Fundamentals in the Indian methanol Chemical Industry for the first half of June looked decidedly more bearish compared to three weeks ago. The arrival of fresh cargoes this week and availability of spot cargoes through recent tenders changed the complexion of the Chemical Industry, trade sources said Thursday. Domestic prices over Thursday to Thursday fell to around Rupee 24-24.50/kg compared to Rupee 29/kg a month ago, and cargoes arriving at West Coast India from May 20 onwards were heard offered at Rupee 23.50-24/kg. Shipping fixtures showed an estimated 80,000 mt of methanol is expected to arrive or has arrived at Kandla, Hazira, and Mumbai this week. The cargoes did not include 10,000-30,000 mt which Khark Petrochemical offered in a tender which closed last week, and the 20,000-40,000 mt that Kaveh Methanol Chemical Industry is offering in a tender for second-half of May loading, which closed Thursday. In China, buying sentiment was muted even as methanol futures and domestic prompt spot prices rose. The actively-traded September methanol futures contract on the Zhengzhou Commodity Exchange closed Yuan 14/mt higher at Yuan 2,463/mt Thursday (Chemical Industry).
CFR China methanol Chemical Industry price rose $1/mt day on day to be assessed at $283/mt Thursday, in line with firmer local prices. Chinese domestic cargoes were assessed at Yuan 2,345/mt Thursday, up Yuan 20/mt day on day amid discussions heard at Yuan 2,340-2,350/mt. CFR Southeast Asia methanol Chemical Industrial price was assessed unchanged at $332/mt Thursday, under an offer at $340/mt CFR. The CFR India Market fell $10/mt week on week to $300/mt CFR, after taking into consideration Chemical Industry feedback that tradable levels for May 28-Jun 17 were around $300/mt CFR.
China’s Yisheng Petrochemical plans to shut its 2.2 million mt/year No. 3 purified terephthalic acid line at Ningbo on April 27 for 15 days of maintenance, a Chemical Industry source said Friday. The company is capable of producing a total of 13.75 million mt/year of PTA across three sites in China — Ningbo, Dalian and HaChina’s domestic PTA prices were supported early Friday, with the most actively traded September futures contract on Zhengzhou Commodity Exchange rising Yuan 42/mt from Friday’s settlement to Yuan 6,102/mt at 10:30 am local time (0230 GMT) Friday. The Asian PTA profit margin was widening amid the falling feedstock cost of paraxylene Chemical Industry, with the PX/ PTA spread calculated at $196/mt for CFR China, according to S&P Global data.
China’s Hengli Petrochemical is planning to begin commercial operation at its 600,000 mt/year new MTBE plant at Dalian, Liaoning Province in early May, a source close to the Chemical Industry company said on Friday. “(Hengli’s) new MTBE plant is expected to start its commercial operation in early May,” a company source based in China said to S&P Global on Friday. Initially, Hengli’s MTBE Marketing was expected to start in April according to the official documents to the Shanghai Stock Exchange filed by the company on March 25. The reason for the delay was not confirmed by the company when contacted. Once the Chemical Industry new MTBE plant begins running at full tilt, the total MTBE capacity in China will reach around 3.07 million mt/year, up 24.29% from the current capacity of around 2.47 mil mt/year, S&P Global data showed. The capacity expansion will make China one of the biggest MTBE producing countries across the Asian Chemical Industry and the ME, in line with the incumbent, Saudi Arabia. As of now, Saudi Arabia produces around 3.07 million mt/year of MTBE, the largest in the Middle East and Asia, followed by China at 2.47 mil mt/year, South Korea at 994,000 mt/year and Taiwan at 680,000 mt/year, according to S&P Global data.
South Korea’s S-Oil plans to restart its 600,000 mt/year of MTBE unit at Onsan in early-May, a Market source close to the Chemical Industry company said on Friday. The unit has been shut in late March in line with the 75,000 b/d high-severity residue fluid catalytic cracker (RFCC) at its 669,000 b/d Onsan refinery complex due to a technical glitch, S&P Global reported earlier. Market participants are expecting the restarts at several refineries across Asia, including the S-Oil’s, as well as the new capacity additions in China, to weigh on the MTBE Chemical Industry sentiment going forward. As reported, China’s Hengli Petrochemical is planning to begin commercial operations at its new 600,000 mt/year MTBE plant at Dalian, Liaoning province in early-May, a company source said Friday. “I think the forward curve structure for the May/June would be flat-to-contango, as there are quite a few refineries restarting,” a Singapore-based trader said early this week (Chemical Industry).
