NORTHEAST ASIA PARAXYLENE PRODUCERS SLASH RATES

The narrowing spread between paraxylene and feedstock isomer-grade mixed xylene has seen northeast Asia MX-based producers come under huge cost pressure recently, with South Korea's Hyundai Cosmo Petrochemical announcing on Monday a lowering of operating rate at its No. 2 aromatics plant in Daesan, a source close to the company said. The source added that it was possible operations could be brought down to a minimum level, but declined to specify how much the minimum level is, and that the company would be monitoring the market situation and make adjustments accordingly.

The No. 2 unit, which primarily uses isomer-MX from Hyundai Chemical as feedstock, can produce 800,000 mt/year of paraxylene and 130,000 mt/year of benzene. The company's No. 1 aromatics unit, which can produce 380,000 mt/year of PX and 120,000 mt/year of benzene, will continue to operate at full production capacity, as it runs on naphtha supplied from the adjacent Hyundai Oilbank refinery, S&P Global Platts reported earlier.

Earlier, South Korea's Lotte Chemical also shut its No. 1 aromatics plant at Ulsan from early September due to weak margins, Platts reported earlier. It is unclear when the plant, with a paraxylene capacity of about 250,000 mt/year, would resume operations as it depends on the margins that are not expected to improve significantly in the near term, a source close to the company said.

Apart from firm blending demand for MX, another key reason for the erosion of the PX-MX spread over Q3 2019 is the impending startup of several new large PX plants mainly in China, which would put downward pressure on Asian spot PX prices, while at the same time supporting isomer-MX prices as these new PX plants require MX for their operations.

One of the startups, Sinopec Hainan's No. 2 PX line of 1 million mt/year capacity, is expected to start production imminently, and will be running on 100% MX feed. The capacity at its No. 1 PX line, which currently produces at 600,000 mt/year, will also be raised to 1 million mt/year by the third quarter, Platts has reported.

"Sinopec Hainan No. 2 is expected to start production end September and supply first PX cargo in October," a Chinese PX buyer, who did not wish to be named, said.

"At the beginning the price [of MX] rose because of the PX demand, but lately mostly because of the gasoline [demand]. PX demand is not that good. The spread between MX and PX is horrible," a Chinese market source said Tuesday.

Asia petrochemicals outlook, w/c Sep 2

Singapore — Market participants will continue to monitor the supply situation of key Asian steam cracker operators to gauge demand-supply balance for the near-term.

Spot supplies are seen to be increasing in line with planned startups of new steam crackers, notably SP Olefins in China.

OLEFINS
The domestic propylene market in Asia is likely to find some support this week as China's Tianjin Bohua Yongli, the upstream entity of Tianjin Bohai Chemical, will restart 250,000 mt/year swing plants that can produce normal butyl alcohol or 2-ethyl hexanol in Tianjin after nearly 10 days of shutdown. The restart will enabled Tianjin Bohai Chemical to reduce their propylene spot sale in Shandong and will likely arrest the price decline seen last week. The Asian butadiene market has softened on weak demand. In South Korea, supply however is expected to remain snug. Most downstream rubber makers in Asia cite unaffordability and weak profit margin, resulting in tepid demand.

AROMATICS
Activity for November-delivery paraxylene cargoes was limited last week, with only six physical cargoes traded during the Platts Markets on Close assessment process. However, interest for October should wane this week and shifts to November, as the CFR Taiwan/China marker rolls into November as the main pricing month this week. "Price support should come from the fact that the September ACP had settled at $780/mt on Friday," said a Singapore-based trader. "It is quite clear that Asian producers are striving to maintain paraxylene-naphtha margins at above $300/mt," a source said. The PX-naphtha spread was $323.56/mt last Friday, based on S&P Global Platts data.

Benzene prices have been on an uptrend over the second half of August, and is expected to continue strengthening this week. A clear indicator of firm demand for benzene can be seen in a wide spread between benzene and feedstock naphtha. The benzene-naphtha spread was firm at $214.92/mt Friday, and is expected to continue at levels above $200/mt this week. Demand from China is expected to pick up by October. One Chinese market participant said that with current inventory levels, buyers in the market would have to restock soon, or latest by October, the source estimates. East China stocks were estimated at 142,700 mt by an industry source Friday, up from just 700 mt on the week.

Asian styrene monomer fell $12/mt week on week to $1,012.50/mt CFR China and $972.50/mt FOB Korea last Friday on bearish sentiment. Margins were slipping on rising feedstock prices, while downstream demand was weak. Sources said that buying interest for US dollar-denominated materials would remain thin amid the escalating US-China trade tensions, while the yuan-denominated SM remain firm on the back of lower inventory in East China. However, a Chinese source noted that there may be a "limit" to the increase in SM prices unless there is an uptick in downstream activity.

POLYMERS
Asian low density polyethylene prices will likely continue their downtrend trajectory from last week. There is ample supply from the US, particularly to Southeast Asia. Buyers surface on expectations that the currency depreciation will continue. Prices are now at a decade low, according to Platts data. Asian polypropylene prices are weak in Northeast and Southeast Asia, but are firmer in India. Some redirection of trade flows were heard, with Pakistan seeking Middle East cargoes following Pakistan's ban on Indian exports.

METHANOL
High inventory levels and operating rates from inland methanol producers could weigh on Chinese methanol prices this week. Domestic ex-tank prices at Taicang slumped last Friday on burgeoning inventory at China's eastern ports. Inventory at East China ports was around 1 million-1.3 million mt, up 6.6%-12% on the week. Bearish fundamentals are also expected to persist in India, compounded by ample supplies and weak demand. Ready ex-tank cargoes were traded Rupees 16.5-17.50/kg last week, compared to Rupees 18/kg the week before.

INTERMEDIATES
Asian purified terephthalic acid prices are likely to remain under pressure this week amid active selling in China's domestic PTA market, according to market sources. Spot physical trading discussions are expected to stay thin this week for the CFR China marker due to the closed arbitrage window since August. PTA was assessed $12/mt lower week on week at $655/mt CFR China last Friday.

Asian monoethylene glycol prices are expected to be rangebound this week amid a lack of direction. In the short term, some trade participants believed MEG prices will be supported by destocking expectations on the back of strong Chinese demand.

Nevertheless, supply glut will likely be seen with new startup capacities in the fourth quarter, leaving most trade participants cautious.

Agriculture | LNG | Oil | Petrochemicals | Shipping 23 Aug 2019 | 22:13 UTC Washington

US to raise tariffs on $550 billion of Chinese imports by 5 percentage points: Trump

Washington — The US will raise the tariff on $250 billion worth of Chinese imports from 25% to 30% on October 1, and raise the current 10% tariff on another $300 billion of Chinese imports to 15% on September 1, President Trump tweeted late Friday.

"Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer," Trump tweeted. "As President, I can no longer allow this to happen!"

Trump's plan to raise these tariffs by five percentage points was in response to China's announcement early Friday that it planned to levy a 5% tariff on US crude imports from September 1, part of a new round of tariffs on $75 billion worth of US goods imports that will be implemented in two batches from September 1 and December 15.

Agriculture | LNG | Oil | Petrochemicals | Shipping 23 Aug 2019 | 22:13 UTC Washington

US to raise tariffs on $550 billion of Chinese imports by 5 percentage points: Trump

Washington — The US will raise the tariff on $250 billion worth of Chinese imports from 25% to 30% on October 1, and raise the current 10% tariff on another $300 billion of Chinese imports to 15% on September 1, President Trump tweeted late Friday.

"Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer," Trump tweeted. "As President, I can no longer allow this to happen!"

Trump's plan to raise these tariffs by five percentage points was in response to China's announcement early Friday that it planned to levy a 5% tariff on US crude imports from September 1, part of a new round of tariffs on $75 billion worth of US goods imports that will be implemented in two batches from September 1 and December 15.

Petrochemicals 23 Aug 2019 | 16:45 UTC Singapore

China to impose 5% extra tariff on US butane, propane: State Council

Topic US-China Trade Tension

Singapore — China plans to impose 5% additional tariffs on imports of US butane and propane, the State Council's Tariff Commission said in a statement Friday on the Ministry of Finance website.

The tariff on US butane will take effect from September 1, while the tariff on US propane will take effect from December 15, the statement said. This takes the total tariff on each fuel to 31%, as China has already imposed 26% tariffs on them.

They are part of a new set of tariffs on $75 billion worth of US goods imports that will be implemented in two batches from September 1 and December 15, in retaliation for US tariffs on $300 billion of Chinese goods announced in August 15.

Petrochemicals 23 Aug 2019 | 16:45 UTC Singapore

China to impose 5% extra tariff on US butane, propane: State Council

Topic US-China Trade Tension

Singapore — China plans to impose 5% additional tariffs on imports of US butane and propane, the State Council's Tariff Commission said in a statement Friday on the Ministry of Finance website.

The tariff on US butane will take effect from September 1, while the tariff on US propane will take effect from December 15, the statement said. This takes the total tariff on each fuel to 31%, as China has already imposed 26% tariffs on them.

They are part of a new set of tariffs on $75 billion worth of US goods imports that will be implemented in two batches from September 1 and December 15, in retaliation for US tariffs on $300 billion of Chinese goods announced in August 15.

Petrochemicals 22 Aug 2019 | 03:16 UTC Singapore

PetroChina Guangdong to build world's largest single-train paraxylene unit

Singapore — PetroChina Guangdong Petrochemical Company has selected Honeywell UOP to build the world's largest single-train paraxylene unit at its new integrated petrochemical complex in Jieyang, Guangdong province, Honeywell said in a statement Thursday.

The new light desorbent parex aromatics complex will be able to produce 2.6 million mt/year of PX, using sulfolane, isomar, tatoray and olefin removal processes.

The Chinese major will also use heavy oil processing technology from Honeywell UOP with an annual crude processing capacity of 20 million mt/year.

Other units include a 3.7 million mt/year hydrocracking unit as well as two continuous catalytic reforming platforming process units, or reformers, each with the capacity of 3 million mt/year, the statement said.

Trial operations at the refining complex are expected to start in October 2021, while trial operation at the petrochemical units will begin two months later, S&P Global Platts reported earlier.

