Due to the continued impact of the new crown pneumonia epidemic, demand for key petrochemical products in the Asian market is mixed. In the second half of this year, the prospects for the Asian petrochemical market were bleak. Although China's economy achieved a year-on-year growth of 3.2% in the second quarter, reversing the 6.8% decline in the previous quarter, the average decline in the first half of this year was still 1.6%.
Glycol under pressure
Affected by the increase in inventory at Chinese ports and the slowdown in polyester demand, the ethylene glycol market in Asia is under pressure. Ethylene glycol stocks in eastern China have risen to nearly 1.5 million tons, the highest level since 2014, casting a shadow over market sentiment. The low season in July and August made the downstream polyester industry's demand weaker. Due to factors such as squeezed profit margins and poor sales, major Chinese polyester producers have begun to cut production.
In addition, the strong raw material costs also support the Asian glycol market. The ongoing reduction in raw material production in the region has to a certain extent contained the sharp drop in ethylene glycol prices.
PX is in a downturn
The paraxylene (PX) market in Asia has also fallen into a downturn. Due to uncertain prospects, market participants remain cautious. Liquidity in the spot market is still low. Although the price difference between PX and upstream naphtha is currently small, buyers are reluctant to actively raise prices when China's domestic supply is sufficient and inventories are high.
In addition, due to the planned shutdown of downstream purified terephthalic acid (PTA) plants, it is expected that the market demand for PX will decline in the short term. Because the current aromatics production profit margin is at a negative value, the seller's offer is not positive.
Ethanolamine demand is particularly hit
In terms of ethanolamine, the overall demand for monoethanolamine (MEA), diethanolamine (DEA) and triethanolamine (TEA) in the Chinese market has been affected by the prolonged rainy season and widespread flooding. The demand for DEA was particularly hit because the construction industry's demand for DEIPA (diethanol isopropanolamine) used as a cement mixing aid slowed down during the rainy season. The main raw material of DEIPA is DEA.
After Southeast Asian countries implemented blockades or flow restrictions to curb the spread of the new crown virus, they have now reopened. Some market participants have also seen a slight rebound in DEA demand. As buyers remain cautious, some suppliers have lowered their offers to attract buyers' interest.
A major MEA downstream detergent manufacturer in India resumed production, so India’s demand for MEA is the strongest overall.
Butadiene performs well
The Asian butadiene market performed well. As the sales bids of two regional producers have attracted strong interest from traders, the current spot buying interest has increased.
Traders purchase the butadiene cargo shipped in August in the spot market to meet contractual commitments. Their demand for butadiene cargoes delivered in August and arrived in September has also increased due to the expected shutdown of a major cracker in Asia in mid-August. China Taiwan Formosa Petrochemical Company will shut down its 176,000-ton butadiene plant in Mailiao for 45 days starting in mid-August.
Due to the relaxation of blockade measures and increased factory activities, butadiene demand has picked up. The butadiene consumption of downstream synthetic rubber (SR) manufacturers and acrylonitrile butadiene styrene polymer (ABS) manufacturers is expected to gradually increase in the coming months. The SR market has shown signs of improvement, with prices showing an upward trend.
Propylene supply decreased
Spot propylene supply from South Korea is relatively mild, which to a certain extent supports the upward trend of propylene prices in the Northeast Asian market.
Recently, a fire broke out at Formosa Petrochemical’s refinery in Mailiao, Taiwan, which forced the closure of one of its two residual oil desulphurization (RDS) units. Although it is unclear how much the residue catalytic cracking (RFCC) unit of Formosa Petrochemical has been affected, it has indeed attracted some spot propylene purchase activities.
Source: Chemical Network
