21 January 2009 05:23 [Source: ICIS news]
By Bohan Loh
SINGAPORE (ICIS news)--Asian petrochemical players are pinning their hopes on a possible recovery in February as buyers re-stock after the Lunar New Year holidays, market sources said on Wednesday.
The Lunar New Year holidays, typically celebrated throughout northeast and southeast Asia, will start on 26 January and could last two to three weeks in certain countries like ?xml:namespace>
Restocking activities are expected to resume in February in line with seasonal expectations. For styrene monomer, a relatively low volume of trades in January suggests that SM derivatives producers could commence building up inventories after the holidays.
According to data compiled by CBI China, approximately 59,550 tonnes of SM had been traded in the key
Furthermore, increased economic activity in the spring would revive demand from certain sectors such as construction.
Benzene prices rebounded in the past two weeks from the low levels of $300/tonne (€234/tonne) FOB (free on board)
Asian base-oils sellers also remained cautiously optimistic about a revival in Chinese demand after the holidays.
"We hope that the Chinese buyers will return after the holidays and start buying as inventories have been reduced in the past few months," said a northeast Asian base-oils trader.
"There have been a few more enquiries lately as customers seem to have drawn down stocks," said a Korean producer.
However, there was no denying that the underlying demand for industrial and marine lubricants would continue to be weak in the coming months and limit any rebound in volumes or prices, said several market players.
For basic chemical building blocks like olefins, the opposite holds true as inventories were purchased ahead of the Lunar New Year.
“The (olefins) market might see a short-term correction downward in northeast Asia, as it sounds like most of the customers there are filling up (inventories), so they may take a couple weeks to wind down inventory,” said a Singapore-based olefins trader.
Indeed, propylene spot prices have come off recent highs with offers of propylene down by $50-80/tonne on the low end to $550/tonne CFR China due to deep sea cargoes.
For downstream polyolefins such as polyethylene (PE) and polypropylene (PP), similar concerns of falling prices in the post-holiday period were expressed by sellers as most regional producers were expected to resume normal production levels.
The demand outlook for plastic finished products remains bearish due to the global economic downturn, Chinese traders said. Asian polyolefins producers had cut production since the fourth quarter last year due to weak demand.
Some Chinese traders were concerned that a large volume of imported polymers would arrive in
In the case of ethanol, the outlook was also generally of weaker pricing and demand.
"The industrial demand for ethanol has shrunk even though the beverage demand is still stable," said a regional ethanol trader.
“This will keep downward pressure on prices despite the fact that the world’s largest ethanol exporter,
Players in the regional bisphenol-A (BPA) markets were resigned to the belief that the unusually large amount of spot deals for materials from Korea and
At least 10,000-15,000 tonnes of spot material from northeast Asia were set to arrive in the ports of east
Pessimism among regional producers was also deepened by expectations for continued weakness in the downstream polycarbonate and epoxy resins sectors as a result of the global credit crunch and economic downturn.
Keny Jin from CBI China, Anu Agarwal, Steve Tan, Chow Bee Lin and Jeremiah Chan have contributed to this article.
($1 = €0.78)
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