Asian aromatics were a mixed bag last week, as methanol and butadiene prices were bolstered by tight supply while paraxylene, ethylene and propylene price movements were capped by healthy supplies. Upstream, feedstock naphtha costs rose $18.125/mt CFR Japan, over the week to $694.375/mt. This week, supply conditions will continue to dictate price movements.
AROMATICS
Asian paraxylene prices ended the week lower as supply for H2 June cargoes were "quite long" amid turnarounds in the downstream PTA market. Due to better netbacks on spot cargoes for June, end-users were also heard to have lowered operating rates and offered their term PX cargoes directly or indirectly to the spot market, which offset the tightness caused by the delay in Middle Eastern arrivals. Ample supplies are likely to continue to underpin trade activity this week, limiting any possibility of a significant price uptick.
Asian benzene prices rose last week, buoyed by persistent H2 June demand for both FOB Korea and CFR China cargo. Bullish sentiment should remain this week as market participants said demand was picking up due to the restart of downstream plants after the completion of scheduled maintenance. In addition, interest for June-loading cargoes was supportive of prices especially with the Asia-US arbitrage window open. The open arbitrage window, together with low imports, firm toluene prices and recent gains in crude oil prices could lift US benzene prices this week.
OLEFINS
Asian Ethylene prices were stable last week and will possibly remain so this week as some reluctance to trade on a fixed price basis emerged given the uncertain demand-supply conditions in the near term. Supplies were heard to be sufficient although the price spread between Europe and Asia was narrowing, standing at less than $80/mt, and the arbitrage window seen closing. On the demand side, demand was healthy as margins for downstream derivatives remained firm.
Asian Propylene prices are also likely to remain rangebound this week, after rising slightly last week, from stronger demand in the China market. This week, however, participants expect spot supply to increase after South Korean producers SK Advance's 600,000 mt/year capacity propylene dehydration plant (PDH) and Hyosung's 500,000 mt/year capacity PDH plant both restarted last week. Consequently, this will cap price increases going forward.
Asian Butadiene prices rose last week on the back of tight supply, and will continue to be supported this week as availability is thin. This is especially so in Japan, where a cargo shortfall had allowed a temporary arbitrage for cheaper Chinese cargoes to Japan.
METHANOL, MTBE
Asian Methanol prices may continue to see support in the near term amid low domestic China port inventories as a result of lower inland Chinese cargoes arriving at the coast, and decreasing imports from the Middle East. However, as Middle East plants return from maintenance and begin ramping up production, supply to China is expected to ease.
Asian MTBE prices soared last week on the back of the higher energy complex and gasoline prices, and will continue to take their cue from the energy complex this week too. Fundamentally, supply is heard to be ample for June cargoes, thereby putting a cap on tradeable premiums to the FOB Singapore marker. - Platts -