China’s Jiangsu Sailboat Petrochemical will restart its 100,000 mt/year butadiene unit in May after a turnaround that began in early April, a company source said Friday. The Chemical Industry exact date has not yet been decided, as the company will monitor the performance of the butadiene Market, the source said. The butadiene Market has been on a downtrend since January this year, with the domestic spot price falling 33.4% from its January peak to Yuan 7,750/mt ex-tank East China Chemical Industry Friday, according to S&P Global assessments. The decline was largely due to oversupply and weak downstream demand. The methanol-to-olefins Chemical Industry plant has a nameplate capacity of 315,000 mt/ year of ethylene, 385,000 mt/year of propylene. The company will be expanding its butadiene unit capacity to 180,000 mt/year in 2022, the source said.
China’s Ningbo Haiyue Chemical Industry was operating its propane dehydrogenation plant at Ningbo, in the eastern province of Zhejiang, at full capacity after completing maintenance, a company source said Friday. Ningbo Haiyue had earlier said it was aiming to achieve full output capacity by April 14 but then postponed it by four days to April 18, S&P Global reported earlier. “We are at a full operating rate since last Friday,” the company source said. Maintenance since March 4 and the delayed restart until April 18 resulted in a loss of around 50,000 mt of propylene. The PDH plant has the capacity to produce 600,000 mt/year of propylene and 500,000 mt/year of polypropylene Chemical Industry and uses 720,000 mt/year of propane Chemical Industry as feedstock when operating at 100% capacity.
Chemical Industry of China’s Yantai Wanhua will operate its 750,000 mt/year propane dehydrogenation plant in Yantai, Shandong province, at full capacity by Sunday, four days later than scheduled, a company source said Friday. “We are producing at 90% now, and will produce at the full rate by the end of this weekend,” the Chemical Industries company source said. Yantai Wanhua shut its PDH plant on April 1 and restarted on April 21. The Chemical Industris company had planned to operate at full capacity by April 24. The PDH plant has an annual propylene output capacity of 750,000 mt and can process 900,000 mt/year of propane.
Chemical Industry news – FOB Korea benzene was assessed down $5/mt on the week and $14/ mt on the day, at $631/mt Friday. Prices had surged mid-week but fell later in the week, as buying sentiment weakened amid a lack of firm direction in the Chemical Industry. Demand from the US, the second largest buyer of South Korean benzene, was expected to weaken, with a larger volume of imports expected to come in May. Sources estimated that as much as 100,000 mt of benzene could load out of Asia in April, for shipment to the US. With June FOB US Gulf marker assessed at 230 cents/gal Friday, or $587.70/mt, the arbitrage stands closed on paper with a spread of $42.70/mt Friday — insufficient to cover spot freight between the two regions. Nonetheless, Chemical Industry sources said that with a contract of affreightment, freight rates could be lower. With the $14/mt fall in FOB Korea prices Friday, the CFR China marker was assessed above FOB Korea for the first time since April 1, with the spread at $1.50/mt. Previously, negative spreads were seen between FOB Korea/CFR China and CFR China/East China import parity prices. Buyers and sellers were not keen to discuss trading on a fixed price basis. However, buying interest for second-half May-arrival CFR China material emerged Friday amid an unplanned plant shutdown in North Asia. Shrinking paraxylene-naphtha and benzene-naphtha spreads also weighed on Chemical Industry sentiment. While the benzene-naphtha spread has hovered below breakeven levels of approximately $150/mt since September 2018, Chemical Industry sources said that firm profit on PX has been helping to cover losses on benzene. The benzene-naphtha spread was at $23.50/mt Friday, $126.50/mt below the breakeven level. However, with the PX-naphtha spread shrinking sharply over the last month, market sources were concerned about narrowing aromatics margins. The PX-naphtha spread was at $343.50/mt Friday, down $126.13/mt on the month. A Chemical Industry source said that units which were non-integrated, as well as units which were older and required a higher operating cost would likely be the first to feel the pinch of narrowing aromatics margins. With the Asian benzene Chemical Industry long, however, a possible reduction in supply could provide respite for Asian benzene prices.