The complex also includes a 1.2 million mt/year naphtha cracker and high density and low density polyethylene, polypropylene, styrene monomer and butadiene, Platts also reported previously.

Petrochemicals 22 Aug 2019 | 03:16 UTC Singapore

PetroChina Guangdong to build world's largest single-train paraxylene unit

Singapore — PetroChina Guangdong Petrochemical Company has selected Honeywell UOP to build the world's largest single-train paraxylene unit at its new integrated petrochemical complex in Jieyang, Guangdong province, Honeywell said in a statement Thursday.

The new light desorbent parex aromatics complex will be able to produce 2.6 million mt/year of PX, using sulfolane, isomar, tatoray and olefin removal processes.

The Chinese major will also use heavy oil processing technology from Honeywell UOP with an annual crude processing capacity of 20 million mt/year.

Other units include a 3.7 million mt/year hydrocracking unit as well as two continuous catalytic reforming platforming process units, or reformers, each with the capacity of 3 million mt/year, the statement said.

Trial operations at the refining complex are expected to start in October 2021, while trial operation at the petrochemical units will begin two months later, S&P Global Platts reported earlier.

The complex also includes a 1.2 million mt/year naphtha cracker and high density and low density polyethylene, polypropylene, styrene monomer and butadiene, Platts also reported previously.

https://blogs.platts.com/2019/08/23/colombia-plastic-bag-consumption-hdpe/

https://blogs.platts.com/2019/08/23/colombia-plastic-bag-consumption-hdpe/

https://www.reuters.com/article/us-china-petrochemical-analysis/chinas-petrochemical-expansion-to-overwhelm-japan-south-korea-producers-idUSKCN1VA0US

https://www.reuters.com/article/us-china-petrochemical-analysis/chinas-petrochemical-expansion-to-overwhelm-japan-south-korea-producers-idUSKCN1VA0US

2019 2nd half Outlook: Global propylene supply to remain healthy on extra capacity, strong inventories

US inventories establish records in 2019
US-Europe arbitrage under pressure, but outlook mixed
Asia likely to stay stable-to-soft as a result of additional PDH plants

Global propylene markets will continue to see healthy supply availability in the second half of 2019 as fresh capacity comes online in Asia and US inventory levels remain strong.
As supply improved, alongside a slowdown in derivatives demand, global propylene spot prices fell this year from the multi-year highs seen in 2018, and the US market has taken the steepest dive.
US propylene supply has recovered in the first half of 2019, as production from propane dehydrogenation units has improved. This was in line with expectations for the front half of the year, and eventually led to record high inventory levels of 6.459 million barrels in March, according to the US Energy Information Administration.

Trade participants have said this is something they expect to continue for the remainder of the year.
The overall increase in inventories has pressured US propylene spot prices, leaving them well below 2018 levels. Polymer-grade propylene spot prices hit a low of 32 cents/lb ($705/mt) FD USG in late February before rebounding and then receding again to 32 cents/lb FD USG in mid-June.
US EXPORTS INCREASE, BUT ARBITRAGE TO EUROPE CHALLENGED IN H2
As supply length pushed spot prices to levels not seen since the end of 2016, US propylene exports have increased through the first four months of 2019, according to data from the US International Trade Commission. Volumes mainly headed to Latin America, and market participants have said they expect this to continue throughout 2019.

Europe has also seen an increase in shipments of US molecules as players anticipated supply tightness amid a heavy steam cracker turnaround schedule in the second quarter.
According to Eurostat data, imports from the US in the first four months of 2019 averaged 13,600 mt/month, compared with 920 mt/month in the same period in 2018. Meanwhile, imports reached an all-time high in February of 63,760 mt, the data show.
Since the beginning of 2019, Europe polymer grade propylene has traded at a premium to other regions before falling below $1,000/mt FD NWE, close to levels in Asia and narrowing the gap with the US.

With that recent relative weakness, market players have started questioning if arbitrage opportunities still exist, already anticipating a decline in imports from the US.
The premium of the European PGP spot price over its US equivalent was calculated at between $150/mt and $200/mt at the beginning of July, meaning the arbitrage was closed on paper.
"The arbitrage has been challenged, but from a volume perspective there is enough propylene for August," one European player said.
However, more planned maintenance is expected in Europe between August and October, meaning supply could turn tighter if the current trend continues.

ATTENTION IN ASIA TURNS TO NEW CAPACITY
Meanwhile, the Asian market will focus on startups, with more than 1.2 million mt/year of extra propylene production capacity expected to come online in China by H2.
This includes China's Fujian Meide Petrochemical's 660,000 mt/year PDH plant in September and Dongguan Juzhengyuan's 600,000 mt/year PDH plant by the end of H2. The additional capacity could reduce Chinese reliance on imported cargoes and exert pressure on spot price.
"We imported 600,000 mt of propylene feedstock for our two 500,000 mt/year polypropylene plants last year and will reduce the imports by 400,000 mt once our PDH plant is operating at full rate," said a company source at Fujian Meide Petrochemical.

As for the rest of Southeast Asia, Northeast Asia and South Korea, there will be less turnarounds in H2 compared with the front half of the year, ensuring a relatively stable supply of propylene, especially in the final three months of the year. Three steam crackers in the region with a total propylene capacity of over 1.5 million mt/year were heard to have plans for turnarounds in the current quarter. Chandra Asia, the major player in Indonesia, is expected to shut down its cracker for turnaround by August 1, while Formosa Petrochemical's No. 2 steam cracker unit will carry out scheduled maintenance by mid-August. Lotte Chemical is scheduled to shut its Daesan cracker by October 14.

Other market participants were keeping a close watch on the Malaysia's Petronas-Aramco RAPID project, which has experienced delays in the startup of the cracker and refinery. The complex's RFCC is now scheduled to produce 600,000 mt/year of propylene by the end of Q3, but is only due to produce on-spec propylene in Q4, according to a source with direct knowledge of the matter.

US AROMATICS
Prompt benzene prices in the US are expected to remain firm after an uptick in buy interest as sources anticipated tightness in the near term. Domestic production is expected to remain curtailed despite recent improvement in toluene conversion margins, while benzene demand was expected to remain firm. Demand was bolstered by talk of an outage downstream at Innova's facility at Triunfo. Details and confirmation were unavailable, but sources said the outage spurred 18,000-20,000 mt of styrene exports, and this had lent support to higher styrene prices. These dynamics were not expected to change, and styrene demand was expected to remain firm amid anticipated outages by multiple European producers. In toluene, prices were expected flat to lower as pricing continued to trace declining blend values. Lower toluene pricing was expected to support toluene conversion margins but was unlikely to lead to an increase in run rates. In xylenes, mixed xylenes pricing was expected to continue tracing blend values after a recent jump in pricing. Participants said that buy interest had increased ahead of planned maintenance by Suncor, though this was not confirmed at time of publication. Paraxylene was expected to see continued pressure from global length. Pricing was talked at $790-$800/mt FOB USG, though discussions were purely academic amid a dearth of spot activity.

Petrochemicals 19 Aug 2019 | 21:30 UTC Houston

Americas petrochemicals outlook, w/c Aug 19


US OLEFINS
August propylene contract discussions are expected to start this week, according to trade participants. Direction was unclear, however, as the propylene spot market had been moving higher last week, because of falling inventory levels. But sources have also said the market remains well supplied. Meanwhile, US ethylene sources said uncertainty remained about the startup timeline of the closed cracker at ExxonMobil's Baytown, Texas, olefins complex.

US POLYMERS
Trade participants said producers were seeking increasing prices for polyethylene, but thin demand and ample supply were still keeping pricing pressure on the market. US polypropylene sources began discussing the pending monthly polymer-grade propylene contract, with at least one source anticipating that it will settle flat at 38 cents/lb. Negotiations should begin in earnest this week, with the settlement impacting spot PP pricing.

LATIN POLYETHYLENE
Latin America continues watching a downtrend in polyethylene pricing following the same trend in the US market, sources said. Pricing of HDPE film remains under pressure due to healthy availability and soft global demand. But some market participants said US-origin LDPE is less available for exports after the steam cracker was shut at the ExxonMobil Baytown olefins complex. The Brazilian polyethylene market is expected to start another week with pressure from international prices, which could continue triggering CFR prices to lower levels -- the lowest since S&P global Platts started its assessments. Currency exchange volatility is starting the week less favorable to the Real at Real 4/$1, putting less pressure on domestic prices, still unchanged. In Argentina, domestic prices were expected to be flat after a $50/mt increase last week. The polyethylene market has been under uncertainty after Dow Chemical's Bahia Blanca complex suffered an explosion in its ethylene cracker BB 2 plant in Dow Argentina at the end of June. The company said the complex would be offline until the end of the third quarter. The lack of availability was a driver for the hikes, but market sources said it was softened by the latest currency devaluation of around 30% last week after the recent presidential primary. General interest rates increased to 74%. Therefore, credit is almost unavailable, and activity is expected to slow down in the country.

LATIN POLYPROPYLENE
The Latin America polypropylene market is expected to start the week under continued pressure from international prices, sources said. Market participants will continue monitoring the US fluctuating polymer-grade propylene prices, as they influence prices for US PP, sources said. Macroeconomic concerns are also rising as currency depreciation in most Latin America countries against the US dollar continue to affect buying interest. One trader said that market participants had switched their thoughts to September order books, as August demand continued weak. Brazilian polypropylene homopolymer and co-polymer markets were unchanged, seeing less volatility in CFR prices lately.

US VINYLS
US export polyvinyl chloride prices were expected to remain in a range of $765-$775/mt FAS Houston this week, where producers settled August pricing, as market participants look toward September pricing negotiations. A deal for H2 September loading to India was heard done at $790-$800/mt FAS Houston, but market participants were skeptical of whether sluggish demand elsewhere would support that pricing level. Indian demand was seen strengthening as buyers were seeking to stock up on PVC volumes ahead of the end of the monsoon season. In addition, last week Asian producers announced fresh September offers up $30/mt from August levels, and one provided less volume than normal with a turnaround planned next month, and volumes designated for India sold out quickly. However, market sources noted that India's decision in July to lift anti-dumping duties on PVC from various countries, including Japan, the European Union, Indonesia and Malaysia, opens the door to more competition to supply that market. Last month, India reduced anti-dumping duties on material from some US producers but did not eliminate them. Upstream, market participants saw little change to ethylene dichloride and caustic soda pricing amid sluggish global demand.

