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NWE Xylenes – PX spot dips below OX as PTA futures weigh

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– PX ECP fully settles at Eur995/mt, up Eur35/mt

– OX ECP negotiations still ongoing

European paraxylene spot prices fell to below orthoxylene spot prices on Monday for the first time since December 2018. Losses for March and April delivery PX were led by falls in purified terephthalic acid futures trading in China, as well as the rolling forward of PX laycans on a CFR Taiwan/China basis, with a backwardated structure between May and June now. March was assessed at $986/mt FOB ARA, down $16.50/mt from Friday, while April was assessed at $980/mt FOB ARA, down $22.50/mt from Friday, tracking movements in the CFR Taiwan/China H2 May and H1 June laycans respectively. In contract news, the European contract price for February fully settled at Eur995/mt, up Eur35/mt from February, sources confirmed Monday. European OX spot prices, on the other hand, remain robust and were stable on the day at $1,000/mt FOB ARA. Around 7,000 mt is expected to arrive in the Amsterdam-Rotterdam-Antwerp hub at the end of March and beginning of April, according to a source. As such, April is expected to be balanced, with tightness returning in May, the source added. The lack of European-origin material has complicated contract price negotiations this month, according to sources, with no full settlement yet reached for March. In the European mixed xylenes market, activity remained thin, with spot cargoes for April not yet nominated by producers. Premiums to Eurobob gasoline were stable at $145/mt CIF ARA March and $138/mt CIF ARA April. A fire at a petrochemical storage plant near Houston, Texas, is expected to have an impact on the European market, as US participants hunt for volumes. The affected tanks, at the Intercontinental Terminals Company’s petrochemical tank farm along the Houston Ship Channel, were said to contain naphtha, xylenes and toluene. Lengthening supply in the European MX market may well coincide well with any extra demand from the US market, traders said.

RATIONALE:

S&P Global Platts assessed the March mixed xylene CIF ARA premium to Eurobob at $145/mt Monday, stable from Friday, amid no disproving indications. The April MX CIF ARA premium was stable at $138/mt, maintaining its structure to March. Paraxylene for March fell $16.50/mt to $986/mt FOB ARA, tracking the CFR Taiwan/China H2 May laycan. April fell $22.50/mt to $980/mt FOB ARA, tracking the CFR Taiwan/China H1 June laycan. The paraxylene 5-30 day forward spot price was assessed as the average of the period at $982/mt FOB ARA, down $20.50/mt on day. Orthoxylene was assessed stable at $1,000/mt FOB ARA, amid no disproving indications.

Asian PX: Falls $19.17/mt due to bearish PTA futures

– China VAT pushes prices down

– PX supply scenario may change

Domestic Chinese purified terepthalic acid, or PTA, futures prices came under further pressure on Monday, falling Yuan 130/mt to Yuan 6,330/mt from the Friday close during the morning session and another 2.54% fall to Yuan 6,296/mt during the afternoon session. Falling PTA domestic Chinese PTA prices put downward pressure on Asian PX prices and traders felt that the fall in prices was in continuation from last Friday’s drop in values, which occurred in response to the Chinese government’s announcement that it was lowering value-added tax to 13% from 16% starting April 1. Traders said that there were no visible bids or offers in the market on Monday morning, and offers and bids on PX paper for more prompt months were scarce. Market sources reported one Q4 paper trade done at $1,010/mt, but quantity of the trade could not be verified. However, market players were bearish on prices and felt that PX prices could have some room to go down. One source felt the market structure, which was currently backwardated between June and Q4 on supply expectations, may start to unravel and even go into a contango structure. The reason for the change in structure could be due to a couple of reasons, including the change in China’s domestic VAT and some PTA plants that will be coming online.

RATIONALE:

Asian PX prices down $19.17/mt day on day at $1,084/mt CFR Taiwan/China and $1,065/mt FOB Korea Monday. The markers take an average of the H1 May, H2 May and H1 June laycans. The H1 June laycan was assessed at $1,080/mt CFR Taiwan/China, below an outstanding open origin June offer from Yisheng at $1,080.50/mt. The May laycans were assessed at $1,086/mt, between an outstanding offer from OTI at $1,090/mt and a bid from Mercuria at $1,066/mt, maintaining a $6/mt spread between May and June. The above rationale applies to the following market data codes: “PHASS05” for FOB Korea and “AAQNE00” for CFR Taiwan/China.

