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Asian Methanol: Sentiment in China stays bearish

– China buyers expect lower-priced May cargoes

– Southeast Asia supply seen tight in H1 May

Sentiment in the Chinese methanol market was bearish Wednesday as end-users anticipate an influx of Iranian cargoes in May. Offers for Middle Eastern cargoes fell from $305-$308/mt CFR China last week to $296/mt CFR China Wednesday, but buying interest was thin. Offers for Iranian cargoes were heard at a premium of 1.5% to formula price, but end-users were holding out for lower fixed-priced offers, trade sources said. Meanwhile, the gap between CFR China and CFR Southeast Asia widened to $44/mt, making re-exports from China to Southeast Asia possible again. In Southeast Asia, the lack of cargoes in the first half of May due to the delayed restart of some Middle East plants, kept prices firm. In India, domestic methanol cargoes were heard traded at Rupees 28/kg this week, compared with Rupees 26/kg last week, due to some vessel delays. However, some trade sources said fundamentals for May was balanced with ample cargoes arriving from Iran.

RATIONALE:

Asian methanol was assessed down $5/mt day on day at $290/mt CFR China Wednesday for cargoes delivered 20-50 days forward, below an offer seen for a May-arrival cargo at $296/mt CFR China. Domestic east China prices fell Yuan 40/mt to Yuan 2,385/mt Wednesday amid discussions heard at Yuan 2,380-2,390/mt. The CFR Southeast Asia marker was assessed at $334/mt Wednesday, unchanged day on day, below a selling indication of $335/mt CFR Southeast Asia and amid firm market fundamentals.

 

Chemical Industry
Chemical Industry

Asian OX: Rises $40-60/mt higher tracking general uptrend in global OX

growth-6

– Taiwan’s FCFC No. 3 aromatics unit shut after fire

– S Korea’s Aekyung to shut PA plant for turnaround

Asian orthoxylene was $40-60/mt higher on the week at $990/mt FOB Korea, $920/mt CFR China and $1,020/mt CFR Southeast Asia Wednesday, due to continued global supply tightness and the general uptrend in global OX market. In the FOB ARA market, spot prices spiked $100/mt to $1,120/mt Wednesday. Apart from meeting term OX commitments, most Asian OX producers in Asia have reduced production and have recycled OX material back into refinery to maximize production of paraxylene amid high production margins of PX. This has resulted in few spot OX cargoes available. In plant news, an explosion and subsequent fire broke out at Taiwan’s Formosa Chemicals and Fibre Corp.’s No. 3 aromatics plant at Mailiao on Wednesday around 2:00 pm local time, a company spokesman told S&P Global  Wednesday. The plant has been shut following the explosion on Wednesday, the spokesman said. The No. 3 plant has the capacity to produce 900,000 mt/year of paraxylene, 640,000 mt/year of benzene and 240,000 mt/year of OX, and is not scheduled for maintenance shutdown in 2019. The company has plans to shut its No. 1 aromatics plant at the same location from the middle of April to the end of May for annual maintenance,  reported earlier. The company also plans to shut its No. 2 aromatics plant at the same location for two to three weeks from the middle of August. Over in South Korea, Aekyung Petrochemical plans to shut its 210,000 mt/year phthalic anhydride plant at Ulsan on May 7 for three weeks of scheduled maintenance, a company source said Wednesday. The shutdown is expected to result in a production loss of 12,000 mt,  estimated. PA is mainly used in the manufacture of dioctyl phthalate, which is a plasticizer.

RATIONALE:

Asian OX was higher this week, assessed at $990/mt FOB Korea, $920/mt CFR China and $1,020/mt CFR Southeast Asia Wednesday, due to continued global supply tightness and the steep increase in European OX prices. FOB Korea was assessed up $60/mt on the week, above bids heard at $970-$980/mt FOB Korea. CFR Southeast Asia was assessed at $1020/mt, based on the freight netback to FOB Korea. CFR China was assessed up $40/mt, tracking the general increase in OX prices globally, but also considering relatively much lower domestic prices in the Chinese market.

