Sell & Procure

Falls $13/mt amid slow demand outlook

Asian styrene monomer fell $13/mt from last Tuesday to $1,074/mt CFR China and $1,024/mt FOB Korea Tuesday on expectations that buying interest from downstream markets would not pick up strongly this week. Discussion remained muted as participants began returning to the market after week-long Lunar New Year holidays. In the east China domestic market, the prompt marker was assessed down Yuan 140/mt from last Tuesday at Yuan 8,430/mt ex-tank Tuesday, equating to $1,056/mt on an import parity basis. Operating rates of producers and buyers in downstream markets were expected to return to normal gradually. “Styrene price movements would depend on the rate at which operations return to pre-holiday rates. Further, new orders are expected to be limited this week,” a market participant in China said. High inventory levels of styrene in east China could also keep prices on a downtrend. The styrene inventory in east China stood at 306,500 mt Tuesday, up 37,000 mt from January 30, market sources said. Feedstock benzene rose $4/mt from last Tuesday to $609/mt CFR China Tuesday, while ethylene rose $15/mt over the same period to $1,100/mt CFR Northeast Asia. SM production margins remain healthy at $106.80/mt, although $20.70/mt lower than a month earlier, according to S&P Global CSG data.

RATIONALE:

Asian SM was assessed down $13/mt from last Tuesday at $1,074/mt CFR China and $1,024/mt FOB Korea Tuesday. The two markers currently take the average of the H1 and H2 March laycans. There were no transparent bids or offers during the CSG Market on Close assessment process. H1 and H2 March were each assessed at $1,074/mt CFR China. The East China domestic prompt marker was assessed at Yuan 8,430/mt ex-tank, down Yuan 140/mt from last Tuesday, and equating to $1,056/mt on an import parity basis. The FOB Korea marker was assessed at $1,024/mt, based on the pegged $50/mt spread to CFR China, and the CFR Taiwan marker at $1,062/mt, based on the pegged $12/mt spread to CFR China.

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Asia and Middle East Naphtha Market Commentary

The Asian naphtha market took a breather on Friday as activities toned down ahead of the public holidays for the next two days. Supply-led factors such as heavy turnarounds in the Middle East and bad weather conditions in the West continued to lend support to the Asian naphtha complex, sources said. Earlier, key naphtha supplier Abu Dhabi National Oil Co., or ADNOC is shutting the two condensate splitters at its 840,000 b/d Ruwais refinery for maintenance over mid-January to early March. Under the turnaround plan, one splitter will be taken offline in mid-January for three weeks. Following its restart, the second splitter will be shut for three weeks. Last Friday, petrochemical producers Asahi Kasei Mitsubishi Chemical Ethylene Corp. and LG Chem bought open-spec naphtha for second-half March delivery. Asahi Kasei Mitsubishi Chemical Ethylene Corp. paid a premium of around $12/mt to the Mean of CSG Japan naphtha assessments on a CFR basis to Mizushima, pricing 30 days prior to delivery, and LG Chem bought its minimum 70% paraffinic naphtha supply for delivery to Yeosu at a premium in the low teens to MOPJ naphtha assessments, CFR, pricing 30 days prior to delivery. A day before, JG Summit Petrochemical Corp., in the Philippines bought around 25,000 mt of naphtha with a minimum 70% paraffin content for delivery to Batangas in H1 March at a high single-digit premium to the MOPJ naphtha assessments, CFR, pricing 30 days before delivery. In other news, the 230,000 b/d Duqm refinery project in Oman was expected to start up in 2022, a senior official from the Port Duqm Company SAOC said Friday. The refinery was expected process medium and light crude from Kuwait and Oman, according to Erwin Mortelmans, commercial director of Port Duqm Company SAOC. It will focus on producing refined products such as diesel, jet fuel, naphtha and refrigerated LPG, he said, speaking at the CSG Middle Distillate conference in Antwerp. In China, Zhejiang Petrochemical has started trial operations on Friday on one of its 200,000b/d crude distillation unit at the phase I project, a source close to the company said Friday. The refinery has put feedstock into its crude distillation unit on January 31, according to the source. The plant’s location means it can supply locally to the Yangtze River Delta region, China’s consumption center, as well as ship to northern and southern China and export overseas.

