Petrotahlil - Asian petrochemical markets will likely remain subdued this week as the escalating coronavirus pandemic in the US and Europe continues to cloud the global demand outlook.
The FOB Korea benzene market plunged to an 11-year low of $318/mt Friday, down $105.33/mt week on week, in an aggressive sell-off on growing fears of a global recession. Sharp declines in benzene feedstock demand from styrene monomer makers and a closed Asia-US benzene arbitrage weighed heavily on benzene market fundamentals.
In the Asian toluene market, extended firm offers for physical cargoes loading in H2 April from South Korea sent strong signals that demand was fading. May ICE Brent crude futures kicked off trading Monday in the range of $23/b, prompting a pessimistic reaction from toluene market participants in offering cargoes. Two physical toluene cargo offers for H2 April-loading cargoes on an FOB Korea basis had already been heard at $300/mt and $310/mt at 0130 GMT Monday. Toluene demand has been crippled globally by shutdowns and weak gasoline requirements and was expected to weaken further this week.
Isomer-grade mixed xylene prices could also see more downward pressure this week as Chinese refineries were expected to increase run rates to capitalize on low crude oil prices, which may lead to increased production of MX along with other aromatics products, market sources said.
"Sinopec will increase their operating rate, the market will be oversupplied," an MX trader in China said Friday.
Asian styrene monomer was expected to remain bearish this week amid a dearth of upstream pricing support and a domestic supply glut in China, after falling last week on plunges in crude oil and benzene prices and as logistical constraints slashed global demand. Some sources said non-integrated producers were cutting operating rates or shutting for maintenance as demand from downstream polystyrene and ABS makers waned amid widespread lockdowns.
Asian methanol prices could face further downward pressure this week amid tight tank storage space in China and an influx of cargoes to the region. India's 21-day nationwide lockdown from last Wednesday has prompted an uptick in spot offers from Middle Eastern suppliers for deliveries to China, Taiwan, South Korea and Southeast Asia. Port operations in India continue normally, although a shortage of port workers and trucks has impacted efficiency, trade sources said.
Participants in China's polyethylene supply chain said they were packaging and moving goods normally amid the global coronavirus pandemic, although they expect export demand for finished goods to be very weak. Asian PE prices were lower due to weak demand as downstream operations were pared back due to COVID-19, and some traders looking to export cargoes to Asia were grappling with a shortage of containers.
The Asian polypropylene market was expected to remain under pressure this week amid slowing demand and aggressive offers from Southeast Asia and South Asia to China. Market sentiment was bearish and buyers were largely remaining on the sidelines due to falling prices. The increasing PP demand for medical, healthcare and packaging applications was failing to support PP prices as it was outpaced by weak demand for many other applications like automaking, market sources said.
Demand destruction was being seen along the entire polyester chain in Asia, including pressuring Asian purified terephthalic acid prices lower. India's 21-day nationwide lockdown has almost put a stop to PTA demand in India and Northeast Asian producers were under pressure to adjust operations to manage rising stocks.
The outlook for monoethylene glycol was bleak with demand remaining elusive amid nationwide lockdowns. Coal-based sellers in particular were under pressure. Asian prices were at record lows Friday amid demand destruction caused by coronavirus containment measures and low crude prices.
The Asian ethylene market was set to remain under pressure this week amid sluggish demand due to the coronavirus pandemic and strong deepsea selling interest. Selling interest in Northeast Asia will compete with ample offers from the US, Europe and the Middle East, but trades are likely to be limited as buyers strive to keep inventories low. The CFR Northeast Asia price hit an 11-year low at $540/mt last Friday, down $50/mt week on week.
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