News Code : 44663

Petrotahlil — The direction of the crude oil and naphtha markets as well as the impact of the COVID-19 pandemic continue to dominate discussions in the Asian petrochemical markets as participants view them as key indicators of how petrochemical markets will perform going forward, sources said.


Asian paraxylene market remained snug for August-delivery amid expectations of cuts in operating rates. The subsequent months would be focused on the rebalancing of the PX and PTA supply-demand dynamics and production margins, multiple sources said.

Mixed xylenes prices continue to weaken as demand from China has slowed, with east China inventory hovering above 110,000 mt this week. The unusually narrow MX-naphtha spread was partially due to a firm naphtha, but also due to weakening fundamentals in the MX market, with supply increasing due to run cuts at downstream paraxylene plants, slowing demand from China's gasoline sector as well as ample supply, market sources said.


The outlook for PE is also bleak with around 2 million mt/year of new plants expected to start up by the end of 2020, although some may be delayed until 2021, sources said.

Market participants said there were no shifts in demand or supply centers following the pandemic, except that demand deficits were smaller. Demand from packaging, consumer and healthcare sectors were faring better, while demand from other plastic sectors were still weak due to lowered spending.

Monoethylene glycol

Some MEG end-users do not expect the current uptrend to last given that global demand for polyester was weak due to the COVID-19 pandemic. Sellers prefer to take a wait-and-watch stance, and inventories were reported to be at a relatively high 1.4 million mt.


The propylene market is likely to stay supported as the resilience in replenishing needs will underpin the strong spot market.

Supply for propylene in eastern China is reportedly tight after MTO operator Nanjing Chengzhi was heard to have shut its plant for maintenance.

Supply from South Korea was tight after S-Oil had shut their No. 2 steam cracker earlier in the month, and this limited spot materials for China.


The acrylonitrile market is likely to trend higher this week amid stronger downstream demand. The ABS plants in China were reportedly running at full rates and demand for acrylonitrile is resilient.

Zhejiang petrochemical is on track to start their new 260,000 mt /year plant this week.


Chinese methanol prices appear to have bottomed out as tightness in tank storage eased and trade sources reported an improvement in domestic demand. Imported cargoes are expected to be discussed higher for August deliveries, but the upside could be capped by oversupply and delays at East China's ports to discharge cargoes.

Purified Terephthalic Acid

Market fundamentals are generally bearish amid expectations of rising supply and high PTA stocks in China.

Trade participants are eyeing Hengli Petrochemical's new No. 5 PTA line at Dalian, which is expected to come online in end-June or early-July, Platts reported previously.

Trade participants are likely to remain cautious after upstream paraxylene surged $63.67/mt week on week to $578/mt CFR Taiwan/China on June 19, squeezing the PTA/PX spread to more than a three-year low of around $60.63/mt, Platts data showed.


Limited spot offers from the Middle East and the upcoming maintenance in Southeast Asia are expected to continue supporting Asian polypropylene prices in the week starting June 22. However, the CFR Fareast Asia PP marker seems to be facing some resistance in breaching higher ground and has been hovering around $890/mt in the week ended June 20, after rising more than $200/mt since May.

Some Asian trade participants are still concerned about weak and uncertain demand, as well as the upcoming new PP startups in Q3.




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