Asia petrochemicals drift in quiet trade as NE region goes on holiday

SINGAPORE (ICIS)–Spot petrochemical trades in Asia were largely muted at the start of October as most of the northeast region was on holiday.

Before going on a long holiday, China delivered upbeat September manufacturing data, which could buoy up overall sentiment upon players’ return a week later.

Economic data from other countries in Asia, however, calls for a more cautious market outlook.

The slowdown in market activity for some petrochemicals started in the weeks leading to the holiday in China, limiting price movements.

At midday, spot daily prices of toluene, ethylene and propylene were stable from the previous day amid muted discussions, with not much movement in upstream crude futures.

The Chinese markets are closed up to 8 October for the Mid-Autumn and China National Day holiday, while the South Korean and Taiwanese markets are shut up to 4 October for their respective holidays.

Manufacturing data from China were encouraging as its official September manufacturing purchasing managers index (PMI) inched up to 51.5,  remaining above 50 for the seventh consecutive month which meant continued expansion.

Based on a private survey by Chinese media group Caixin, the September manufacturing PMI for China was 53, higher than the official number but slightly lower than its August reading.

Japan’s September manufacturing data, however, remained in contractionary territory although the PMI number at 47.7 has improved from the previous month.

In the ethylene market, spot prices in northeast Asia were stable on Thursday at $870/tonne CFR (cost and freight), after rising to their highest in more than three months in the previous week.

Spot prices had been driven up by shortage of October-arrival cargoes due to plant shutdowns and higher downstream operating rates in South Korea and Japan.

The supply crunch in southeast Asia has also drawn cargoes from the Middle East and Europe which might otherwise have gone to China.

In the butadiene (BD) and downstream styrene butadiene rubber (SBR) markets, spot discussions were scarce as players switch to holiday mode.

“The BD market is very quiet this week with hardly any discussions,” a trader said.

China’s imports of SBR have largely tapered down as downstream tyre makers have mostly covered their October requirements.

“The tyre makers in China … are not in a hurry to lock in November requirements given the unclear outlook,” a Chinese synthetic rubber producer said.

For phenol, spot discussions and deals were done on a formula basis with the market failing to sustain last week’s gains.

In the bisphenol-A (BPA) market, spot discussions were few due to uncertainty in supply conditions after the holidays.

Market players expect Zhejiang Petrochemical’s BPA unit in China to come on stream this month, while  Kumho P&B is scheduled to shut its plant in South Korea for a turnaround from mid-October to early November.

In the polycarbonate (PC) market, spot trades were limited as most buyers had replenished inventories ahead of the holiday.

Supply is expected to improve post-holiday as plants restart from turnarounds, which will likely be accompanied by a slight pick-up in spot activity.

For isomer-grade mixed xylenes (MX), market sentiment was bearish amid ample inventory and expectations of low demand after the holiday.

In the melamine market, buyers were opting to wait until after the holidays before discussing spot export cargoes from China.

Available supply in the market just increased with the restart of Xinji Jiuyuan’s plant in late September.

For titanium dioxide (TiO2), some sellers have stopped offering cargoes from China and will make new offers after the holidays.

In the polyvinyl chloride (PVC) market, a number of carbide-based and ethylene-based producers in China have secured export shipments for October ahead of the holidays, filling in a global shortfall caused by recent global supply shortages amid production outages in the US and Europe.

For epichlorohydrin (ECH), domestic prices in China have weakened for a second week as buying tempo has started to wane from mid-September.

Spot ECH prices in east China closed on 29 September at an average of yuan (CNY) 10,300/tonne DEL (delivered), down by CNY750/tonne from two weeks ago, ICIS data shows.

For phthalic anhydride (PA), imports into China practically grind to a halt, with “nary an enquiry,” a northeast Asian PA maker said.

Spot PA prices held steady at an average of $620/tonne since mid-September, ICIS data shows.

Focus article by Pearl Bantillo

Interactive by Nurluqman Suratman

($1 = CNY6.79)

Photo: Colorful lanterns celebrating the Mid-Autumn Festival in Zhouzhuang, Kunshan City in China’s Jiangsu Province – 28 September 2020. (Source: Xinhua/Shutterstock)

Additional reporting by Helen Yan, Joson Ng, Julia Tan, Jonathan Chou, Ai Teng Lim, Keven Zhang, Angeline Soh and Yeow Pei Lin

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