2019 2nd half Outlook: Global propylene supply to remain healthy on extra capacity, strong inventories

US inventories establish records in 2019
US-Europe arbitrage under pressure, but outlook mixed
Asia likely to stay stable-to-soft as a result of additional PDH plants

Global propylene markets will continue to see healthy supply availability in the second half of 2019 as fresh capacity comes online in Asia and US inventory levels remain strong.
As supply improved, alongside a slowdown in derivatives demand, global propylene spot prices fell this year from the multi-year highs seen in 2018, and the US market has taken the steepest dive.
US propylene supply has recovered in the first half of 2019, as production from propane dehydrogenation units has improved. This was in line with expectations for the front half of the year, and eventually led to record high inventory levels of 6.459 million barrels in March, according to the US Energy Information Administration.

Trade participants have said this is something they expect to continue for the remainder of the year.
The overall increase in inventories has pressured US propylene spot prices, leaving them well below 2018 levels. Polymer-grade propylene spot prices hit a low of 32 cents/lb ($705/mt) FD USG in late February before rebounding and then receding again to 32 cents/lb FD USG in mid-June.
US EXPORTS INCREASE, BUT ARBITRAGE TO EUROPE CHALLENGED IN H2
As supply length pushed spot prices to levels not seen since the end of 2016, US propylene exports have increased through the first four months of 2019, according to data from the US International Trade Commission. Volumes mainly headed to Latin America, and market participants have said they expect this to continue throughout 2019.

Europe has also seen an increase in shipments of US molecules as players anticipated supply tightness amid a heavy steam cracker turnaround schedule in the second quarter.
According to Eurostat data, imports from the US in the first four months of 2019 averaged 13,600 mt/month, compared with 920 mt/month in the same period in 2018. Meanwhile, imports reached an all-time high in February of 63,760 mt, the data show.
Since the beginning of 2019, Europe polymer grade propylene has traded at a premium to other regions before falling below $1,000/mt FD NWE, close to levels in Asia and narrowing the gap with the US.

With that recent relative weakness, market players have started questioning if arbitrage opportunities still exist, already anticipating a decline in imports from the US.
The premium of the European PGP spot price over its US equivalent was calculated at between $150/mt and $200/mt at the beginning of July, meaning the arbitrage was closed on paper.
"The arbitrage has been challenged, but from a volume perspective there is enough propylene for August," one European player said.
However, more planned maintenance is expected in Europe between August and October, meaning supply could turn tighter if the current trend continues.

ATTENTION IN ASIA TURNS TO NEW CAPACITY
Meanwhile, the Asian market will focus on startups, with more than 1.2 million mt/year of extra propylene production capacity expected to come online in China by H2.
This includes China's Fujian Meide Petrochemical's 660,000 mt/year PDH plant in September and Dongguan Juzhengyuan's 600,000 mt/year PDH plant by the end of H2. The additional capacity could reduce Chinese reliance on imported cargoes and exert pressure on spot price.
"We imported 600,000 mt of propylene feedstock for our two 500,000 mt/year polypropylene plants last year and will reduce the imports by 400,000 mt once our PDH plant is operating at full rate," said a company source at Fujian Meide Petrochemical.

As for the rest of Southeast Asia, Northeast Asia and South Korea, there will be less turnarounds in H2 compared with the front half of the year, ensuring a relatively stable supply of propylene, especially in the final three months of the year. Three steam crackers in the region with a total propylene capacity of over 1.5 million mt/year were heard to have plans for turnarounds in the current quarter. Chandra Asia, the major player in Indonesia, is expected to shut down its cracker for turnaround by August 1, while Formosa Petrochemical's No. 2 steam cracker unit will carry out scheduled maintenance by mid-August. Lotte Chemical is scheduled to shut its Daesan cracker by October 14.

Other market participants were keeping a close watch on the Malaysia's Petronas-Aramco RAPID project, which has experienced delays in the startup of the cracker and refinery. The complex's RFCC is now scheduled to produce 600,000 mt/year of propylene by the end of Q3, but is only due to produce on-spec propylene in Q4, according to a source with direct knowledge of the matter.

https://www.reuters.com/article/us-china-petrochemical-analysis/chinas-petrochemical-expansion-to-overwhelm-japan-south-korea-producers-idUSKCN1VA0US

US AROMATICS
Prompt benzene prices in the US are expected to remain firm after an uptick in buy interest as sources anticipated tightness in the near term. Domestic production is expected to remain curtailed despite recent improvement in toluene conversion margins, while benzene demand was expected to remain firm. Demand was bolstered by talk of an outage downstream at Innova's facility at Triunfo. Details and confirmation were unavailable, but sources said the outage spurred 18,000-20,000 mt of styrene exports, and this had lent support to higher styrene prices. These dynamics were not expected to change, and styrene demand was expected to remain firm amid anticipated outages by multiple European producers. In toluene, prices were expected flat to lower as pricing continued to trace declining blend values. Lower toluene pricing was expected to support toluene conversion margins but was unlikely to lead to an increase in run rates. In xylenes, mixed xylenes pricing was expected to continue tracing blend values after a recent jump in pricing. Participants said that buy interest had increased ahead of planned maintenance by Suncor, though this was not confirmed at time of publication. Paraxylene was expected to see continued pressure from global length. Pricing was talked at $790-$800/mt FOB USG, though discussions were purely academic amid a dearth of spot activity.

Petrochemicals 19 Aug 2019 | 21:30 UTC Houston

Americas petrochemicals outlook, w/c Aug 19


US OLEFINS
August propylene contract discussions are expected to start this week, according to trade participants. Direction was unclear, however, as the propylene spot market had been moving higher last week, because of falling inventory levels. But sources have also said the market remains well supplied. Meanwhile, US ethylene sources said uncertainty remained about the startup timeline of the closed cracker at ExxonMobil's Baytown, Texas, olefins complex.

US POLYMERS
Trade participants said producers were seeking increasing prices for polyethylene, but thin demand and ample supply were still keeping pricing pressure on the market. US polypropylene sources began discussing the pending monthly polymer-grade propylene contract, with at least one source anticipating that it will settle flat at 38 cents/lb. Negotiations should begin in earnest this week, with the settlement impacting spot PP pricing.

LATIN POLYETHYLENE
Latin America continues watching a downtrend in polyethylene pricing following the same trend in the US market, sources said. Pricing of HDPE film remains under pressure due to healthy availability and soft global demand. But some market participants said US-origin LDPE is less available for exports after the steam cracker was shut at the ExxonMobil Baytown olefins complex. The Brazilian polyethylene market is expected to start another week with pressure from international prices, which could continue triggering CFR prices to lower levels -- the lowest since S&P global Platts started its assessments. Currency exchange volatility is starting the week less favorable to the Real at Real 4/$1, putting less pressure on domestic prices, still unchanged. In Argentina, domestic prices were expected to be flat after a $50/mt increase last week. The polyethylene market has been under uncertainty after Dow Chemical's Bahia Blanca complex suffered an explosion in its ethylene cracker BB 2 plant in Dow Argentina at the end of June. The company said the complex would be offline until the end of the third quarter. The lack of availability was a driver for the hikes, but market sources said it was softened by the latest currency devaluation of around 30% last week after the recent presidential primary. General interest rates increased to 74%. Therefore, credit is almost unavailable, and activity is expected to slow down in the country.

LATIN POLYPROPYLENE
The Latin America polypropylene market is expected to start the week under continued pressure from international prices, sources said. Market participants will continue monitoring the US fluctuating polymer-grade propylene prices, as they influence prices for US PP, sources said. Macroeconomic concerns are also rising as currency depreciation in most Latin America countries against the US dollar continue to affect buying interest. One trader said that market participants had switched their thoughts to September order books, as August demand continued weak. Brazilian polypropylene homopolymer and co-polymer markets were unchanged, seeing less volatility in CFR prices lately.

US VINYLS
US export polyvinyl chloride prices were expected to remain in a range of $765-$775/mt FAS Houston this week, where producers settled August pricing, as market participants look toward September pricing negotiations. A deal for H2 September loading to India was heard done at $790-$800/mt FAS Houston, but market participants were skeptical of whether sluggish demand elsewhere would support that pricing level. Indian demand was seen strengthening as buyers were seeking to stock up on PVC volumes ahead of the end of the monsoon season. In addition, last week Asian producers announced fresh September offers up $30/mt from August levels, and one provided less volume than normal with a turnaround planned next month, and volumes designated for India sold out quickly. However, market sources noted that India's decision in July to lift anti-dumping duties on PVC from various countries, including Japan, the European Union, Indonesia and Malaysia, opens the door to more competition to supply that market. Last month, India reduced anti-dumping duties on material from some US producers but did not eliminate them. Upstream, market participants saw little change to ethylene dichloride and caustic soda pricing amid sluggish global demand.

Petrochemicals 16 Aug 2019 | 07:09 UTC Singapore

Analysis: China's faltering car sales crimp petrochemical, gasoline demand

Singapore — Chinese gasoline and petrochemical demand growth is under pressure from decelerating automobile sales that are expected to worsen this year, exacerbated by a slowing economy, and the currency and trade dispute with the US.

The slowdown threatens the margins of key petrochemical producers in China and other parts of Asia, and paves the way for a growing glut of gasoline supplies flooding regional markets, weighing down on prices and refining margins.

Chinese motor vehicle sales in the first half of 2019 plunged 14.35% year on year to 12.18 million units, according to China's National Bureau of Statistics, reigniting worries of a second consecutive year of falling sales.

China's wholesale car sales dropped 7.8% on year to 1.73 million units in June, despite retailers offering discounts of up to 30% to destock inventories of cars with old emissions standards. Sales are expected to fall 11% on year in 2019, according to S&P Global Platts Analytics.

"As such, we estimate passenger vehicle wholesales will continue dropping by 13% year on year in 3Q19. The decline will likely ameliorate to -2.7% year on year in 4Q19 on the back of year-end discount offered by retailers," Platts Analytics said in its latest China oil market forecast.