 

Chemical Industry
Chemical Industry

Asian Solvent MX: Up $15-$30/mt on week

Chemical Industry

– China MX inventory builds again

– Toluene up $16/mt, naphtha up $24.50/mt

Week on week, Asian solvent-grade mixed xylene prices were assessed up by $15-$30/mt on the back of firm prices in related markets, as well as healthy demand heard around Asia. The CFR China marker was assessed at $690/mt, up $15/mt, as tradable levels were heard around such levels. The East China domestic prompt ex-tank price was assessed at Yuan 5,675/mt this week, or about $698.30/mt on an import-parity basis, up from about Yuan 5,600/mt last week. The inventory level of MX in east China jumped week on week by 40% to around 126,000 mt, containing mainly isomer-grade mixed xylene. However, prices in the domestic market remained firm. On an FOB Korea basis, a trade was heard at $655/mt, referenced by several market sources. The FOB Korea marker was assessed up $15/mt on week at $655/mt. In other markets, feedstock naphtha rose $24.50/mt week on week to $581.87/mt CFR Japan on Wednesday. Also, toluene rose by $16/mt on week to $703/mt FOB Korea, while isomer-MX increased $8/mt to $723/mt FOB Korea. Southeast Asian demand was heard picking up this week, as was demand from the Indian market. The CFR Southeast Asia marker was assessed up $15/mt at $720/mt, and CFR India up $30/mt to $740/mt.

RATIONALE:

Solvent-MX was assessed up from last week by $15/mt to $655/mt FOB Korea, at the level of a deal heard done on FOB Korea basis for May loading. Similarly, CFR China was assessed up $15/mt at $690/mt based on indications that it could be a tradable level, as well as considering domestic price levels. CFR Southeast Asia was also assessed up $5/mt at $720/mt, close to a traded price heard done. CFR India was negotiated close to FOB Korea plus $80-$90/mt, and assessed at FOB Korea plus $85/mt, at a fixed price of $740/mt CFR India.

 

Chemical Industry
Chemical Industry

Asian Iso-MX: Prices stable in thin activity

Chemical Industry

– Laycans roll over inflat structure

– Paraxylene falls $15.83/mt

Asian isomer-grade mixed xylene prices held steady Wednesday from the day before at $726/mt FOB Korea and $739/mt CFR Taiwan despite a sharp drop in paraxylene prices. Asian PX fell $15.83/mt over the same period to $1,042.50/mt CFR Taiwan/China in line with lower crude and naphtha. However, for isomer-MX, prompt domestic prices in China were heard relatively stable at Yuan 5,670-5,700/mt, equating to $722.20/mt on an import parity basis. The laycans rolled over for isomer-MX Wednesday but due to the flat structure of the market, this did not affect prices. Market participants polled Wednesday did not see any difference in the pricing between May and June at the moment.

RATIONALE:

Isomer-MX was assessed unchanged day on day at $726/mt FOB Korea and $739/mt CFR Taiwan Wednesday. The markers take the average of the third and fourth half-month laycans, currently second-half May and H1 June. No bids or offers were registered during the  Market on Close assessment process or earlier in the day. The above rationale applies to the following market data codes: PHAUV00 for FOB Korea and PHAUT00 for CFR Taiwan.

