Singapore — Activity in the Asian petrochemical market is expected to pick up this week after the week-long National Day holiday in China, with demand set to emerge in some segments due to restocking requirements, market sources said.
However there are holidays this week in Japan on Monday and Taiwan on Wednesday, and some participants are absent from the market as they are attending the 52nd European Petrochemical Association conference in Vienna over October 7-10.
OLEFINS
Discussion is expected to pick up this week for ethylene in Asia amid softening spot prices in both Northeast and Southeast Asia. "Chinese buyers may need to procure for restocking when they come back, but this is still uncertain," a buyer in Southeast Asia said.
Margins for naphtha and downstream polyethylene were hovering at healthy levels for integrated producers, market sources said.
However the Asian butadiene market was expected to remain bearish amid poor margins for downstream acrylonitrile-butadiene-styrene makers. Across Asia, there is little firm buying interest seen, particularly as most ABS makers continue to lower plant operating rates. Asian traders are finding it tough to get buyers outside of China, with some traders even considering selling to the US given the weak prices in Asia, market sources said.
AROMATICS
Market participants are anticipating a post-China holiday pickup in demand this week, although there was uncertainty around whether this could support benzene prices. Demand from Southeast Asia will likely remain thin as November requirements have been concluded. Some demand was heard from Middle Eastern buyers, which could potentially help ease the oversupply in Asia, market sources said.
A number of Asian paraxylene market participants are attending an industry conference in Europe this week and long term contract negotiations for 2019 are expected to start there. More PX supply is expected to be added to the supply pool going forward as Indonesia's Trans Pacific Petrochemical Indotama or TPPI restarts its aromatics complex at Tuban in East Java, which has been shut since May 2014.
POLYMERS
Sentiment is expected to remain bearish in the spot Asian polypropylene market this week amid weak downstream demand. Despite upstream propylene costs increasing and the energy complex reaching multi-year highs, PP end-users said downstream demand was not strong and they would not want to pay more. Production costs in Asia have risen by up to 19% due to the uptick in naphtha prices, producers said.
It is low demand season in the Asian polyethylene terephthalate market and sentiment was expected to remain bearish this week. Spot buying appetite was limited amid off-peak season for PET resins. Based on prevailing spot PTA and MEG feedstock prices, Northeast Asia's PET margin stood at minus $34.80/mt Friday, and for Southeast Asia at minus $35.20/mt.
INTERMEDIATES
Asian caprolactam spot prices were expected to be bullish this week amid tight supply in the leadup to peak demand season in winter.
In Taiwan, prompt demand was heard to be rising, resulting in dwindling inventories for producers and more imports from Europe, Japan and South Korea to keep up with demand, one producer said. On the buy side, downstream nylon and yarn demand have further driven up demand, with operating rates at healthy levels.
Buying indications from end-users were expected to be lowered this week amid weaker sentiment downstream in the poly vinyl chloride market. US cargoes were heard coming into Asia due to inventory tax regulations in the US, sources said.
"With the US-China trade war, most of the cargoes are now coming into Taiwan," a Taiwanese buyer said. A Japanese trader noted that even though demand was stable, many buyers were waiting on the sidelines for producers to lower their offers.