"There is no sign of recovery in the Chinese car industry anytime soon amid the US-China trade war, which has extended into the currency war now," Eun Young Lee, equity research vice president, at DBS said.

The International Energy Agency said that while worldwide car sales could drop by 5% this year as the economy slows, the decline will be particularly pronounced in China, which represents a third of global car sales.

The bleak outlook for Chinese car manufacturers is having a direct impact on gasoline and petrochemical demand.

BEARISH ABS AND SBR MARKETS
"Together with a strong increase in production capacity and a general slowdown in economic activity, the sharp drop in automobile sales explains part of the difficulties currently experienced by the petrochemical sector," the IEA said in its latest monthly report.

It added that carmakers use a lot of plastic and petrochemical products, and petrochemical feedstock demand has been particularly weak in recent months, with global naphtha demand under pressure since March and LPG/ethane demand barely recovering to last year's levels.

There is a bearish impact on Asian acrylonitrile-butadiene-styrene (ABS) and styrene butadiene rubber (SBR) markets, both of which are used for car manufacturing, and prices have already fallen.

ABS prices hit a three-year low of $1,370/mt CFR China August 7, while prices for SBR for the 1502 grade -- commonly used in passenger vehicle tires -- also dipped to an eight-month low of $1,290/mt CFR SEA August 8, according to Platts assessments.

Should car sales dip further, ABS demand over one year could shrink by around 768,000 mt, market sources said.

Some SBR producers, such as China's Zhejiang Transfar Chemicals Group, China Shenhua Energy Co. Ltd. and Thailand's Bangkok Synthetic Co., have already announced plant maintenance shutdowns in response to the negative margins.

With July's SBR margins averaging minus $105.53/mt, basis CFR China, several SBR sources have also warned of more cuts in following months should negative margins continue.

GASOLINE EXPORTS SHRINK
Lower car sales are also stifling gasoline demand growth and worsening the already persistent domestic oversupply in China, prompting higher exports in coming months.

"China's gasoline demand growth has been on a slow decline. Year-on-year growth for 2019 is expected to be around 75,000 b/d, down 29% from the previous year," Anthony Tso, senior analyst at Platts Analytics, said.

"Dampened domestic demand may become more apparent in 2H19, which will encourage more gasoline exports, up to 400,000 b/d (approx. 1.4 million mt) on average for the rest of the year," he added.

China's gasoline exports in May and June were at a relatively low level of 848,000 mt and 998,000 mt, respectively, but analysts said exports in July and August could top 1 million mt/month, with at least one Singapore-based analyst projecting exports of 1.5 million mt.

Oil companies only consumed 42.7%, or 6.78 million mt, of their year-to-date gasoline export quotas in H1, leaving at least 9.11 million mt quota available for rest of the year, Platts data showed.

Fundamentals in the Chinese domestic gasoline market have been weak as large-scale private refineries, like the 400,000-b/d Hengli Petrochemical (Dalian) Refinery have flooded the market, even as China works on a long-term shift away from internal combustion engine or ICE vehicles to electric vehicles.

Petrochemicals 16 Aug 2019 | 07:09 UTC Singapore

Analysis: China's faltering car sales crimp petrochemical, gasoline demand

Singapore — Chinese gasoline and petrochemical demand growth is under pressure from decelerating automobile sales that are expected to worsen this year, exacerbated by a slowing economy, and the currency and trade dispute with the US.

The slowdown threatens the margins of key petrochemical producers in China and other parts of Asia, and paves the way for a growing glut of gasoline supplies flooding regional markets, weighing down on prices and refining margins.

Chinese motor vehicle sales in the first half of 2019 plunged 14.35% year on year to 12.18 million units, according to China's National Bureau of Statistics, reigniting worries of a second consecutive year of falling sales.

China's wholesale car sales dropped 7.8% on year to 1.73 million units in June, despite retailers offering discounts of up to 30% to destock inventories of cars with old emissions standards. Sales are expected to fall 11% on year in 2019, according to S&P Global Platts Analytics.

"As such, we estimate passenger vehicle wholesales will continue dropping by 13% year on year in 3Q19. The decline will likely ameliorate to -2.7% year on year in 4Q19 on the back of year-end discount offered by retailers," Platts Analytics said in its latest China oil market forecast.

"There is no sign of recovery in the Chinese car industry anytime soon amid the US-China trade war, which has extended into the currency war now," Eun Young Lee, equity research vice president, at DBS said.

The International Energy Agency said that while worldwide car sales could drop by 5% this year as the economy slows, the decline will be particularly pronounced in China, which represents a third of global car sales.

The bleak outlook for Chinese car manufacturers is having a direct impact on gasoline and petrochemical demand.

BEARISH ABS AND SBR MARKETS
"Together with a strong increase in production capacity and a general slowdown in economic activity, the sharp drop in automobile sales explains part of the difficulties currently experienced by the petrochemical sector," the IEA said in its latest monthly report.

It added that carmakers use a lot of plastic and petrochemical products, and petrochemical feedstock demand has been particularly weak in recent months, with global naphtha demand under pressure since March and LPG/ethane demand barely recovering to last year's levels.

There is a bearish impact on Asian acrylonitrile-butadiene-styrene (ABS) and styrene butadiene rubber (SBR) markets, both of which are used for car manufacturing, and prices have already fallen.

ABS prices hit a three-year low of $1,370/mt CFR China August 7, while prices for SBR for the 1502 grade -- commonly used in passenger vehicle tires -- also dipped to an eight-month low of $1,290/mt CFR SEA August 8, according to Platts assessments.

Should car sales dip further, ABS demand over one year could shrink by around 768,000 mt, market sources said.

Some SBR producers, such as China's Zhejiang Transfar Chemicals Group, China Shenhua Energy Co. Ltd. and Thailand's Bangkok Synthetic Co., have already announced plant maintenance shutdowns in response to the negative margins.

With July's SBR margins averaging minus $105.53/mt, basis CFR China, several SBR sources have also warned of more cuts in following months should negative margins continue.

GASOLINE EXPORTS SHRINK
Lower car sales are also stifling gasoline demand growth and worsening the already persistent domestic oversupply in China, prompting higher exports in coming months.

"China's gasoline demand growth has been on a slow decline. Year-on-year growth for 2019 is expected to be around 75,000 b/d, down 29% from the previous year," Anthony Tso, senior analyst at Platts Analytics, said.

"Dampened domestic demand may become more apparent in 2H19, which will encourage more gasoline exports, up to 400,000 b/d (approx. 1.4 million mt) on average for the rest of the year," he added.

China's gasoline exports in May and June were at a relatively low level of 848,000 mt and 998,000 mt, respectively, but analysts said exports in July and August could top 1 million mt/month, with at least one Singapore-based analyst projecting exports of 1.5 million mt.

Oil companies only consumed 42.7%, or 6.78 million mt, of their year-to-date gasoline export quotas in H1, leaving at least 9.11 million mt quota available for rest of the year, Platts data showed.

Fundamentals in the Chinese domestic gasoline market have been weak as large-scale private refineries, like the 400,000-b/d Hengli Petrochemical (Dalian) Refinery have flooded the market, even as China works on a long-term shift away from internal combustion engine or ICE vehicles to electric vehicles.

Petrochemicals 16 Aug 2019 | 07:09 UTC Singapore

Analysis: China's faltering car sales crimp petrochemical, gasoline demand

Singapore — Chinese gasoline and petrochemical demand growth is under pressure from decelerating automobile sales that are expected to worsen this year, exacerbated by a slowing economy, and the currency and trade dispute with the US.

The slowdown threatens the margins of key petrochemical producers in China and other parts of Asia, and paves the way for a growing glut of gasoline supplies flooding regional markets, weighing down on prices and refining margins.

Chinese motor vehicle sales in the first half of 2019 plunged 14.35% year on year to 12.18 million units, according to China's National Bureau of Statistics, reigniting worries of a second consecutive year of falling sales.

China's wholesale car sales dropped 7.8% on year to 1.73 million units in June, despite retailers offering discounts of up to 30% to destock inventories of cars with old emissions standards. Sales are expected to fall 11% on year in 2019, according to S&P Global Platts Analytics.

"As such, we estimate passenger vehicle wholesales will continue dropping by 13% year on year in 3Q19. The decline will likely ameliorate to -2.7% year on year in 4Q19 on the back of year-end discount offered by retailers," Platts Analytics said in its latest China oil market forecast.

"There is no sign of recovery in the Chinese car industry anytime soon amid the US-China trade war, which has extended into the currency war now," Eun Young Lee, equity research vice president, at DBS said.

The International Energy Agency said that while worldwide car sales could drop by 5% this year as the economy slows, the decline will be particularly pronounced in China, which represents a third of global car sales.

The bleak outlook for Chinese car manufacturers is having a direct impact on gasoline and petrochemical demand.

BEARISH ABS AND SBR MARKETS
"Together with a strong increase in production capacity and a general slowdown in economic activity, the sharp drop in automobile sales explains part of the difficulties currently experienced by the petrochemical sector," the IEA said in its latest monthly report.

It added that carmakers use a lot of plastic and petrochemical products, and petrochemical feedstock demand has been particularly weak in recent months, with global naphtha demand under pressure since March and LPG/ethane demand barely recovering to last year's levels.

There is a bearish impact on Asian acrylonitrile-butadiene-styrene (ABS) and styrene butadiene rubber (SBR) markets, both of which are used for car manufacturing, and prices have already fallen.

ABS prices hit a three-year low of $1,370/mt CFR China August 7, while prices for SBR for the 1502 grade -- commonly used in passenger vehicle tires -- also dipped to an eight-month low of $1,290/mt CFR SEA August 8, according to Platts assessments.

Should car sales dip further, ABS demand over one year could shrink by around 768,000 mt, market sources said.

Some SBR producers, such as China's Zhejiang Transfar Chemicals Group, China Shenhua Energy Co. Ltd. and Thailand's Bangkok Synthetic Co., have already announced plant maintenance shutdowns in response to the negative margins.

With July's SBR margins averaging minus $105.53/mt, basis CFR China, several SBR sources have also warned of more cuts in following months should negative margins continue.

GASOLINE EXPORTS SHRINK
Lower car sales are also stifling gasoline demand growth and worsening the already persistent domestic oversupply in China, prompting higher exports in coming months.

