activity was centered on November delivery cargoes as a few sellers who had nominated first-half October as the delivery laycan were facing some resistance from buyers further down the trading chain.
"The reason being cited by our counterparty is that the final buyer in the chain, and the ultimate receiver of the cargo, is unable to receive the cargo during the Chinese National [Day] holiday period in early October," said a trader in one such chain.
Supported by trade activities for November delivery cargoes, PX rose $7.67/mt week on week to 837/mt FOB Korea and $855/mt CFR Taiwan/China.
In benzene, last week's market activity was thin with Northeast Asia mostly out due to long holidays, while the arbitrage window from Northeast Asia to the US Gulf Coast remained closed.
In Taiwan, November talks had quietened down as buyers have mostly covered their requirements before the holiday season.
Yet, trade participants were heard to have slowly returned to the market at the end of last week, amid positive sentiment on the back of firmer crude oil futures and feedstock naphtha. Asian benzene prices were assessed Friday at $795/mt CFR China and $784/mt FOB Korea, up $12-$17.50/mt week on week.
OLEFINS
Limited activity was seen throughout the week in the Asian ethylene market, amid weak sentiment. Spot ethylene demand also retreated as derivatives, notably styrene monomer, fell.
Ethylene supplies were also seen to be normalizing, with a 9,000 mt spot cargo offered from Saudi Arabia earlier last week. A cargo for end-October loading from Thailand was said to have been sold, to be delivered to Northeast Asia. As a result, the FOB Korea ethylene price fell $25/mt week on week decline to be assessed at $1,285/mt, in tandem with weaker CFR Northeast Asia prices.
Butadiene prices sank $220/mt week on week to $1,180/mt FOB Korea and $1,230/mt CFR China on plunging domestic demand. In response to the poor demand, China Petroleum and Chemical Corp., or Sinopec, slashed its ex-works butadiene offers in east China by Yuan 1,200/mt to Yuan 11,000/mt, or $1,389/mt on an import parity basis, effective October 1. This was equivalent to a 9.8% cut.
Also, styrene-butadiene rubber producers' demand was weak on thin demand from tiremakers. But supply for Asia in the coming months could tighten as some European parcels were making their way to the US.
METHANOL, MTBE
Asian methanol markets were muted last week, although more demand was detected for prompt cargoes in comparison to cargoes for mid-November arrival, because of market uncertainty during the Chinese holidays.
MTBE rose $5/mt day on day to $679.50/mt FOB Singapore last Friday on the back of firmer gasoline prices. A Southeast Asian producer commented that demand from China and South Korea was relatively lower compared to last year and was looking at countries within Southeast Asia as export destinations next year, such as Indonesia, Vietnam and Laos.
POLYMERS
Acrylonitrile-butadiene-styrene margins in Asia were holding at a near four-year high, after riding on bullish Chinese automobile demand throughout the third quarter.
ABS spot prices in Asia had fallen below the $2,000/mt CFR China mark in late September on weaker feedstock SM and butadiene prices, and was assessed unchanged week on week at $1,980/mt CFR China on October 4.
ABS margins averaged $290.82/mt in Q3, compared to an average of $164.36/mt in Q2, and just $5.02/mt in Q3 last year, Platts data showed.
With the CFR China ABS spot price below $2,000/mt last week, the arbitrage window from Asia to Europe may re-open in October, based on indicative freight costs of around $100/mt between Far East Asia and Europe, and additional inland freight costs of around Eur20-30/mt.