Solvent mixed xylene noticed lower

Solvent-grade mixed xylene was assessed $10/mt lower week on week on Friday at $610/mt FOB Korea on lower selling ideas, while demand — particularly from China — remained sluggish due to the Lunar New Year holidays. Many market participants were already absent from the market. Meanwhile, South Korean parcels were moving into Southeast Asia, where margins were better than China, market sources said. In plant news, Korea Petrochemical Industry Co. plans to shut its benzene-toluene-xylene plant in Onsan for about one month of maintenance in April, a market source said. The plant has the capacity to produce 180,000 mt/year of benzene, 70,000 mt/ year of toluene and 40,000 mt/year of solvent-grade mixed xylene. South Korea’s LG Chem is planning to shut its Daesan aromatics plant for 35 days of maintenance in March, a source close to the company said. The plant can produce 24,000 mt/year of solvent-grade mixed xylene, along with 264,000 mt/year of benzene and 54,000 mt/year of toluene. Maintenance at the plant will overlap with the turnaround at the upstream cracker, as previously reported by  . MX inventories in eastern China were heard to be steady at around 61,000 mt. Rationale Solvent-MX was assessed down $10/mt week on week at $600/mt FOB Korea Friday on the back of lower discussions. A deal at $625/ mt FOB Korea was not considered in the assessment as the size was too small. Another producer said $590/mt FOB Northeast Asia might be a workable price, although similarly acknowledged it was not a firm offer. No bids or offers were heard during the  Market on Close assessment process. The CFR China marker was assessed at $620/ mt, unchanged on thin trade and prevailing discussions. The Southeast Asia marker was assessed at $660/mt CFR, reflecting decreases in the broader market. The CFR India marker was assessed at $664/ mt, down $10/mt, based on the freight differential of $64/mt between Korea and India.

Phthalic anhydride prices noticed stable to up

Spot trading activity for Phthalic Anhydride gained traction this week as more buyers in Southeast Asia stepped up their purchase of feedstock ahead of the Lunar New Year. “Spot supply for Phthalic Anhydride in SEA is tight and there is strong demand from buyers who want to buy more to stock up their inventories,” a South Korean producer, who sold eight parcels of PA cargoes totalling over 1,200 mt to SEA buyers this week, said. On the other hand, buying interest for Dioctyl Phthalate was reported stronger as Chinese buyers want to stock up before the commencement of the Lunar New Year festivities this week. “I do not think the DOP market in China has really gotten stronger this week, but rather the strengthening of the Chinese Yuan against the greenback this week has made imported material more palatable to them,” a Taiwanese producer, who sold a cargo to Chinese buyer at $1,050/mt CFR China this week, said. The same Taiwanese producer offered at cargo at $1,050/mt CFR China last week, but there were no takers. On the SEA marker, sellers however, had to lower their offers for DOP in the SEA market to entice buying interest.”We sold two cargoes this week, but we have to lower our price as we are eager to offload these materials before the Lunar New Year,” a South Korean trader, who sold two parcels of DOP to SEA buyers this week, said. RATIONALE: CFR China dioctyl phthalate was assessed up $10/mt week on week at $1,050/mt Friday, based on a trade concluded at $1,050/mt CFR China. The CFR Southeast Asia marker was assessed down $15/mt week on week at $1,210/mt, reflecting two deals done in the range of $1,200-$1,215/mt CFR SEA. Phthalic anhydride was assessed unchanged week on week at $900/mt CFR China, as price discussions were heard at $900/mt CFR China. The SEA marker was up $10/mt on week at $965/mt CFR SEA, based on eight trades concluded at a range of$960-$980/mt CFR SEA. CFR China 2-EH marker was assessed unchanged on the week at $1,035/mt CFR China this week, as price discussion were heard at around $1,035/mt CFR China. The SEA marker was assessed unchanged week on week at $1,075/mt CFR SEA on muted trading. The China and SEA marker for normal butanol was assessed unchanged on week at $910/mt CFR China and$910/mt CFR SEA, respectively, due to a muted market.

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