"China's gasoline demand growth has been on a slow decline. Year-on-year growth for 2019 is expected to be around 75,000 b/d, down 29% from the previous year," Anthony Tso, senior analyst at Platts Analytics, said.

"Dampened domestic demand may become more apparent in 2H19, which will encourage more gasoline exports, up to 400,000 b/d (approx. 1.4 million mt) on average for the rest of the year," he added.

China's gasoline exports in May and June were at a relatively low level of 848,000 mt and 998,000 mt, respectively, but analysts said exports in July and August could top 1 million mt/month, with at least one Singapore-based analyst projecting exports of 1.5 million mt.

Oil companies only consumed 42.7%, or 6.78 million mt, of their year-to-date gasoline export quotas in H1, leaving at least 9.11 million mt quota available for rest of the year, Platts data showed.

Fundamentals in the Chinese domestic gasoline market have been weak as large-scale private refineries, like the 400,000-b/d Hengli Petrochemical (Dalian) Refinery have flooded the market, even as China works on a long-term shift away from internal combustion engine or ICE vehicles to electric vehicles.

Petrochemicals 16 Aug 2019 | 07:09 UTC Singapore

Analysis: China's faltering car sales crimp petrochemical, gasoline demand

Singapore — Chinese gasoline and petrochemical demand growth is under pressure from decelerating automobile sales that are expected to worsen this year, exacerbated by a slowing economy, and the currency and trade dispute with the US.

The slowdown threatens the margins of key petrochemical producers in China and other parts of Asia, and paves the way for a growing glut of gasoline supplies flooding regional markets, weighing down on prices and refining margins.

Chinese motor vehicle sales in the first half of 2019 plunged 14.35% year on year to 12.18 million units, according to China's National Bureau of Statistics, reigniting worries of a second consecutive year of falling sales.

China's wholesale car sales dropped 7.8% on year to 1.73 million units in June, despite retailers offering discounts of up to 30% to destock inventories of cars with old emissions standards. Sales are expected to fall 11% on year in 2019, according to S&P Global Platts Analytics.

"As such, we estimate passenger vehicle wholesales will continue dropping by 13% year on year in 3Q19. The decline will likely ameliorate to -2.7% year on year in 4Q19 on the back of year-end discount offered by retailers," Platts Analytics said in its latest China oil market forecast.

"There is no sign of recovery in the Chinese car industry anytime soon amid the US-China trade war, which has extended into the currency war now," Eun Young Lee, equity research vice president, at DBS said.

The International Energy Agency said that while worldwide car sales could drop by 5% this year as the economy slows, the decline will be particularly pronounced in China, which represents a third of global car sales.

The bleak outlook for Chinese car manufacturers is having a direct impact on gasoline and petrochemical demand.

BEARISH ABS AND SBR MARKETS
"Together with a strong increase in production capacity and a general slowdown in economic activity, the sharp drop in automobile sales explains part of the difficulties currently experienced by the petrochemical sector," the IEA said in its latest monthly report.

It added that carmakers use a lot of plastic and petrochemical products, and petrochemical feedstock demand has been particularly weak in recent months, with global naphtha demand under pressure since March and LPG/ethane demand barely recovering to last year's levels.

There is a bearish impact on Asian acrylonitrile-butadiene-styrene (ABS) and styrene butadiene rubber (SBR) markets, both of which are used for car manufacturing, and prices have already fallen.

ABS prices hit a three-year low of $1,370/mt CFR China August 7, while prices for SBR for the 1502 grade -- commonly used in passenger vehicle tires -- also dipped to an eight-month low of $1,290/mt CFR SEA August 8, according to Platts assessments.

Should car sales dip further, ABS demand over one year could shrink by around 768,000 mt, market sources said.

Some SBR producers, such as China's Zhejiang Transfar Chemicals Group, China Shenhua Energy Co. Ltd. and Thailand's Bangkok Synthetic Co., have already announced plant maintenance shutdowns in response to the negative margins.

With July's SBR margins averaging minus $105.53/mt, basis CFR China, several SBR sources have also warned of more cuts in following months should negative margins continue.

GASOLINE EXPORTS SHRINK
Lower car sales are also stifling gasoline demand growth and worsening the already persistent domestic oversupply in China, prompting higher exports in coming months.

"China's gasoline demand growth has been on a slow decline. Year-on-year growth for 2019 is expected to be around 75,000 b/d, down 29% from the previous year," Anthony Tso, senior analyst at Platts Analytics, said.

"Dampened domestic demand may become more apparent in 2H19, which will encourage more gasoline exports, up to 400,000 b/d (approx. 1.4 million mt) on average for the rest of the year," he added.

China's gasoline exports in May and June were at a relatively low level of 848,000 mt and 998,000 mt, respectively, but analysts said exports in July and August could top 1 million mt/month, with at least one Singapore-based analyst projecting exports of 1.5 million mt.

Oil companies only consumed 42.7%, or 6.78 million mt, of their year-to-date gasoline export quotas in H1, leaving at least 9.11 million mt quota available for rest of the year, Platts data showed.

Fundamentals in the Chinese domestic gasoline market have been weak as large-scale private refineries, like the 400,000-b/d Hengli Petrochemical (Dalian) Refinery have flooded the market, even as China works on a long-term shift away from internal combustion engine or ICE vehicles to electric vehicles.

Petrochemicals 06 Aug 2019 | 04:20 UTC Singapore

Asian MEG falls to 10-year low on escalating US-China trade tension

Commodity: Petrochemicals
Topic: US-China Trade Tension

Singapore — The CFR China marker for monoethylene glycol continued its downtrend, falling to a 10-year low at $512/mt Monday as the US-China trade dispute escalated further, according to S&P Global Platts data.

Asian MEG prices were last lower at $505/mt CFR China on April 1, 2009, Platts data showed.

Asian monoethylene glycol price falls to 10-year low

US President Donald Trump announced last Thursday that the US will impose 10% tariffs on additional $300 billion Chinese goods from September 1. This includes all Chinese textile and apparels exported to US that are not subject to tariffs yet, sources said.

Prior to the US latest tariffs imposition, the Asian MEG prices had been rangebound and averaged $537/mt CFR China since mid-May due to a lack of market direction.

Trade participants were concerned the prevailing weak demand will further worsen along the whole polyester chain. Consequently, prices of MEG and purified terephthalic acid tumbled $33/mt and $20/mt from last Thursday to $512/mt CFR China and $690/mt CFR China respectively, Platts data showed.

In addition, Chinese yuan has depreciated sharply post-US tariffs announcement, with the US dollar/China yuan rate hitting year-to-date high of 6.9225 Monday and more than a decade high of 6.9683 Tuesday.

The weaker yuan further weighed on dollar-denominated MEG imports prices, forcing the CFR China marker to fall faster than China's domestic prompt MEG prices, a source said.


Olefinscan
With the global olefins market changing, having access to information on the key drivers behind feedstock and derivative price trends is crucial.

China domestic prompt MEG prices was assessed at Yuan 4,275/mt Monday (around $506/mt import parity value), down Yuan 200/mt from last Thursday.

Meanwhile, MEG fundamentals have been firmer with inventories continuously falling from their record-high of 1.4 million mt in mid-April, to around 1 million mt last week at the main ports of China's east, Platts reported earlier. This was still higher than the averaged 700,000 mt typical stock level in the previous year.

Nevertheless, with more Asian MEG plants set to resume operations after turnarounds and plans to ramp up production in the third quarter, most market participants doubted China MEG stocks would continue to decline, especially in the face of weaker demand prospects.

The overall rate of downstream Chinese polyester operation has dropped to around 85% since end-July, down from the rate of 90% and above over H2 June-early July, reflecting weak demand, according to market sources.

Petrochemicals 05 Aug 2019 | 09:00 UTC Singapore

Asia petrochemicals outlook, w/c August 5

The Asian petrochemical markets this week will continue to be pressured by the US president's announcement to impose 10% tariff on another $300 billion worth of Chinese goods, effective September 1.

The depreciation of the Chinese yuan against the US dollar, both offshore and on shore, which tracked the escalation in US-China trade tensions, may further impact petrochemical products and weaken buyers' interest for imported materials.

AROMATICS
Sentiment in the Asian paraxylene market may turn bearish this week after the US announced it will impose tariffs on additional Chinese goods. Traders said there would be little support for PX prices downstream after last week's August PX Asian contract price negotiations failed to result in a settlement. The PX/MX spread would likely continue to narrow this week as the recent strength in Northeast Asian gasoline was curtailing MX spot supply. Domestic MX prices in China were heard to be firming up due to demand from PX producers or gasoline blenders.

Asian benzene is likely to firm this week, with the South Korean market likely to be tight in September as a major South Korean producer is scheduled to undergo maintenance, where a loss of around 58,000 mt of benzene is expected. Nevertheless, little change is expected for FOB Korea demand due to the open South Korea-US arbitrage window. Recent plant troubles and delayed shipments in Southeast Asia may keep supplies in the region tight in September. On the demand front, end-users will likely be more keen on buying fixed-price cargoes, while traders eye the falling east China inventories as an opportunity to work the import-domestic arbitrage.

Asian styrene monomer would likely remain bearish this week, pressured by weak demand from downstream markets after the additional tariff announcement. Market sources noted the weakening yuan would likely hamper demand for imported materials.

OLEFINS
The Asian ethylene market is expected to be stable to firm this week as China was reported to be in need of some spot requirement due to the shutdown of a methanol-to-olefins unit for 15 days from the end of July in Jiangsu, China which produces 360,000 mt/year of ethylene. Ethylene supplies from Southeast Asia are also seen to be limited due to steam cracker turnaround season.

The Shandong propylene market is expected to strengthen from a week ago after major producer, Tianjin Bohai Chemical, lowered the operating rate of its PDH plant to 50%-60% since July 30 due to a technical glitch, and will only be fully operational by August 10. The strength in China's domestic propylene price is also lending support to the import market, and South Korean sellers are not willing to depart with their cargoes unless there is at least a $60/mt spread between the CFR China and FOB Korean market.

