China petrochemicals lead Asia gains on strong crude, US supply disruptions

SINGAPORE (ICIS)–China’s petrochemical trades were brisk upon re-opening on Thursday after a week-long hiatus, leading gains in key Asian markets amid surging crude prices and US supply disruptions.

Prices in the Chinese commodities futures markets surged on the first trading day after the Lunar New Year holiday, with styrene monomer (SM) logging an 11% spike at the close of trade, largely on concerns over tight post-holiday supply.

Prior to the holiday, domestic petrochemical trading had been robust accompanied by sharp price increases as market players anticipated strong post-holiday demand.China’s markets were closed from 11-17 February for the Lunar New Year holiday, with seasonal shutdowns of downstream plants largely expected to be shorter this year given pandemic-related travel curbs in the country.

Surging oil prices caused by massive refinery shutdowns in the US amid freezing temperatures in Texas provided additional impetus for the uptrend in selected petrochemical markets in China, as well as in the whole of Asia.

China, the world’s second-biggest economy, is a major importer of petrochemicals in Asia.

Even before the re-opening of the key Chinese markets, prices of benzene in Asia, as well as those of petrochemical feedstock naphtha, had been tracking strong crude gains on supply disruption concerns.

At midday, naphtha was trading at above $584/tonne CFR (cost & freight) NE (northeast Asia) and benzene stood at more $780/tonne FOB (free on board) Korea, according to ICIS data.

These markets are on their fourth day of gains as US refineries and petrochemical plants in the hub of Texas have been hit by power outages due to winter storms.

Ethylene values in northeast Asia were also up at midday at $840/tonne CFR on an upbeat downstream outlook following US outages.

In the monoethylene glycol (MEG) market, spot discussions for March shipment on Thursday were higher at $660-670/tonne CFR CMP (China Main Ports).

Global MEG supply is in for further tightening amid recent shutdowns in the US.

Focus article by Pearl Bantillo

Additional reporting by Yvonne Shi, Judith Wang, Melanie Wee, Yeow Pei Lin and Clive Ong

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