Asian PX: Prices fall $15.83/mt amid rollover in backwardation

– MOPJ Naphtha falls $8.13/mt at $573.50/mt

– July cargo traded at $1,042/mt, $1,043/mt in MOC

Asian PX prices took a tumble Wednesday, down $15.83/mt on the day to be assessed at $1,042.50/mt CFR Taiwan/China Wednesday, amid a rollover of laycans in backwardation, tracking the fall in the upstream crude oil and naphtha markets. ICE June Brent fell $0.69/b to stand at $70.83/b at close of Asia trade, while benchmark CFR Japan naphtha marker fell $8.13/mt to close at $573.50/mt Wednesday. Industry participants attributed the fall to weakness in Chinese commodity and equity markets, which prompted end-users to stay cautious for June delivery cargoes and await better offers in the market. Physical discussions in the Asian paraxylene market Wednesday reflected the bearish sentiments in PX and upstream markets. Floating formula-linked discussions were seen throughout the day, with buyers emerging during mid-afternoon trade seeking June arrival cargoes against sharply falling offers as crude oil futures took a dip. During the  Market on Close assessment process Wednesday, an Asian-origin June cargo traded at $1,050/mt CFR Taiwan/China, while July delivery cargoes traded twice, at $1,042/mt and $1,043/mt respectively. An outstanding offer from Oman Trading International at $1,048/mt CFR for June went answered at close of MOC, while June and July laycans were assessed at a $6/mt backwardation. In market news, Indonesia’s Trans Pacific Petrochemical Indotama, or TPPI, has sold 30,000 mt PX for May to June loading, FOB Tuban basis at a low double digit discount to 50% average of CFR Taiwan/China PX marker plus 50% CFR Asia Contract Price formula, market sources said. TPPI restarted its aromatics operations at Tuban in East Java in October 2018 after they were halted in May 2014, S&P Global  reported earlier. The company has the capacity to produce up to 550,000 mt/year of PX, 350,000 mt/year of benzene and 100,000 mt/year of orthoxylene at Tuban, but currently has no plans to produce OX.

RATIONALE:

Asian PX prices were assessed down $15.83/mt day on day at $1,042.50/mt CFR Taiwan/China and $1,023.50/mt FOB Korea Wednesday, amid a rollover of laycans in backwardation. The markers take an average of the H1 and H2 June, and H2 July laycans. The June laycans were assessed at $1,044.50/mt, below an outstanding offer from Oman Trading International at $1,048/mt, and above an outstanding Asian-origin bid from Mercuria at $1,040/mt. The H1 July laycan was assessed at $1,038.50/mt, below an outstanding July offer from Yisheng at $1,039/mt, and at the pegged $6/mt backwardation to the June laycans, which is also in line with the June/July structure at the time of the last June trade for Asia between Glencore and Hengli at $1,050/mt, which was normalized due to a restriction in origin. The above rationale applies to the following market data codes: “PHASS05” for FOB Korea and “AAQNE00” for CFR Taiwan/China.

Asian Styrene: Falls $8/mt amid uncertain outlook

Chemical Industry

– Weaker feedstocks weigh on prices

– Sentiment-driven amid lack of clarity

Asian styrene monomer fell $8/mt day on day to $1,053/mt CFR China and $1,013/mt FOB Korea Wednesday on weakening sentiment and an uncertain price outlook. In the CFR China market, bids were heard at $1,050/mt for June arrival cargoes but did not attract any selling interest. Earlier, bids were heard at $1,030/mt CFR China for on or before May 20 arrival, with no offers heard. The laycans rolled forward from the average of H1 and H2 May to H2 May and H1 June in a flat market structure. In the east China domestic market, the May marker fell Yuan 70/mt on the day to Yuan 8,070/mt ex-tank. The fall in SM also tracked the weakness in western crude benchmarks and feedstock benzene and ethylene. An Asian SM trader said the market was lacking clarity and continued to be sentiment-driven. SM prices were expected to remain rangebound for the time being, sources said. “Despite the weak SM prices, production margins are healthy given low benzene prices. However, since Asian supply would be tighter at least until early May due to plant turnarounds, prices could be hovering within this range for a while,” one market participant said. A Chinese producer said high inventory in east China was expected to decline between April and May, but an inventory level of more than 200,000 mt could be a “new normal” this year.