INTERMEDIATES
Chinese methanol prices are expected to be under pressure this week as China's offshore yuan weakened to slightly over $7 in early Monday trade. Tank top issues and an influx of South American, Trinidad & Tobago and Southeast Asian cargoes will likely compound length in the market. Elsewhere, fundamentals in South Korea and Taiwan are likely to remain bearish until mid-September as traders and end-users grapple with high inventory levels and lackluster demand.

Market sentiment along the whole polyester chain is likely to be bearish this week, amid the escalation of the US-China trade tensions. The $300 billion worth of Chinese goods will include all Chinese textile and apparels exported to the US that have not been imposed a tariff. Asian purified terephthalic acid prices tumbled $10/mt week on week last Friday, while monoethylene glycol prices fell $7/mt CFR China over the same period. In plant news, both China's Tongkun Group Co. Ltd and Ningbo Liwan shut PTA lines with capacities of 1.5 million mt/year and 720,000 mt/year, respectively, end-July, Platts reported previously.

POLYMERS
The global outlook for the polyethylene market is bearish for the remainder of the year due to a combination of weak feedstock costs, weak global demand and anticipated plant start ups, according to market participants. An estimated 4 million-5 million mt of new polyethylene supply is expected to come on line by end December, with 2.9 million mt of it in the US and the rest in Asia.

Petrochemicals 06 Aug 2019 | 04:20 UTC Singapore

Asian MEG falls to 10-year low on escalating US-China trade tension

Commodity: Petrochemicals
Topic: US-China Trade Tension

Singapore — The CFR China marker for monoethylene glycol continued its downtrend, falling to a 10-year low at $512/mt Monday as the US-China trade dispute escalated further, according to S&P Global Platts data.

Asian MEG prices were last lower at $505/mt CFR China on April 1, 2009, Platts data showed.

Asian monoethylene glycol price falls to 10-year low

US President Donald Trump announced last Thursday that the US will impose 10% tariffs on additional $300 billion Chinese goods from September 1. This includes all Chinese textile and apparels exported to US that are not subject to tariffs yet, sources said.

Prior to the US latest tariffs imposition, the Asian MEG prices had been rangebound and averaged $537/mt CFR China since mid-May due to a lack of market direction.

Trade participants were concerned the prevailing weak demand will further worsen along the whole polyester chain. Consequently, prices of MEG and purified terephthalic acid tumbled $33/mt and $20/mt from last Thursday to $512/mt CFR China and $690/mt CFR China respectively, Platts data showed.

In addition, Chinese yuan has depreciated sharply post-US tariffs announcement, with the US dollar/China yuan rate hitting year-to-date high of 6.9225 Monday and more than a decade high of 6.9683 Tuesday.

The weaker yuan further weighed on dollar-denominated MEG imports prices, forcing the CFR China marker to fall faster than China's domestic prompt MEG prices, a source said.


Olefinscan
With the global olefins market changing, having access to information on the key drivers behind feedstock and derivative price trends is crucial.

China domestic prompt MEG prices was assessed at Yuan 4,275/mt Monday (around $506/mt import parity value), down Yuan 200/mt from last Thursday.

Meanwhile, MEG fundamentals have been firmer with inventories continuously falling from their record-high of 1.4 million mt in mid-April, to around 1 million mt last week at the main ports of China's east, Platts reported earlier. This was still higher than the averaged 700,000 mt typical stock level in the previous year.

Nevertheless, with more Asian MEG plants set to resume operations after turnarounds and plans to ramp up production in the third quarter, most market participants doubted China MEG stocks would continue to decline, especially in the face of weaker demand prospects.

The overall rate of downstream Chinese polyester operation has dropped to around 85% since end-July, down from the rate of 90% and above over H2 June-early July, reflecting weak demand, according to market sources.

Petrochemicals 05 Aug 2019 | 09:00 UTC Singapore

Asia petrochemicals outlook, w/c August 5

The Asian petrochemical markets this week will continue to be pressured by the US president's announcement to impose 10% tariff on another $300 billion worth of Chinese goods, effective September 1.

The depreciation of the Chinese yuan against the US dollar, both offshore and on shore, which tracked the escalation in US-China trade tensions, may further impact petrochemical products and weaken buyers' interest for imported materials.

AROMATICS
Sentiment in the Asian paraxylene market may turn bearish this week after the US announced it will impose tariffs on additional Chinese goods. Traders said there would be little support for PX prices downstream after last week's August PX Asian contract price negotiations failed to result in a settlement. The PX/MX spread would likely continue to narrow this week as the recent strength in Northeast Asian gasoline was curtailing MX spot supply. Domestic MX prices in China were heard to be firming up due to demand from PX producers or gasoline blenders.

Asian benzene is likely to firm this week, with the South Korean market likely to be tight in September as a major South Korean producer is scheduled to undergo maintenance, where a loss of around 58,000 mt of benzene is expected. Nevertheless, little change is expected for FOB Korea demand due to the open South Korea-US arbitrage window. Recent plant troubles and delayed shipments in Southeast Asia may keep supplies in the region tight in September. On the demand front, end-users will likely be more keen on buying fixed-price cargoes, while traders eye the falling east China inventories as an opportunity to work the import-domestic arbitrage.

Asian styrene monomer would likely remain bearish this week, pressured by weak demand from downstream markets after the additional tariff announcement. Market sources noted the weakening yuan would likely hamper demand for imported materials.

OLEFINS
The Asian ethylene market is expected to be stable to firm this week as China was reported to be in need of some spot requirement due to the shutdown of a methanol-to-olefins unit for 15 days from the end of July in Jiangsu, China which produces 360,000 mt/year of ethylene. Ethylene supplies from Southeast Asia are also seen to be limited due to steam cracker turnaround season.

The Shandong propylene market is expected to strengthen from a week ago after major producer, Tianjin Bohai Chemical, lowered the operating rate of its PDH plant to 50%-60% since July 30 due to a technical glitch, and will only be fully operational by August 10. The strength in China's domestic propylene price is also lending support to the import market, and South Korean sellers are not willing to depart with their cargoes unless there is at least a $60/mt spread between the CFR China and FOB Korean market.

INTERMEDIATES
Chinese methanol prices are expected to be under pressure this week as China's offshore yuan weakened to slightly over $7 in early Monday trade. Tank top issues and an influx of South American, Trinidad & Tobago and Southeast Asian cargoes will likely compound length in the market. Elsewhere, fundamentals in South Korea and Taiwan are likely to remain bearish until mid-September as traders and end-users grapple with high inventory levels and lackluster demand.

Market sentiment along the whole polyester chain is likely to be bearish this week, amid the escalation of the US-China trade tensions. The $300 billion worth of Chinese goods will include all Chinese textile and apparels exported to the US that have not been imposed a tariff. Asian purified terephthalic acid prices tumbled $10/mt week on week last Friday, while monoethylene glycol prices fell $7/mt CFR China over the same period. In plant news, both China's Tongkun Group Co. Ltd and Ningbo Liwan shut PTA lines with capacities of 1.5 million mt/year and 720,000 mt/year, respectively, end-July, Platts reported previously.

POLYMERS
The global outlook for the polyethylene market is bearish for the remainder of the year due to a combination of weak feedstock costs, weak global demand and anticipated plant start ups, according to market participants. An estimated 4 million-5 million mt of new polyethylene supply is expected to come on line by end December, with 2.9 million mt of it in the US and the rest in Asia.

Petrochemicals 02 Aug 2019 | 20:51 UTC Houston

New $300 billion in US tariffs on China products would impact many chemicals, plastics

Commodity: Petrochemicals
Topic: The Trump Administration, US-China Trade Tension

Houston — President Donald Trump's latest escalation in the US-China trade war targets 10% tariffs on all Chinese imports that do not yet face such taxes, including a wide array of petrochemical-reliant finished plastics and products.

Among the $300 billion in targeted Chinese products are smartphones, laptops, toys, toilet seats, mustard and ketchup dispensers, plastic dishes and trays, picture frames, statuettes, beads and a catch-all category of "other articles of plastics," according to the proposed list on the Office of the United States Trade Representative's website.

Other produces include items made with vulcanized rubber, which has been treated to be flexible and resistant to heat, such as conveyor belts and hoses, medical gloves and pet toys.

Other petrochemical-heavy products on the list include polyester yarns and fabrics, travel hygiene sets, crayons, combs and hair pins, dental floss, fireworks, de-icing fluids, wallpaper and shoes with rubber soles.

On Friday, a day after Trump tweeted his intent to impose the new tariffs on September 1 as recent talks with China failed to produce a trade deal, Hua Chunying, spokeswoman for China's foreign ministry, said China would "take necessary countermeasures" to protect its interests.

"China believes there is no winner in a trade war. We do not want a trade war, but we are not afraid of fighting one," she said in comments posted on the ministry's website Friday. "China does not accept any maximum pressure, threat or blackmail."

The trade war already has affected the US petrochemical industry. Last year the US imposed tariffs on $250 billion in Chinese products, and China responded with $110 billion in tariffs on US goods. In the petrochemical sphere, US tariffs have targeted both raw materials and products made with them, while Chinese tariffs targeted hundreds of raw materials used to make plastics, rubber and other materials.

The American Chemistry Council has strongly opposed tariffs, saying the trade war could jeopardize the US' growing status as a global supplier with more than $200 billion in new chemical infrastructure that aims to export most output to Asia, with China easily the most dominant demand market.

As was the case ahead of the third round of tariffs the US imposed on Chinese products last year, the US likely will see a surge of imports at the peak of shipping season as companies seek to pre-empt the additional costs, according to supply chain research firm Panjiva Research. Peak shipping for toys and videogames is in October for Christmas shopping season, while peak shipping for laptops hits twice: August for back-to-school sales, and November depending on model release schedules, Panjiva said.

Panjiva, like S&P Global Platts, is a division of S&P Global.

In June, the USTR received more than 2,800 public comments from companies, organizations and citizens on the $300 billion in products targeted for new tariffs.

Bert Eshaghpour, president of Wego Chemical Group, a family business that imports specialty chemicals from China for domestic distribution, said in June that previous petrochemical tariffs have already impacted costs and supply chains in the US. More chemicals on the proposed $300 billion list are manufactured only in China, he said. Those include chemicals used in automotive, food, paper and construction industries.

"There are no other choices or alternatives," Eshaghpour said in a letter to the US Trade Representative Robert Lighthizer.

