Petrotahlil — The market sentiment in Asian petrochemicals may remain mixed in the week starting Jan. 11.
Overall market sentiment is on a downward trajectory due to the sluggish demand and muted discussion prior to the Lunar New Year holiday. Meanwhile certain markets showed optimistic signs of recovery, spurred by surging upstream crude oil prices. Upstream crude oil market is expected to stay upbeat, driven by an expectation of the US stimulus package and COVID-19 vaccine rollout.
Asian butadiene market would likely to remain bearish in the week to Jan. 15, after hitting a three-month low on Jan. 8, as supplies continue to normalize.
Market participants eye a planned restart of LG Chem's butadiene unit in Yeosu, South Korea on Jan. 16. The butadiene unit is able to produce 145,000 mt/year.
The China propylene market is likely to see a further erosion during the week given ongoing weak polypropylene prices, and Chinese buyers are eyeing cheaper domestic materials which are growing in abundance.
FOB Korea however, is receiving some support as producers noted that Eneos is likely to delay the startup of their cracker till end of January. Korea is a major exporter of propylene to China and Korea.
China 2-ethyl hexanol import prices is poised to dive further in the week, after the government in Shandong province, a major production region, relieved the previous curbs on production and transportation of 2-EH in a bid to combat air pollution in December. The 2-EH CFR China marker was assessed $1,320/mt CFR China Jan. 7, down $125/mt week on week.
The acrylonitrile market is likely to stay firm during the week as ongoing planned turnaround by production majors are likely to lend support. Taiwan's largest ACN producer Formosa Plastics Corp. shut its 280,000 mt/year ACN plant in Mailiao for around four weeks of maintenance from Jan. 8.
Firm sentiments in the Asian PX market will likely stay in the week that started Jan. 11 on signs of tighter supply-demand and upcoming new downstream PTA plants while continuing to take directional cues mainly from upstream oil markets, said sources.
However, sources noted China's PTA oversupply and concerns over its production margins on RMB basis as PX surged in the week ended Jan. 8 although PTA futures saw similar uptrend in the same period due to rising feedstock prices, further boosting sentiments in PX market.
Port and laycan declarations for February-delivery paraxylene cargoes are expected to be concluded later in the week.
With the Lunar New Year holidays starting in mid-February in China and other Asian countries, demand and market activity is expected to remain sluggish in China, and although MX prices on an FOB Korea basis have risen to a 10-month high last week, domestic MX prices in China have been lagging the rise so far.
Downstream paraxylene prices are likely to remain a key determinant of MX price direction during the current week, similar to the week before.
Asian MTBE FOB Singapore price recovered to near 10-month high at $540.50/mt on Jan. 8, driven by firmer crude oil and the gasoline markets. Thanks to the development of the COVID-19 vaccine as well as the recovering emerging economies and the following resurgence of the gasoline blending demand, market outlook in the coming weeks remain optimistic. Upcoming Lunar New Year festive demand reinforced the upbeat sentiment additionally. However, there are still some uncertainties and bearish sentiment, which is likely to weigh on the MTBE price after the festive season.
Crude-led strengths had tugged the Asian toluene market to start this week on higher grounds, but fundamentally, demand for the aromatics product remained relatively muted. Outflows of more toluene materials in the Northeast Asia region had certainly placed more weights to the supply scale while demand was mainly stemming from stable requirements from India.
Outlook in the Asian solvent-MX market appeared unchanged, with expectations among participants that strengths from the isomer mixed xylenes market would be spilled over to the solvent-grade sector. Participants said switching to a higher premium isomer-grade mixed xylenes would be less feasible given the higher prices of the latter grade. Much of the trade momentum would hinge largely on solvent buyers' requirements for February.
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