SINGAPORE (ICIS)--Spot prices of some petrochemicals in Asia spiked on Tuesday with crude prices trading at near four-year highs ahead of the re-imposition of US sanctions on Iran next month.Part of Pardis petrochemical complex facilities in Asaluyeh, Iran. Photo released by official website of the office of the Iranian Presidency (Source: Uncredited/AP/REX/Shutterstock)
Market reaction, however, was partly muted by the absence of buyers in the key China market amid a week-long holiday in the country.
At midday, spot prices of petrochemical feedstock naphtha were up $19/tonne from the previous day at $749.50/tonne CFR (cost & freight) Japan.
Benzene gained $12/tonne to $880.50/tonne FOB (free on board) Korea.
But benzene’s recent spike has not affected downstream sectors such as styrene monomer (SM), phenol and caprolactam – all of which continued to enjoy strong margins and profitability.
Brent crude was up 4 cents at $85.05/bbl, while WTI rose 22 cents at $75.52/bbl on Tuesday noon, after surging by more than $2/bbl overnight.
Crude prices are near their highest levels since November 2014.
“Crude oil and naphtha prices are all up, so it is unlikely that BD [butadiene] will drop further,” a trader said.
Regional BD prices have fallen by about 23% since 24 August to $1,350/tonne CFR NE Asia in end-September, ICIS data showed.
In the toluene market, prices were steady despite upstream gains and a narrower naphtha-toluene spread in the paper market, due to limited spot trading liquidity in the absence of Chinese buyers.
China is on a week-long holiday for its National Day celebration, also called a Golden Week (1-7 October).
In the ethylene market, sentiment was weighed down by ample supply of regional and deep-sea cargoes due partly to downstream production issues in this region.
Crude prices have been rising on concerns over the potential loss of supply from Iran, a major crude exporter, when the US sanctions hit on 4 November.
The $2/bbl gain on Monday was partly fueled by a positive sentiment generated by the renegotiated trade agreement between the US, Mexico and Canada.
Strong crude prices have been boosting buying appetite in the isomer-grade xylene and paraxylene (PX) markets.
Regional isomer-grade xylene prices increased by $8/tonne on 1 October from 28 September on the back of firmer crude prices.
The market typically tracks the movement of downstream paraxylene (PX) and upstream crude prices.
For PX, some market participants have adopted a cautious stance with no clear direction from downstream markets in China.
Discussions for December PX shipments on Tuesday morning were higher at $1,328-1,345/tonne CFR Taiwan and/or China Main Ports, compared with a deal done at $1,310/tonne CFR Taiwan and/or China Main Ports on 1 October.
Producers in the downstream polyethylene terephthalate (PET) are facing squeezed margins amid spikes in upstream crude prices, which drive up costs of feedstock purified terephthalic acid (PTA) and upstream PX.
PET makers are already looking at very narrow spread over feedstock prices and are grappling with a seasonal slowdown in demand.
Focus article by Pearl Bantillo
Additional reporting by Helen Yan, Helen Lee, Clive Ong, Trixie Yap, Samuel Wong, Hazel Goh and Yaw Min Jie