In another such letter to Lighthizer, Stanley Bernard, vice president of growth and development at Drexel Chemical Company, a Tennessee pesticide manufacturer, said US agriculture's four most widely used pesticide ingredients are on the proposed $300 billion list and are not made in the US.

"Drexel and the small farmers who use our generic crop protection products cannot withstand the addition" of tariffs "on our most important products - products for which we have no domestic supply," Bernard wrote.

Petrochemicals 02 Aug 2019 | 20:51 UTC Houston

New $300 billion in US tariffs on China products would impact many chemicals, plastics

Author Kristen Hays Editor Richard Rubin Commodity Petrochemicals Topic The Trump Administration, US-China Trade Tension

Houston — President Donald Trump's latest escalation in the US-China trade war targets 10% tariffs on all Chinese imports that do not yet face such taxes, including a wide array of petrochemical-reliant finished plastics and products.

Among the $300 billion in targeted Chinese products are smartphones, laptops, toys, toilet seats, mustard and ketchup dispensers, plastic dishes and trays, picture frames, statuettes, beads and a catch-all category of "other articles of plastics," according to the proposed list on the Office of the United States Trade Representative's website.

Other produces include items made with vulcanized rubber, which has been treated to be flexible and resistant to heat, such as conveyor belts and hoses, medical gloves and pet toys.

Other petrochemical-heavy products on the list include polyester yarns and fabrics, travel hygiene sets, crayons, combs and hair pins, dental floss, fireworks, de-icing fluids, wallpaper and shoes with rubber soles.

On Friday, a day after Trump tweeted his intent to impose the new tariffs on September 1 as recent talks with China failed to produce a trade deal, Hua Chunying, spokeswoman for China's foreign ministry, said China would "take necessary countermeasures" to protect its interests.

"China believes there is no winner in a trade war. We do not want a trade war, but we are not afraid of fighting one," she said in comments posted on the ministry's website Friday. "China does not accept any maximum pressure, threat or blackmail."

The trade war already has affected the US petrochemical industry. Last year the US imposed tariffs on $250 billion in Chinese products, and China responded with $110 billion in tariffs on US goods. In the petrochemical sphere, US tariffs have targeted both raw materials and products made with them, while Chinese tariffs targeted hundreds of raw materials used to make plastics, rubber and other materials.

The American Chemistry Council has strongly opposed tariffs, saying the trade war could jeopardize the US' growing status as a global supplier with more than $200 billion in new chemical infrastructure that aims to export most output to Asia, with China easily the most dominant demand market.

As was the case ahead of the third round of tariffs the US imposed on Chinese products last year, the US likely will see a surge of imports at the peak of shipping season as companies seek to pre-empt the additional costs, according to supply chain research firm Panjiva Research. Peak shipping for toys and videogames is in October for Christmas shopping season, while peak shipping for laptops hits twice: August for back-to-school sales, and November depending on model release schedules, Panjiva said.

Panjiva, like S&P Global Platts, is a division of S&P Global.

In June, the USTR received more than 2,800 public comments from companies, organizations and citizens on the $300 billion in products targeted for new tariffs.

Bert Eshaghpour, president of Wego Chemical Group, a family business that imports specialty chemicals from China for domestic distribution, said in June that previous petrochemical tariffs have already impacted costs and supply chains in the US. More chemicals on the proposed $300 billion list are manufactured only in China, he said. Those include chemicals used in automotive, food, paper and construction industries.

"There are no other choices or alternatives," Eshaghpour said in a letter to the US Trade Representative Robert Lighthizer.

In another such letter to Lighthizer, Stanley Bernard, vice president of growth and development at Drexel Chemical Company, a Tennessee pesticide manufacturer, said US agriculture's four most widely used pesticide ingredients are on the proposed $300 billion list and are not made in the US.

"Drexel and the small farmers who use our generic crop protection products cannot withstand the addition" of tariffs "on our most important products - products for which we have no domestic supply," Bernard wrote.

Petrochemicals 28 Jul 2019 | 07:53 UTC Dubai

SABIC Q2 net profit plunges 68% on lower petrochemical prices

Dubai — SABIC, the petrochemical producer that is being acquired by Saudi Aramco, posted a 68.4% year-on-year plunge in second quarter net profit to Riyals 2.12 billion ($565 million) as petrochemical prices fell and new supply was added.

"The slowdown in global GDP growth coincides with a decline in petrochemical prices due to a significant increase in new supply capacity resulting in lower product prices and margins in key product lines," Yousef al-Benyan, vice chairman and CEO of SABIC, said Sunday in a statement to the Saudi stock exchange where its shares are traded.

"The new capacities in key products lines that pressured SABIC's product prices and margins in the first half of 2019 are expected to continue to impact the company's earnings in the second half of 2019."

Second quarter revenue fell 17% year-on-year to Riyal 35.87 billion. Some of the products that suffered from weak prices include mono ethyl glycol, whose prices in the second quarter were the lowest since 2009, SABIC said.

SABIC, the Middle East's biggest petrochemical producer, said last week it had called off talks to form a joint venture with European specialty chemicals producer Clariant due to current "unfavorable" market conditions. SABIC, the top shareholder in Clariant with a 24.99% stake, signed a memorandum of understanding in September 2018 to combine SABIC's specialties business with the Swiss company's additives and high value masterbatch offerings.

State-owned Saudi Aramco agreed earlier in 2019 to acquire 70% of SABIC from the country's sovereign wealth fund for $69 billion as part of plans to expand its petrochemicals portfolio. Both Saudi Aramco and SABIC are boosting their petrochemical footprint and inking agreements within and outside the Gulf state to gain access to feedstock and get closer to their customers.

ExxonMobil and SABIC had announced in June that they are going ahead with a newbuild petrochemical complex in Texas, after having received all necessary permits and approvals.

Petrochemicals 28 Jul 2019 | 07:53 UTC Dubai

SABIC Q2 net profit plunges 68% on lower petrochemical prices

Dubai — SABIC, the petrochemical producer that is being acquired by Saudi Aramco, posted a 68.4% year-on-year plunge in second quarter net profit to Riyals 2.12 billion ($565 million) as petrochemical prices fell and new supply was added.

"The slowdown in global GDP growth coincides with a decline in petrochemical prices due to a significant increase in new supply capacity resulting in lower product prices and margins in key product lines," Yousef al-Benyan, vice chairman and CEO of SABIC, said Sunday in a statement to the Saudi stock exchange where its shares are traded.

"The new capacities in key products lines that pressured SABIC's product prices and margins in the first half of 2019 are expected to continue to impact the company's earnings in the second half of 2019."

Second quarter revenue fell 17% year-on-year to Riyal 35.87 billion. Some of the products that suffered from weak prices include mono ethyl glycol, whose prices in the second quarter were the lowest since 2009, SABIC said.

SABIC, the Middle East's biggest petrochemical producer, said last week it had called off talks to form a joint venture with European specialty chemicals producer Clariant due to current "unfavorable" market conditions. SABIC, the top shareholder in Clariant with a 24.99% stake, signed a memorandum of understanding in September 2018 to combine SABIC's specialties business with the Swiss company's additives and high value masterbatch offerings.

State-owned Saudi Aramco agreed earlier in 2019 to acquire 70% of SABIC from the country's sovereign wealth fund for $69 billion as part of plans to expand its petrochemicals portfolio. Both Saudi Aramco and SABIC are boosting their petrochemical footprint and inking agreements within and outside the Gulf state to gain access to feedstock and get closer to their customers.

ExxonMobil and SABIC had announced in June that they are going ahead with a newbuild petrochemical complex in Texas, after having received all necessary permits and approvals.

Global and regional market fundamentals are expected to continue to influence polyethylene pricing second half of 2019. Market players believe that, even under the scenario of an agreement between the US and China, pricing will continue at a very competitive levels amid healthy availability from different origins.

Global and regional market fundamentals are expected to continue to influence polyethylene pricing second half of 2019. Market players believe that, even under the scenario of an agreement between the US and China, pricing will continue at a very competitive levels amid healthy availability from different origins.

As supply length pushed spot prices to levels not seen since the end of 2016, US propylene exports have increased through the first four months of 2019, according to data from the US International Trade Commission. Volumes mainly headed to Latin America, and market participants have said they expect this to continue throughout 2019.
Europe has also seen an increase in shipments of US molecules as players anticipated supply tightness amid a heavy steam cracker turnaround schedule in the second quarter.
According to Eurostat data, imports from the US in the first four months of 2019 averaged 13,600 mt/month, compared with 920 mt/month in the same period in 2018. Meanwhile, imports reached an all-time high in February of 63,760 mt, the data show.
Since the beginning of 2019, Europe polymer grade propylene has traded at a premium to other regions before falling below $1,000/mt FD NWE, close to levels in Asia and narrowing the gap with the US.
With that recent relative weakness, market players have started questioning if arbitrage opportunities still exist, already anticipating a decline in imports from the US.
The premium of the European PGP spot price over its US equivalent was calculated at between $150/mt and $200/mt at the beginning of July, meaning the arbitrage was closed on paper.
"The arbitrage has been challenged, but from a volume perspective there is enough propylene for July and August," one European player said.
However, more planned maintenance is expected in Europe between August and October, meaning supply could turn tighter if the current trend continues.

ATTENTION IN ASIA TURNS TO NEW CAPACITY
Meanwhile, the Asian market will focus on startups, with more than 1.2 million mt/year of extra propylene production capacity expected to come online in China by H2.
This includes China's Fujian Meide Petrochemical's 660,000 mt/year PDH plant in September and Dongguan Juzhengyuan's 600,000 mt/year PDH plant by the end of H2. The additional capacity could reduce Chinese reliance on imported cargoes and exert pressure on spot price.
"We imported 600,000 mt of propylene feedstock for our two 500,000 mt/year polypropylene plants last year and will reduce the imports by 400,000 mt once our PDH plant is operating at full rate," said a company source at Fujian Meide Petrochemical.
As for the rest of Southeast Asia, Northeast Asia and South Korea, there will be less turnarounds in H2 compared with the front half of the year, ensuring a relatively stable supply of propylene, especially in the final three months of the year. Three steam crackers in the region with a total propylene capacity of over 1.5 million mt/year were heard to have plans for turnarounds in the current quarter. Chandra Asia, the major player in Indonesia, is expected to shut down its cracker for turnaround by August 1, while Formosa Petrochemical's No. 2 steam cracker unit will carry out scheduled maintenance by mid-August. Lotte Chemical is scheduled to shut its Daesan cracker by October 14.
Other market participants were keeping a close watch on the Malaysia's Petronas-Aramco RAPID project, which has experienced delays in the startup of the cracker and refinery. The complex's RFCC is now scheduled to produce 600,000 mt/year of propylene by the end of Q3, but is only due to produce on-spec propylene in Q4, according to a source with direct knowledge of the matter.

