News Code : 43816

Asian petrochemical markets are expected to trade higher this week amid rising tensions in the Middle East, after the US killed Iran's top general and an Iraqi militia leader in an air raid at Baghdad international airport last Friday.

Petrotahlil :Trade sources said the spike in oil and petrochemical prices would likely be short-term, barring an escalation into a war.

AROMATICS

Asian paraxylene has been on an uptrend lately on the back of supply tightness from production cuts due to weak margins, and firm spot PX demand amid slow term contract negotiations. Firm crude prices due to growing geopolitical tension in the Middle East is likely to push PX prices further. However, market participants said that the effect on crude oil prices would likely be a "temporary" one. Meanwhile, discussions are also expected to pick up as the market returns from the holiday season.

A recent lull Chinese demand coupled with lowered runs at several Asian paraxylene plants, the isomer-grade mixed xylene market may continue to see overall sluggish demand this week. Firm upstream prices caused by Middle East tensions are likely to push MX prices higher in the short term, but it may also put margins under some pressure. Isomer-MX prices rose $8/mt on the week at $700/mt FOB Korea and up $4/mt at $720/mt CFR Taiwan Friday, according to S&P Global Platts data.

Asian toluene prices are expected to be bullish this week on the back of higher crude oil price amid rising tensions in the Middle East.

The FOB Korea toluene marker will likely reach a new high. It was assessed at $690/mt on Friday's Asian close. It was last higher at $690.50/mt on December 30 and $693/mt on September 17, 2019, Platts data showed.

Market sources said toluene spot requirements have increased with buyers in Southeast Asia still on a lookout for January-loading cargoes.

OLEFINS

The ethylene market in Asia is likely to be firmer this week after a quiet trading session last week. CFR Northeast Asian prices were steady on the week at $750/mt CFR and flat on the week at $670/mt CFR Southeast Asia Friday. Naphtha feed cracker operators in Asia may suffer more margin pressure as naphtha and crude price soar, and this will ultimately lead to higher ethylene prices in Asia. Meanwhile, demand is expected to emerge this week as planned turnarounds in Asia kick off this month.

The propylene market in Asia is likely to trend higher this week as more propane hydrogenation, or PDH, plants shut down in China and lower operating rates among Korean steam crackers lend support. The recent price hike for propane feedstock is also likely to firm up price for propylene price in China.

The CFR China marker moved up $30/mt last week to hit $840/mt Friday. Market participants were bullish that the price would hit over $850/mt by the end of this week as tighter spot availability will see buyers moving up their bids to secure propylene feedstock.

POLYMERS

The Asian polyethylene market is likely to gain some ground this week, amid expectations of tighter supplies following production cuts. In plant news, Thailand's PTT Global Chemical unexpectedly shut one of its three steam crackers at Map Ta Phut last week due to power supply glitch, a company source said.

"An external utility supplier to PTTGC blacked out last night, leading to the unplanned shutdown of olefin cracker 1 MTA and a slowdown at downstream LLDPE [linear low density polyethylene], LDPE [low density polyethylene unit], glycol and phenol units," the source said. PTT Global Chemical has three crackers at the complex, each with an olefins production capacity of 1 million mt/year.

Downstream, it has two 400,000 mt/year LLDPE units, a 300,000 mt/year of LDPE unit and a 395,000 mt/year monoethylene glycol unit at which operating rates have been lowered. Two 400,000 mt/year high density polyethylene units have been shut since early December for scheduled turnarounds.

While market direction remained weak in China for polypropylene, Indian demand for raffia bags manufacture is expected to increase with restocking, traders said. However, Asian supply is expected to remain tight, as Malaysia's Lotte Chemical Titan plans to shut its 480,000 mt/year polypropylene facility for around two to three weeks of maintenance at Pasir Gudang, during the planned turnaround of its No. 2 naphtha-fed stream cracker starting from March, a company source said.

INTERMEDIATES

Asian monoethylene glycol stocks continue to remain on the low side, with east China's inventories falling 51,000 mt from last Thursday to around 445,000 mt Monday, a source said.

Trade participants are closely monitoring the status of Zhejiang Petrochemical's new 750,000 mt/year MEG plant, which is slated to start up in the second half of January. The company's upstream 1.4 million mt/year ethylene cracker was under testing, Platts reported earlier.

For purified terephthalic acid, the overall Chinese PTA stocks are estimated to be 1.4 million-1.5 million mt, enough to meet around 12-day demand, a source said Friday. Physical spot trading discussions are expected to remain limited this week due to large bid-offer spread.

In downstream, the overall operating rate of Chinese polyester sector has dropped to 81% of total capacity Friday, and is expected to continue falling this week as the market winds down to celebrate the nation-wide Lunar New Year holidays, sources said last week.

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Source :Platts

END 

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