The FOB Korea benzene marker was assessed down $14/mt on day at $631/mt Friday. The marker takes the average of the third, fourth and fifth half-month laycans, currently H2 May, H1 June, and H2 June. During the S&P Global Chemical Industry on Close assessment process Friday, there were no transparent bids or offers. H2 May was assessed at $629/mt FOB Korea, below an offer last seen at $630/mt FOB Korea. H1 and H2 June were assessed at $632/mt FOB Korea, above a bid seen last at $631/mt FOB Korea. The June/July spread was assessed at the pegged level of minus $2/mt. The CFR China marker was assessed down $3.50/mt on day at $632.50/mt (Chemical Industry). H2 May was assessed at $630/mt CFR China, where a bid and offer met. H2 May was bid at $630/mt CFR Caojing, while H2 May was offered at $630/mt CFR Jiangyin/Ningbo. The H1 June laycan was assessed at $635/mt. The H2 May/June spread was assessed at the pegged level of minus $5/mt. The East China marker was assessed down Yuan 16/mt on day at Yuan 4,507/mt, or $580.92/mt on an import parity basis (Chemical Industry).
Asian benzene discussions dipped slightly Thursday, amid thin trading in the FOB Korea Chemical Industry, as bids and offers were wide apart. Despite that, an offer at $652/mt for July-loading benzene by Litasco capped prices, and the FOB Korea benchmark was assessed down $3/mt on the day at $650/mt Thursday. Over in the CFR China Chemical Industry, buy and sell interest for H2 May was still seen despite the fact that laycan and port declarations have already been concluded. CFR China was assessed down $2/mt on the day at $641/mt Thursday. Over in the CFR Taiwan Chemical Industry, demand was heard from the country for June-arrival material, amid the start up of a downstream plant after an unplanned shutdown, as well as the start up of styrene plants after having completed annual maintenance. While CFR China was assessed $9/mt lower than FOB Korea, CFR Taiwan prices were expected to be slightly higher than that of CFR China. Meanwhile, supply was expected to grow in the domestic Chemical Industry with Hengli Petrochemical having achieved on-specification production of benzene, as sales volumes from the plant increases gradually. Meanwhile, China’s Fuhaichuang Petroleum and Petrochemical, formerly known as Dragon Aromatics, will delay its planned two-week turnaround of its No. 1 aromatics unit in Gulei, a source close to the company said Thursday. The plant operates two aromatics lines, each with a nameplate capacity to produce 240,000 mt/year of benzene Chemical Industry. However, with demand from Chinese end-users persistently weak amid safety checks in the region, and high inventory levels, the delay of the shutdown was not expected to significantly affect domestic East China prices.
FOB Korea benzene was assessed down $3/mt on the day at $650/mt Thursday. The marker takes the average of the third, fourth and fifth half-month laycans, H2 May, H1 June, and H2 June. During the Chemical Industry on Close assessment process Thursday, Litasco offered July at $652/mt FOB Korea, where the bid was subsequently withdrawn. The H2 May laycan was assessed at $648/mt FOB Korea, keeping the H2 May/H1 June spread at the pegged level of minus $3/mt. The H1 and H2 June laycans were assessed at $651/mt FOB Korea Chemical Industry, above a bid seen last at $650/mt FOB Korea, and assessing the June/July spread at the pegged level of minus $1/mt. The CFR China marker was assessed down $2/mt on the day at $641/mt. H2 May was assessed at $639/mt CFR China, between a bid and offer seen at $637/mt CFR China, and $640/mt CFR Jiangyin/Ningbo, while tracking falls in the domestic East China Chemical Industry. The H1 June laycan was assessed at $643/mt, assessing the H2 May/June spread at the pegged level of minus $4/mt.
Activity was lackluster in the Asian naphtha market Tuesday. LG Chem was seeking open-spec naphtha for H2 May delivery to Daesan in a tender that closes April 1. State-run Bharat Petroleum Corp. Ltd. last Tuesday sold 30,000 mt of naphtha with minimum 65% paraffin and maximum 150 ppm sulfur for loading from Mumbai over April 2-7 to Total at a premium in the range of $9.5-$10/mt to the average of and Petroleum Argus Arab Gulf naphtha assessments, FOB. Last week, Taiwan’s CPC Corp. bought one-two medium range cargoes of full range naphtha and heavy virgin naphtha for May 5-27 delivery at a premium of around $3.50-$4/mt to the April average of Mean of Japan naphtha assessments, CFR, market sources said. It was unclear whether the price was an average for both grades or solely for the full range naphtha. The company could not be reached for clarification. In plant news, Indian Oil Corp.’s Panipat refinery has restarted its atmospheric vacuum distillation unit after completion of a planned maintenance shutdown that began March 25, company officials said Tuesday. A hydrocracker, sulfur unit, diesel hydrotreater and coker were also offline during the shutdown, and the refinery sourced naphtha for its 800,000 mt/year fluid catalytic cracker from other sites during the period. Switching off one heater cuts naphtha output by 12.5% to 350 mt/hour. Japan’s largest refiner JXTG Nippon Oil & Energy said Tuesday it has decommissioned all petrochemical and oil production units at the Muroran plant in Hokkaido to turn the facility into a refined products terminal on April 1. The Muroran facility is now a petrochemical plant, with blending facilities for gasoline and kerosene. The units include a 30,000 b/d fluid catalytic cracker and a 36,000 b/d catalytic reformer, which can act as a naphtha splitter. Muroran halted the crude distillation operations in March 2014.
