Since the outbreak of the New Coronary Pneumonia epidemic, global oil and chemical trade flows have rapidly changed with the epidemic situation. According to the ICIS (An Xunsi) report, due to the impact of the new coronary pneumonia epidemic on the economic trends in the United States and Europe, the demand has dropped sharply, and the prices of chemical products have plummeted. The end of the epidemic is unpredictable. Asia, where the epidemic is relatively mild, has become a dumping ground for chemicals around the world.
However, this does not mean that flow to Asia can get more profit space. With Asia becoming the dumping ground for products, leading to increasing competition pressure in the Asian market, many petrochemical products prices have fallen to historical lows, and many arbitrage windows from the EU and the Americas to Asia are rapidly closing. At present, the arbitrage margin of ocean-going cargo transportation to the Asian market is already very low, which is not attractive to traders. Asian markets with oversupply are also unlikely to absorb ocean-going or arbitrage goods from the European Union and the United States. It's just that the situation in Asia is slightly better compared to the European and American markets that are on the verge of collapse.
01 Methanol: export target China
India has closed the country, and methanol from the Middle East, especially Iran, is trying to transfer to China for digestion. Because of the sluggish demand in the European and American markets, suppliers and traders are planning to export methanol goods to China.
This will lead to further intensified competition in the Chinese methanol market, and may cause some Chinese manufacturers to reduce the operating rate of the device and do not rule out parking shutdowns.
02 Butadiene: Arbitrage window closed
At the beginning of April, large quantities of ocean-going butadiene goods from the West flooded into the Asian market, forcing Asian traders to sell off at low prices, causing the Asian butadiene market to fall sharply. At the same time, low oil prices have also led to the continued decline in Asian petrochemical product prices to record lows, and the arbitrage window from the EU and the Americas to Asia is rapidly closing. The current arbitrage margin is neither feasible nor attractive enough to attract Asian traders to import goods from Europe and the Americas.
While China's domestic market is well supplied, the demand for imported butadiene has dropped significantly. With the downturn in the downstream synthetic rubber market and the decline in demand for acrylonitrile butadiene styrene copolymers (ABS), the spot demand for butadiene has weakened.
In the United States, butadiene sales are small because end-use companies are still closed. The new coronavirus epidemic is expected to plague the US butadiene value chain for at least the first half of the year. Today, domestic butadiene goods are flowing to Asia, and Asia has become one of the few export markets for US and European producers. Market participants believe that this is unlikely to be a long-term solution.
03 Propylene: China's inquiry is more active
Downstream demand is insufficient, and manufacturers are considering further reducing the plant's operating rate. Propylene products from South America and India have insufficient downstream demand and may be shipped to the Asian market. This will lead to an excess of propylene supply in Asia in the short term.
It is understood that the negotiated price of propylene arriving in late April is about 560-600 US dollars / ton, equivalent to RMB prices below 5000 yuan / ton. Due to the low price of U.S. dollar disks, domestic downstream factories have increased their enthusiasm for negotiating U.S. dollar disks, and the import of propylene may increase in the short term.
04 Mixed xylene: arbitrage space opened
At present, the price of aromatic hydrocarbons in the United States has plummeted, while the demand in Asia is relatively strong. The arbitrage window for the export of mixed xylene from the United States to the Northeast Asian market reopened a few years later.
On April 6, the price of mixed xylene in the United States was about $ 270 / ton (FOB, Gulf of Mexico), while the price in the Asian market was $ 355 / ton (FOB, South Korea), and the price difference between the two was $ 85 /Ton. The freight rate between the US and Asia is US $ 70 to US $ 80 per ton, which means that arbitrage is feasible. According to market sources, due to the poor market prospects in the US, sellers of mixed xylene in the US even offered discounts on the basis of quotations.
In April of this year, South Korea Lotte Chemical purchased a batch of 30,000 to 40,000 tons of mixed xylene cargo from the United States, which is expected to reach the Korean market by the end of May. Other end users in Asia are also considering buying spot from the US.
05 Ethylene: arbitrage opportunities decrease
At present, due to the decline in domestic and neighboring countries, ethylene suppliers other than Asia continue to look for buyers of goods arriving in Hong Kong in May and June in the Asian market.
So far, more than 90,000 tons of ethylene ocean-going goods delivered from April to the first half of June have been sold to the Asian market. However, as the spot prices of ethylene in Asia have further weakened, the arbitrage opportunities for exporting ethylene goods from the Americas and Europe to sellers in the Asian market have become less and less.