RATIONALE:

Asian SM was assessed down $8/mt day on day at $1,053/mt CFR China and $1,013/mt FOB Korea Wednesday. The markers currently take the average of the H2 May and H1 June laycans. There were no transparent bids or offers during the  Market on Close assessment process. H1 June was assessed at $1,053/mt, above the best bid heard at $1,050/mt CFR Zhangjiagang/Jiangyin with no offer heard, and tracking weaker sentiment in the east China domestic market in the afternoon. Maintaining the pegged flat May/June spread, H2 May was also assessed at $1,053/mt. In the east China domestic market, the May marker was assessed down Yuan 70/mt on the day at Yuan 8,070/mt ex-tank, equating to $1,043.50/mt on an import parity basis. The FOB Korea marker was assessed at $1,013/mt based on the pegged $40/mt spread to CFR China, while the CFR Taiwan marker was assessed at $1,041/mt based on the pegged $12/mt spread to CFR China.

Chemical Industry
Chemical Industry

Asian Toluene: Toluene blending into gasoline drives demand

Imported Data

– SEA, India show demand

– China market lackluster

Asian toluene was assessed higher day on day by $7/mt at $710/mt FOB Korea on Wednesday. Toulene prices were responding to a higher 92 RON gasoline crack spread to ICE Brent futures which hit an eight-month high of $9.31/bbl at the 0830 GMT close of Asian trade on Wednesday. The spread was assessed at $7.64/bbl on Wednesday down by $0.86/bbl day on day. With tighter gasoline supply from Asia due to refinery turnarounds, especially in China, as well as lower inventories across major oil hubs that include Singapore, demand for aromatics additives into gasoline was robust. Toluene was in demand as a blendstock due to its 112-115 RON value in both Southeast Asia and India, market sources said. A trader said that he had recently sold around 10,000-15,000 mt of April cargo and demand continued to be high. Indian demand was also considered to be quite high, although no specific deals were heard for the Indian market. This demand was primarily driving strength in toluene prices, a source said. The Chinese market remained quite lackluster with solvent makers demand for toluene down, primarily due to shutdowns among solvent producers in the wake of safety concerns following an explosion in China last month. The East China domestic prompt price was unchanged day on day at Yuan 5,360/mt on Wednesday, with tradable indications heard between Yuan 5,350-5,370/mt. The US prices for toluene were also higher compared to Asian prices, a source said. It offered an opportunity for arbitrage from Asia to the US, but vessel space was very tight for both April and May, since a lot of that vessel space was dedicated to benzene cargoes, the source added.

RATIONALE:

Toluene was assessed higher by $7/mt day on day at $710/mt FOB Korea and by $5/mt day on day at $726/mt CFR China on Wednesday. The markers take the average of the third and fourth half-month laycans, currently H2 May and H1 June. No bids or offers were registered during the  Market on Close assessment process. The FOB Korea marker was assessed higher by $7/mt at $710/mt, above the highest bid heard for June loading cargo at $709/mt FOB Korea. There was no structure assessed between the May and June windows. The East China domestic prompt price was unchanged day on day at Yuan 5,360/mt on Wednesday, with tradable indications heard between Yuan 5,350-5,370/mt. No bids or offers were heard on a CFR China basis and the marker was assessed higher by $5/mt at $726/mt.

 

Chemical Industry
Chemical Industry

Asian Benzene – FOB Korea down $9.66/mt

Chemical Industry

– FOB Korea sell interest picks up

– May CFR China demand heard filled

Asian benzene prices have been on a downtrend this week, as demand for Asian material continued to come from ex-Asia demand centers such as the US and EU. June FOB USG paper was assessed at 225 cents/gal Wednesday, or $672.75/mt, bringing the FOB Korea-FOB USG paper spread to $34.42/mt Wednesday, insufficient to cover freight costs between the two regions. Regardless of the arbitrage being closed on paper, traders had earlier been heard keen to seek demand from the US amid a negative FOB Korea-CFR China price spread. However, selling interest for H2 May, and June-loading material was more aggressive than buy interest Wednesday, as offers fell lower over the day but did not attract buy interest. CFR China activity was absent Wednesday, with the FOB Korea-CFR China spread standing at minus $14/mt, deterring sellers from offering material on a fixed price basis. Simultaneously, the CFR China-East China benzene spread was at minus $35.88/mt, preventing Chinese buyers from seeking import material. Amid the absence of both buyers and sellers, CFR China trade activity has been thin. In the Taiwan market, demand for May material was heard fulfilled, with buyers not keen to discuss May-arrival material despite falling fixed and floating pricing.

