Petrotahlil - Some North Asian countries will close as early as Thursday, with market participants returning only in the middle of next week.
Ports in China will also close over the holiday, leaving concerns of congestion before and after the festivities, as vessels will have queued to load or offload material, which may result in shipment delays.
Benzene is expected to continue trading in a range this week, having done so for most of last week.
The open arbitrage window between North Asia and the US remains closely watched, with prices in the US having risen notably since the beginning of the month, supported by stronger European prices and tight domestic supply.
Benzene availability in the US has been constrained by a reduction in imports from South Korea, with less than 110,000 mt having loaded in November 2019 and December, and just under 7,000 mt loading during the first 10 days of January, down from just over 118,000 mt in September.
The price spread between forward month DDP USG and FOB Korea stood at $64.34-$82.28/mt last Friday, which is more than sufficient to cover both term and spot freight levels.
The arbitrage is likely to stay open on paper this week, potentially supporting demand for Asian benzene cargoes.
The same bullishness, however, is not expected for paraxylene this week, in light of last week's lack of clear direction and steady prices.
Market sources noted no significant change in supply-demand fundamentals with the market structure likely to remain flat.
The near-term outlook remains bearish, given the narrow margins of both PX and PTA producers in the current price environment.
Spot prices of olefins such as ethylene, propylene, and butadiene may continue to rise this week, as supplies of cargoes from both East Asia and Northeast Asian are expected to be limited, on the back of lower steam cracker operations and plant shutdowns in the region.
Furthermore, with US ethylene ethylene prices falling last week, and the Europe-Asia butadiene arbitrage window closed on paper, there may be limited opportunities for deepsea supply to move to Asia.
Last week, derivatives of ethylene such as monoethylene glycol saw its market structure flip, with the forward market likely to remain in backwardation ahead of the start up of new plants.
In prompt pricing however, stocks could accumulate to around 150,000-200,000 mt over the coming weeks, as downstream textile producers shut operations during the Lunar New Year holidays.
The polystyrene markets, including general purpose PS and acrylonitrile-butadiene-styrene, have witnessed prices move in line with that of upstream styrene monomer.
While producers noted fewer orders this week, ahead of the Lunar New Year holidays, several had raised prices in line with the climb in styrene prices.
While trading post-holidays could still stay thin within key markets like Taiwan and China, market participants were reportedly optimistic of a pick up in demand due to restocking.
In the Chinese polyester market, operating rates were last heard to have been cut to 75% of overall capacity, with most downstream textile producers shutting operations for the Lunar New Year holidays, resulting in lackluster demand and rising stocks in the upstream purified terephthalic acid market in both Northeast and Southeast Asia.
Nevertheless, Asian PTA producers did not want to compromise on profit margins and had chosen to either cut production or hold cargoes at, on expectations that PTA prices would improve post-holidays in February.
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Source : Platts