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Asian Iso-MX: FOB Korea prices rise on China demand

Distilled Solvent Manufacturers in India

– FOB Korea April bids up to $682/mt

– China VAT favorable to MX

Isomer grade mixed xylene cargoes of 3,000 mt were assessed higher by $11/mt day on day, at $683/mt FOB Korea on Monday, with the highest bid heard at $682/mt FOB Korea for second-half April-loading cargo. Asian sources said that Asian paraxylene prices were falling like nine pins after the lowering of the value added tax to 13% from 16% was announced by the Chinese government on Friday. An Asian trader said this was because MX cargoes were in demand from Chinese buyers, who would probably use them for blending. There were plenty of Chinese CFR MX bids in the market, he added, from Chinese traders, who may import the cargoes and then sell them to smaller gasoline blenders. A 3,000-mt Chinese MX bid was heard at around $685-$690/mt CFR East China for April loading, said a source, but no deals were heard done. The trader also remarked that lower Chinese duties had given MX imports a $25-$30/mt price advantage, which was spurring demand. Although Asian sources have said that there are plenty of MX cargoes available in Asia, especially since major refineries in Asia are going through turnarounds, the news from China was prompting sellers to raise prices in a bid to make profits.

RATIONALE:

Isomer-MX was assessed higher by $11/mt day on day at $683/mt FOB Korea and higher by $10/mt at $697/mt CFR Taiwan Monday. The markers take the average of the third and fourth half-month laycans, currently H2 April and H1 May. No bids or offers were registered during the Platts Market on Close assessment process. The highest bid heard for H2 April loading cargoes was $682/mt FOB Korea. No bids/offers were heard for CFR Taiwan. The CFR Taiwan marker was assessed higher largely tracking FOB Korea prices. The above rationale applies to the following market data codes: PHAUV00 for FOB Korea and PHAUT00 for CFR Taiwan.

NWE Toluene – Market waits for Houston fire impact

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– Traders continue to look for arbitrage

– European exports fell 70% year-on-year in January

Premiums were stable in the European toluene market over Eurobob gasoline on Monday. March was assessed steady at $145/mt, while April was assessed at $140/mt. The premiums remained backwardated to compensate for the greater contango in gasoline structure, stemming from the seasonal specification change. This is unlikely to impact toluene, sources have said, due to current premiums being well above blend value, dampening gasoline-pool demand for toluene. European traders have expressed hopes that the arbitrage window to the US will open amid growing levels of supply in Europe and a lack of local spot demand. Outright US pricing was higher than in Europe on Friday, but not by enough to make the arbitrage economic. Fires at petrochemical storage facilities in Houston over the weekend and on Monday have traders watching for signs of a price increase on toluene but no impact was was clear yet. Statistical agency Eurostat on Monday released data for January showing a 70% fall in European toluene exports in comparison to January 2018, down to 7,655 mt from 25,536 mt. Imports in January 2019 were 1,044 mt, down from 1,336 mt year-on-year.

RATIONALE:

S&P Global Platts assessed the CIF ARA toluene premium over Eurobob gasoline at $145/mt for March on Monday, stable from Friday. A trader said the market was unchanged at this level. The April premium was assessed stable at $140/mt, in line with an indication and keeping a $5/mt backwardation to March.