RATIONALE:

FOB Korea benzene was assessed down $9.66/mt on the day at $628.67/mt Wednesday. The marker rolled forward Wednesday to take the average of the third, fourth and fifth half-month laycans, H2 May, H1 June, and H2 June. During the  Market on Close assessment process Wednesday, there were no transparent bids or offers seen. The H2 May laycan was assessed at the pegged level of $624/mt FOB Korea, keeping the H2 May/June spread unchanged from the pegged level of minus $7/mt, below an offer last seen at minus $6/mt. The H1 and H2 June laycans were assessed at the pegged level of $631/mt FOB Korea, below an offer last seen at $635/mt. The CFR China marker was assessed at the pegged level of $615/mt, tracking falls in the FOB Korea market. The East China marker was assessed down Yuan 20/mt on the day at Yuan 4,403/mt, or $569.38/mt on an import parity basis.

Chemical Industry
Chemical Industry

US Methanol daily: Spot hovers at or below 100 cents/gal

chemical industry

– April, May unchanged on day

– Asian, European pricing mixed

The week opened to unchanged pricing for spot methanol Tuesday, amid limited activity heard for the front and forward months. April and May pricing were unchanged from Tuesday at 100 cents/gal FOB USG and 98 cents/gal FOB USG, respectively. No fresh bids, offers or trades were confirmed over the day. While June was heard talked in the mid-90 cents/gal range late Tuesday, no additional confirmation was available Tuesday. In Asia, the CFR China marker was down $3/mt (about 0.90 cent/gal) to $295/mt (about 88.60 cents/gal). In Europe, the FOB Rotterdam marker was up $3.39/mt (about 1.02 cents/gal) to $306.82/mt (about 92.14 cents/gal).

RATIONALE:

S&P Global  assessed US spot methanol at 100 cents/gal FOB USG for the front month (April) and 98 cents/gal FOB USG for the forward month (May). Both assessments were unchanged on the day in the absence of fresh indications.

US Gulf Benzene daily – Benzene softer to open the week

Imported date

– Crude falls 49 cents on the day

– Styrene gains in line with Europe

US spot benzene prices were softer Tuesday as downstream styrene prices gained. Prompt spot (April) benzene was down 1 cent on the day, with the DDP and FOB assessments closing at 229 cents/gal, while forward-month pricing fell 2 cents on the day and the DDP and FOB assessments closed level to April at 229 cents/gal. Activity increased to open the contract period and sources reported May trading at 229 cents/gal and a June trade heard at 225 cents/gal. Still, benzene was pressured by lower crude pricing as WTI futures fell 49 cents on the day to settle at $63.40/barrel. Meanwhile, downstream styrene prices shook off declines in benzene and gained $25 on the day as European styrene prices moved higher. Prompt-month styrene was assessed at $1,050/mt FOB USG, while forward-month pricing was assessed flat to the prompt month. The prompt spot styrene-benzene spread widened to near $364.50/mt, according to S&P Global  data.

RATIONALE:

US April benzene on a DDP USG basis was assessed down 1 cent on the day at 229 cents/gal on a bid-offer range last seen at 228-232 cents/gal. The April FOB price was assessed down in tandem and closed level to the DDP price. May benzene fell 2 cent on the day, with the DDP assessment closing at 229 cents/gal on a bid-offer range last seen at 228-231 cents/gal and considering a reported trade at the assessed level. The May FOB assessment rose in tandem and closed level to the DDP price. Prompt and forward-month styrene prices were assessed up $25 on the day to $1,050/mt (47.63 cents/lb) FOB USG on a netback to the European styrene price.

Imported data
Imported data