AA: The European acetic acid market was stable week on week in thin trading. AA was assessed at Eur700/mt FD NWE on Friday. The vast majority of market participants put AA value around Eur700/mt, with lower end of the range indicated at mid to high Eur600s/mt by a trader. “Demand is fine and nobody seems to be forced to sell material,” a trader said. “Prices are expected to pick up again by mid of April,” the trader added. However, a feeling that logistical issues in Houston, on the back of the fire in ITC Terminal in Deer Park last week, might affect AA prices globally, a producer said. AA was also unchanged in Asia this week, despite lower methanol prices, on a few turnarounds in Northeast Asia. The CFR Far East Asia price was at $450/mt Friday and AA China price was assessed also stable at $400/mt.
VAM: European vinyl acetate monomer market was heard higher on the week with prices assessed at Eur885/mt Friday, up Eur20 from a week earlier. “Prices picking up a bit, like Eur20-Eur30, not as much as we were expecting,” a trader said. While supply is sufficient the expected seasonal increase in prices drove values higher according to sources. “Customers are whiling to pay a bit more as they expect prices to pick up,” a second trader said. VAM was also heard steady to higher in Asia this week on relatively tighter supply from Southeast Asia and China. However, CFR China was assessed stable on the week at $920/mt Friday.
S&P Global Platts assessed acetic acid spot truck prices at Eur700/mt FD NWE on Friday, unchanged on the week. The product was heard pegged at around that level by market participants. Acetic acid FOB NWE was assessed at $780/mt, also stable and in line with the FD price. Vinyl acetate monomer spot trucks were assessed up Eur20 on the week at Eur885/mt FD NWE Friday and in line with source indications in a Eur845-Eur895/mt range. FOB NWE VAM was also assessed up $22 at $987/mt, in line with the FD price movement.
Asian toluene climbed $2/mt day on day to be assessed at $666/mt FOB Korea and by $3.50/mt to $698.50/mt CFR China Wednesday, tracking related market upwards. The market was quiet except for a bid heard at $685/mt CFR China for a H2 April delivery cargo earlier during the day, as buyers in Asia continued seeking April cargoes amid a tightness in supply. “The market seems a bit firm, especially for April … Market participants are pushing up prices in May but let us see,” a Southeast Asian trader said. In China, domestic ex-tank prompt cargoes were heard discussed at Yuan 5,390-5,430/mt earlier in the day, and hovered around the same level late into the day. Discussions from H2 April onwards were heard lower, at about Yuan 5,320-5,370/mt, indicating a backwardated market, and the April/May CFR China structure was valued at a backwardation of $3/mt, tracking the Chinese domestic market. The Chinese domestic prompt ex-tank marker was assessed at Yuan 5,405/mt, converting to around $667/mt on an import parity basis. “The domestic Chinese market can be said to be good, but then it is not so good as well. Last week, there was a boom then it has since slowed down … based on crude prices last week, there was definitely demand for toluene on the gasoline blending side,” a domestic Chinese trader said. On that note, gasoline blending demand has picked up, on the back of bullish demand for gasoline as seen from the number of bids sharply outweighing the number of offers during the Market on Close assessment process for Asian gasoline on Wednesday. “I am hearing demand [for gasoline blendstock] is picking up due to a slight shortage in gasoline from refinery turnarounds. It is likely that demand for blendstocks like toluene will pick up because it seems like the [most economical] blendstock currently,” a Southeast Asian MTBE producer said. In related market news, ICE May Brent crude oil futures rose 84 cents/b day on day to $67.61/b at the close of Asian trade at 4:30 pm Singapore time (0830 GMT). In the US, nitration grade toluene prices have been kept at a constant after a massive surge in prices observed since the start of February, with many in Asia heard to have leveraged on the arbitrage opportunity to sell toluene into the US lately. Front-month US nitration grade toluene was assessed at 263 cents/gal Wednesday.
The FOB Korea marker was assessed at $666/mt FOB Korea Wednesday, up $2/mt day on day, and at the notional pegged levels in the afternoon amid thin liquidity. The CFR China marker was assessed at $698.50/mt, up $3.50/mt, tracking the domestic East China marker and crude higher and was assessed at the notional pegged levels in the afternoon amid thin trade. The FOB Korea and CFR China markers take the average of the third and fourth half-month laycans, currently H2 April and H1 May. H2 April was assessed at $700/mt CFR China and H1 May at $697/mt CFR China, tracking the backwardation in the domestic East China market structure.