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Asian Toluene: Dips $1/mt tracking domestic East China discussion

– China’s VAT cut prompts wait-and-see approach

– Domestic East China price falls Yuan 15/mt

Asian toluene slipped $1/mt from last Friday to be assessed at $647/mt FOB Korea and $690/mt CFR China Monday, tracking domestic East China ex-tank prompt discussions lower in thin trade. No firm bids or offers were heard throughout the day Monday as most market participants adopted a wait-and-see approach to gauge the impact of the Chinese government’s latest move to lower VAT in a bid to spur consumption. “Toluene arrival to China has been lower recently,” a toluene end-user in China said. The East China domestic prompt ex-tank toluene price was heard discussed at around Yuan 5,375/mt early in the day before falling to Yuan 5,360/mt towards the end of the day. The East China domestic marker was assessed at that level, equating to $662/mt on an import parity basis, down Yuan 15/mt from last Friday. “In April the prompt domestic price will be close to Yuan 5,600/mt in my personal view,” a market source in China said. “We were seeing H2 April being discussed at Yuan 5,400/mt this morning, there isn’t a lot of supply globally, downstream consumption is also good — unless plants have enough inventories, I would say prices will continue to rise in China,” another source in China said Monday.

RATIONALE:

Toluene was assessed down $1/mt from last Friday at $647/mt FOB Korea Monday in thin trade. The CFR China marker was assessed at $690/mt, also down $1/mt from Friday, tracking the domestic East China market lower in 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. The H2 April and H1 May laycans were each assessed at $690/mt CFR China, retaining the flat price structure from Friday.

NWE Styrene – Spot prices rise amid buy interest for cargoes

– March trades at $1,110/mt

– Shell’s Moerdijk POSM to start maintenance April

European styrene spot prices shifted higher Monday amid increasing buy interest for prompt and forward cargoes. S&P Global Platts assessed styrene for loading 5-30 days forward at $1,117.50/mt FOB ARA Monday, up $17.50/mt on the day. Prices continued to rise as market participants continued to secure volumes ahead of plant maintenances in the second quarter. Trading activity shifted to prompt cargoes as a deal was heard at $1,110/mt for March delivery. Shell’s Moerdijk propylene oxide/styrene monomer unit in the Netherlands will be taken offline in the second week of April for maintenance lasting approximately seven weeks, industry sources said. The POSM unit has a nameplate capacity of 450,000 mt/year of styrene monomer, according to Platts data. In Asia, from April 1 China’s VAT rate for styrene and upstream benzene will be reduced to 13% from 16%, resulting in a higher import-parity equivalent that could attract more sellers and prompt higher offer levels too, according to sources. Styrene was assessed up $8/mt day on day at $1,097/mt CFR China and $1,057/mt FOB Korea Monday. In the US, sources said that America’s Styrenics finished a planned 45-day maintenance at its St James, Louisiana plant.

RATIONALE:

S&P Global Platts assessed styrene for loading 5-30 days forward at $1,117.50/mt FOB ARA Monday, up $17.50/mt on the day. March was assessed at $1,111/mt, up $20/mt on the day, $1 above the best bid at $1,110/mt and below the outstanding offer at $1,130/mt. April was assessed at $1,121/mt, up $13.50/mt, within the bid-offer heard range at $1,120-$1,130/mt and narrowing the contango by $6.50/mt to $10/mt.

Asian Styrene: CFR China up $8/mt while domestic prices fall

– Opposite price direction a result of VAT reduction

– Increasing run rates downstream

Ex-China styrene monomer discussions were firm Monday, with CFR China bids for April-delivery material supporting prices. CFR China was assessed up $8/mt on the day at $1,097/mt, while FOB Korea was also up $8/mt over the same period at $1,057/mt. Opposing price directions between East China domestic prices and CFR China was seen, with April East China domestic assessed down Yuan 40/mt on the day, while April-delivery CFR China had risen $6/mt. Market sources said that this was due to the reduction in value-added tax to be implemented from April 1, whereby the effective VAT for styrene, and upstream benzene, will be reduced to 13% from 16%. This would result in a higher import parity equivalent, which could attract more sellers, and prompt higher offer levels too. Operating rates at downstream plants were heard higher on the week, with operating rates at acrylonitrile-butadiene-styrene plants up 1 percentage point on the week to 84%, while polystyrene run rates were up 3 percentage points to 80%. The pick up in run rates downstream could result in greater demand for imported styrene material, but sources did not notice an upturn in demand Monday.

