Petrotahlil:In Asia, spot ethylene and propylene markets have defied the firming energy markets in the wake of OPEC and its allies’ decision to deepen oil production cuts so far. Prices for both monomers continued to edge down amid worries for supply overhang and poor derivative demand.
Deeper OPEC+ cuts spur crude prices
Global oil benchmarks soared on December 4, supported by the lower crude supplies in the US and prospects of deeper OPEC+ production cuts. OPEC and its allies have reached an agreement to cut oil production by an additional 500,000 b/d at the Ministerial Meeting on December 6.
Spot ethylene fails to follow crude higher
Data from ChemOrbis Price Wizard showed that spot ethylene prices on CFR China basis plunged by $80/ton in the past two weeks. Prices were on an uptrend for more than a month before they moved southwards.
According to data, CFR SEA prices also slumped by $130/ton in the past three weeks, hitting their lowest levels since July.
Spot propylene hits over 3-and-a-half-year low
Propylene prices remained tilted to the downside despite rising energy costs on the back of ebbing demand.
In Asia, spot propylene prices on FOB Korea basis, meanwhile, posted cumulative drops of $130/ton since late September. According to the weekly average data on ChemOrbis Price Wizard, FOB Korea prices hit their lowest levels since May 2017.
Will a possible trade deal boost prices?
The news that the US has signed off on a “phase-one” trade deal in principle with China rattled markets, causing a cautious optimism among players.
Neither the US nor China had made official statements regarding the deal, at the time of press.
This along with OPEC cuts is expected to provide a floor for prices. On the other side of the coin, concerns over sustainability persist as downstream offtake would be sluggish ahead of the Chinese New Year holidays at the end of January.
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