– Spot cargo availability limited elsewhere in Asia
– Styrene monomer production margin $90.80/mt
Asian styrene monomer extended its gains from Tuesday by $7/mt to $1,083/mt CFR China and $1,043/mt FOB Korea Tuesday on continuing optimism that fundamentals will improve from late March due to the scheduled turnarounds. Discussions were thin in the physical market. In the east China domestic market, prices rose from the start of the day, with the prompt marker assessed up Yuan 100/mt at Yuan 8,460/mt ex-tank. “Chinese market participants are hoping for a jump in prices to support the market, even though tank space is full,” said a Chinese trader. A source noted that while there were expectations that the high inventory in east China would ease this week, there is no progress yet. Spot cargoes availability, however, is limited elsewhere in Asia, in particular South Korea, Taiwan and Japan. Besides the stockpiles issue, the US-China trade negotiation remains as another concern in the market. In the feedstock markets, benzene fell $3/mt from Tuesday to $629/mt CFR China on the high inventory in China while ethylene dropped $20/mt from Tuesday to $1,130/mt CFR Northeast Asia Tuesday on softer demand from the SM market. This brings the SM production margin to $90.80/mt Tuesday, up $19.20/mt on the week but down $36.90/mt on the month. Operating rates of SM plants in China remain high with healthy demand from downstream plants, said market sources.
Asian SM was assessed up $7/mt from Tuesday at $1,083/mt CFR China and $1,043/mt FOB Korea Tuesday. The CFR China and FOB Korea SM markers currently take the average of the H1 and H2 April laycans. There were no transparent bids and offers during the Market on Close assessment process on Tuesday. H1 and H2 April were assessed at $1,083/mt CFR China, tracking weaker sentiments in the east China domestic market in the afternoon. In the East China domestic market, the prompt marker was assessed at Yuan 8,460/mt ex-tank Tuesday, up Yuan 100/mt from Tuesday. On an import parity basis, this is approximately $1,066.40/mt. FOB Korea marker was assessed at $1,043/mt Tuesday, based on the pegged $40/mt spread to CFR China, while CFR Taiwan marker was assessed at $1,071/mt Tuesday, based on the pegged $12/mt spread to CFR China.
Asian phenol and acetone prices rose this week, supported by bullish sentiment in China as markets reopened after the Lunar New Year holidays and tight supply in India. Upstream benzene was assessed down $3.67/mt from Friday last week at $596.33/mt Friday, while propylene, another feedstock, was assessed up $10/mt over the same period at $925/mt FOB Korea.
PHENOL: CFR India phenol was assessed up $50/mt from Friday last week at $1,250/mt Friday amid plant issues in the Middle East, which left supply tight in South Asia. India’s domestic phenol market rose to Rupees 111/kg last week before paring back to Rupees 104/kg this week, market sources said. Multiple trades were heard concluded at $1,250/mt CFR India, equating to Rupees 100/kg. Several market participants were expecting sentiment to weaken going forward, saying prices had recently risen too much too fast. On the other hand, keen buyers were still heard in the market, with one buyer saying there were no ready sellers at $1,300/mt CFR India. Nonetheless, March material was still heard available and tradable indications continued to hover at $1,250/mt CFR India. East China domestic discussions supported the price of import material to China, with East China prices heard up Yuan 125/mt from Friday last week at Yuan 8,500/mt Friday, as sentiment was firm after the Lunar New Year holidays. However, the restart of a major phenol producer in China in January contributed to expectations of growing supply, as commercial sales from the plant should begin soon, sources said. Downstream products such as caprolactam and bisphenol-A were heard unable to support further increases in feedstock phenol prices, resulting in thin spot demand.
ACETONE: Despite thin trading in acetone delivered in Asia, market sources said prices had risen $10-$20/mt recently as producers were keen to seize on an open arbitrage between Asia and the US and Europe. Shipping sources said 5,000 mt of acetone was quoted from Yeosu in South Korea to Houston, while 2,000 mt was heard shipped from Singapore to Rotterdam at a rate of $95/mt. FOB Rotterdam acetone prices stood at $570/mt last Friday. This resulted in a pickup in demand for Asian material, and CFR China prices were assessed up $15/mt from Friday last week at $460/mt Friday, while CFR India was assessed up $5/mt over the same period at $505/mt.