RATIONALE:

Asian SM was assessed up $8/mt day on day at $1,097/mt CFR China and $1,057/mt FOB Korea Monday. The markers rolled forward Monday to take the average of the H2 April and H1 May laycans. There were no transparent bids or offers during the Platts Market on Close assessment process. H1 and H2 April were each assessed at $1,096/mt CFR China, above a bid last seen at $1,095/mt CFR Zhangjiagang/Jiangyin. In the East China domestic market, the prompt marker was assessed down Yuan 5/mt on the day at Yuan 8,500/mt ex-tank, equating to $1,070.82/mt on an import-parity basis. The FOB Korea marker was assessed at $1,057/mt, based on the pegged $40/mt spread to CFR China, while the CFR Taiwan marker was assessed at $1,085/mt, based on the pegged $12/mt spread to CFR China.

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Asian Benzene – FOB Korea up $5/mt amid laycan rollover

– Thin trading in anticipation of clearer direction

– Refinery troubles in US to support prices

FOB Korea benzene discussions were steady Monday, with H2 April and May cargoes valued at $606/mt and $619/mt FOB Korea, respectively. However, owing to a rollover in marker laycans Monday, the FOB Korea benchmark was up $5/mt at $614.67/mt, amid a market in contango. FOB Korea buy and sell activity was tepid, and bids and offers seen were not sharp, reflecting a wait-and-see atmosphere amid the announcement made by China on Friday regarding a reduction in VAT, to be implemented April 1. The effective VAT for benzene and downstream styrene, will be reduced to 13% from 16%. Despite a Yuan 20-30/mt fall in domestic East China prices, import-parity equivalents were higher from last Friday after having accounted for the reduction in VAT. April domestic cargoes were down Yuan 20/mt on the day at Yuan 4,720/mt Monday, but up $13.97/mt at $602.40/mt on an import-parity basis. Market sources said that while the reduction in VAT was intended to make domestic product more price competitive, potentially reducing demand for import material, it will also result in a higher import parity equivalent, which could attract more sellers. A major fire hit the ExxonMobil refinery and petrochemical facility in Baytown, Texas, on Saturday, S&P Global Platts reported earlier. While the company had not commented on whether production of petrochemicals would be affected, the accident could result in a tighter supply of benzene, in turn supporting the benzene price in the US, and encourage shipment of benzene from South Korea to the US.

RATIONALE:

FOB Korea benzene was assessed up $5/mt from last Friday at $614.67/mt Monday. The marker takes the average of the third, fourth and fifth half-month laycans, H2 April, H1 May, and H2 May. During the Platts Market on Close assessment process Monday, no fully transparent bids or offers were seen. The H2 April laycan was assessed at $606/mt, keeping the H2 April/May spread unchanged on the day at minus $13/mt. The H1 May and H2 May laycans were assessed at $619/mt FOB Korea, between a bid and an offer last seen at $617/mt and $620/mt FOB Korea, respectively. The CFR China marker was assessed up $6.50/mt on the day at $619.50/mt Monday. H2 April buy and sell ideas were heard at $618/mt and $620/mt CFR China, respectively. The East China marker was assessed down Yuan 27/mt on the day at Yuan 4,740/mt, or $601.69/mt on an import-parity basis.

Asia and Middle East Naphtha Market Commentary

Spot activity was slow in the Asian naphtha market Monday, although market sources still describes demand as stable. The discount of Far East Index propane swap to Mean of Platts Japan naphtha swap tanked to minus $80/mt last Thursday before recovering mildly to $64.75/mt last Friday. Despite the widening spread between LPG and naphtha, trade activity for LPG among end-users in the Far East have yet to gain much traction, according to one petrochemical source Monday. Late last week, JG Summit Petrochemical Corp., in the Philippines bought one cargo of 25,000 mt open specification naphtha with a minimum paraffin content of 70% for second half of April delivery into Batangas, at around mid-single digit premium to the MOPJ naphtha assessments, CFR, pricing 30 days before delivery. At 0300 GMT Monday, the CFR Japan naphtha physical crack for H2 May delivery against ICE Brent crude futures was pegged at $53.85/mt. In other news, state-owned Abu Dhabi National Oil Company awarded Japan’s Inpex Corporation a concession to explore in one of its onshore blocks, ADNOC said Sunday in an emailed statement. Inpex can explore onshore block 4 in Abu Dhabi under a concession that will last for 35 years, ADNOC said. Inpex holds a 100% stake in the exploration phase of the block, while it will have the opportunity to develop and produce following commercial discovery. ADNOC will retain the right for up to a 60% stake in the production phase. In the new concession area are two existing “undeveloped” oil and gas fields: Ramham and Hudririat. As part of the concession, Inpex will appraise the fields. Over 60% of the offshore concessions held by Japanese companies in Abu Dhabi were set to expire March last year. But last year Inpex was awarded a 10% stake in Abu Dhabi’s offshore Lower Zakum oil field concession for 40 years and concluded a 25-year extension to the Satah and Umm al-Dalkh fields offshore Abu Dhabi, where it holds a 40% stake in each, supporting Japan’s continued presence in the UAE. In data news, Taiwan’s refinery throughput averaged 868,000 b/d in January, down 7.1% year on year but up 0.3% month on month, data released Friday by the Ministry of Economic Affairs’ Bureau of Energy showed. Average refinery utilization in January was 83.5%, down from 89.9% a year ago, based on Taiwan’s total capacity of 1.04 million b/d. Taiwan’s consumption of naphtha was 424,000 b/d in January, a mild 0.6% dip year on year. The country’s consumption of LPG was 80,000 b/d, up 31.2% year on year.

Asian Oxo Alcohols: SEA PA market up $10/mt on week on tighter feedstock

– LG Chem to shut PA plant end Apr

– Taiwan’s Nan Ya to restart 2-EH unit Mar 8

The phthalic anhydride (PA) market continued to gain traction this week as tighter feedstock such as oxo made producers shift the additional cost to buyers, and this lifted spot trade level. “OX supply is very tight, there is lack of raw materials so we have to increase our price offer to buyers in SEA this week,” a South Korean producer, who sold three parcel of cargoes to SEA this week, said. Other also said that demand is stronger as more buyers were stocking up ahead as more producers were planning for turnaround next month. South Korea’s Aekyung Petrochemical plans to shut its 210,000 mt/year phthalic anhydride plant at Ulsan in April for a month of scheduled maintenance, S&P Global  reported earlier. On the other hand, South Korea’s LG Chem plans to shut its 60,000 mt/year PA plant at Yeosu by end April for scheduled maintenance, a company source said Thursday. “We will shut down our PA plant by late April for 20 days,” the company source said. PA is mainly used in the manufacture of dioctyl phthalate, which is a plasticizer. Meanwhile, Taiwan’s Nan Ya Plastics will restart of its 2-ethyl hexanol unit Thursday, two days earlier than planned earlier, after it was shut down unexpectedly on February 12 due to a technical issue, a company source said Thursday. The 2-EH unit is located at Mailiao and has a production capacity of 205,000 mt/yr. The unit was earlier scheduled to restart on March 10. “We have shut down for 22 days in total, and our total production loss is 12,000 mt,” the company source said. Nan Ya Plastics is the largest 2-EH producer in Taiwan.

RATIONALE:

Dioctyl phthalate was assessed unchanged week on week at $1,055/mt CFR China Thursday, as price discussions were heard at around $1,055/mt CFR China. The CFR Southeast Asia marker was assessed up $10/mt over the same period at $1,270/mt, based on three spot trades, totaling over 400 mt in the range of $1,260-$1,280/mt CFR SEA. PA was assessed unchanged on the week at $890/mt CFR China, based on a trade concluded at $890/mt CFR China. The CFR SEA marker was assessed unchanged week on week at $980/mt CFR SEA, based on trades concluded in the range of $960-$980/mt CFR SEA, 2-EH was assessed unchanged on the week at $1,060/mt CFR China, below selling indications heard at $1,080/mt CFR China. The Southeast Asia marker was assessed unchanged on the week at $1,100/mt on muted trading. Normal butanol was assessed unchanged on the week at $930/mt CFR China based on a trade concluded at that level and the SEA marker was up $10/mt at $920/mt CFR SEA, below a selling indication heard at $930/mt CFR SEA.