2019 Second Half Outlook: Global propylene supply to remain healthy on extra capacity, strong inventories.
US inventories establish records in 2019
US-Europe arbitrage under pressure, but outlook mixed
Asia likely to stay stable-to-soft as a result of additional PDH plants

Global propylene markets will continue to see healthy supply availability in the second half of 2019 as fresh capacity comes online in Asia and US inventory levels remain strong.
As supply improved, alongside a slowdown in derivatives demand, global propylene spot prices fell this year from the multi-year highs seen in 2018, and the US market has taken the steepest dive.
US propylene supply has recovered in the first half of 2019, as production from propane dehydrogenation units has improved. This was in line with expectations for the front half of the year, and eventually led to record high inventory levels of 6.459 million barrels in March, according to the US Energy Information Administration.

Trade participants have said this is something they expect to continue for the remainder of the year.
Inventory levels have gradually come down since March, but are still well above inventory levels a year ago. At the end of June, US inventories stood at 4.960 million barrels, compared with 2.324 million barrels at the end of June 2018. Market participants have said stocks should build again following mid-year turnarounds at some heavy cracker units. But sources added that all three US PDH units are still expected to have see type of turnaround between October and February 2020.
The overall increase in inventories has pressured US propylene spot prices, leaving them well below 2018 levels. Polymer-grade propylene spot prices hit a low of 32 cents/lb ($705/mt) FD USG in late February before rebounding and then receding again to 32 cents/lb FD USG in mid-June.

As supply length pushed spot prices to levels not seen since the end of 2016, US propylene exports have increased through the first four months of 2019, according to data from the US International Trade Commission. Volumes mainly headed to Latin America, and market participants have said they expect this to continue throughout 2019.
Europe has also seen an increase in shipments of US molecules as players anticipated supply tightness amid a heavy steam cracker turnaround schedule in the second quarter.
According to Eurostat data, imports from the US in the first four months of 2019 averaged 13,600 mt/month, compared with 920 mt/month in the same period in 2018. Meanwhile, imports reached an all-time high in February of 63,760 mt, the data show.
Since the beginning of 2019, Europe polymer grade propylene has traded at a premium to other regions before falling below $1,000/mt FD NWE, close to levels in Asia and narrowing the gap with the US.
With that recent relative weakness, market players have started questioning if arbitrage opportunities still exist, already anticipating a decline in imports from the US.
The premium of the European PGP spot price over its US equivalent was calculated at between $150/mt and $200/mt at the beginning of July, meaning the arbitrage was closed on paper.
"The arbitrage has been challenged, but from a volume perspective there is enough propylene for July and August," one European player said.
However, more planned maintenance is expected in Europe between August and October, meaning supply could turn tighter if the current trend continues.

ATTENTION IN ASIA TURNS TO NEW CAPACITY
Meanwhile, the Asian market will focus on startups, with more than 1.2 million mt/year of extra propylene production capacity expected to come online in China by H2.
This includes China's Fujian Meide Petrochemical's 660,000 mt/year PDH plant in September and Dongguan Juzhengyuan's 600,000 mt/year PDH plant by the end of H2. The additional capacity could reduce Chinese reliance on imported cargoes and exert pressure on spot price.
"We imported 600,000 mt of propylene feedstock for our two 500,000 mt/year polypropylene plants last year and will reduce the imports by 400,000 mt once our PDH plant is operating at full rate," said a company source at Fujian Meide Petrochemical.
As for the rest of Southeast Asia, Northeast Asia and South Korea, there will be less turnarounds in H2 compared with the front half of the year, ensuring a relatively stable supply of propylene, especially in the final three months of the year. Three steam crackers in the region with a total propylene capacity of over 1.5 million mt/year were heard to have plans for turnarounds in the current quarter. Chandra Asia, the major player in Indonesia, is expected to shut down its cracker for turnaround by August 1, while Formosa Petrochemical's No. 2 steam cracker unit will carry out scheduled maintenance by mid-August. Lotte Chemical is scheduled to shut its Daesan cracker by October 14.
Other market participants were keeping a close watch on the Malaysia's Petronas-Aramco RAPID project, which has experienced delays in the startup of the cracker and refinery. The complex's RFCC is now scheduled to produce 600,000 mt/year of propylene by the end of Q3, but is only due to produce on-spec propylene in Q4, according to a source with direct knowledge of the matter.

2019 Second Half Outlook: Global propylene supply to remain healthy on extra capacity, strong inventories.
US inventories establish records in 2019
US-Europe arbitrage under pressure, but outlook mixed
Asia likely to stay stable-to-soft as a result of additional PDH plants

Global propylene markets will continue to see healthy supply availability in the second half of 2019 as fresh capacity comes online in Asia and US inventory levels remain strong.
As supply improved, alongside a slowdown in derivatives demand, global propylene spot prices fell this year from the multi-year highs seen in 2018, and the US market has taken the steepest dive.
US propylene supply has recovered in the first half of 2019, as production from propane dehydrogenation units has improved. This was in line with expectations for the front half of the year, and eventually led to record high inventory levels of 6.459 million barrels in March, according to the US Energy Information Administration.

Trade participants have said this is something they expect to continue for the remainder of the year.
Inventory levels have gradually come down since March, but are still well above inventory levels a year ago. At the end of June, US inventories stood at 4.960 million barrels, compared with 2.324 million barrels at the end of June 2018. Market participants have said stocks should build again following mid-year turnarounds at some heavy cracker units. But sources added that all three US PDH units are still expected to have see type of turnaround between October and February 2020.
The overall increase in inventories has pressured US propylene spot prices, leaving them well below 2018 levels. Polymer-grade propylene spot prices hit a low of 32 cents/lb ($705/mt) FD USG in late February before rebounding and then receding again to 32 cents/lb FD USG in mid-June.

Petrochemicals 10 Jul 2019 | 04:08 UTC Singapore

H2 outlook: Global polyethylene market seen bearish on weak demand, rising supply

Author: Fumiko Dobashi Hui Heng
Commodity: Petrochemicals

Highlights:
Demand growth for packaging seen lukewarm
US-China trade tensions, weak currencies add further weight

Singapore — The outlook for the polyethylene market globally is bearish for the remainder of the year due to a combination of weak feedstock costs, weak global demand and anticipated plant startups, according to market participants.

An estimated 4 million-5 million mt of new polyethylene supply is expected to come online by end December -- 2.9 million mt of it in the US and the rest in Asia. However, the new polyethylene units are expected to contribute only around half their nameplate capacities initially due to the various delays in the typical ramp-up cycle before reaching on-specification resin, and due to potential delays in receiving on-site monomer from steam crackers.

Market sources were expecting more US shale-based PE to enter the market worldwide excluding China in H2, in regions such as Latin America, Europe and then Asia. Producer sources in the key supply region of the Middle East estimated that around 12 million mt/year of PE in 2019 will continue to diversify end-product portfolios, where competition is less intense.

Weak ethylene feedstock markets were expected to weigh on PE buying ideas, while demand was expected to be generally more bearish in H2 than a year earlier due to uncertain macroeconomics, particularly resulting from the US-China trade tensions.

"Even if there is a resolution with China, there is still no guarantee that China will come back to the market," a US PE distributor said. While US-China trade tensions continue to simmer heading into H2, PE market participants have been more concerned about the recent weakness in global demand. South Asia and Southeast Asia have not seen a rise in polymer finished orders from the US as their manufacturing capacities are not as big as China's, traders said.

The current PE surplus will continue to be absorbed by China's demand through some redirection of regional cargoes, sellers said. Some participants were expecting more Southeast Asian cargoes to be exported to China due to regional plant expansions and the ASEAN-China free trade agreement. Some small Chinese plastic recyclers have also relocated to Southeast Asian countries such as Cambodia and Myanmar due to cheaper labor costs, sources said.

US exports of high density polyethylene, linear low density PE and low density PE combined totaled 1.8 million mt over January-April, surging almost 50% from the same period a year earlier, according to US International Trade Commission data. However, with exports for some grades of PE to China impacted by a 25% tariff, specifically LLDPE and HDPE, US exporters have relied on Latin America as a key export destination.

With escalating tensions between the US and China, Europe has seen imports from the US increase this year, with market participants expecting this will continue into H2. According to latest Eurostat data, HDPE imports between January and April 2019 totaled 35,300 mt, up from 22,160 mt in the same period a year earlier.

Virgin PE was likely to remain the preferred substitute despite the recent government push for recycling; recycled resins account for around 3%-4% of the volume of production used in polymer resins. Recycled material is still less easily available and requires a large capital outlay.

The performance of recycled material was also generally not up to expectations, and a lack of financial incentives to collect and sort waste and a fragmented industry comprising mostly small players continued to constrain development, market sources said. Some traders were not optimistic that recycled PE could replace virgin PE, noting that virgin resin made from ethane was currently very cheap.

Currency depreciation against the US dollar has also dampened imports to several countries.

In one of the leading polymer markets, Turkey, the weak US dollar-Turkish lira exchange rate continues to hamper selling into the Turkish market, as imported material is purchased in US dollars and then sold into the market in the local currency. "Turkey is going through difficult times and businesses are squeezed," one trader said.

Petrochemicals 10 Jul 2019 | 04:08 UTC Singapore

H2 outlook: Global polyethylene market seen bearish on weak demand, rising supply

Author: Fumiko Dobashi Hui Heng
Commodity: Petrochemicals

Highlights:
Demand growth for packaging seen lukewarm
US-China trade tensions, weak currencies add further weight

Singapore — The outlook for the polyethylene market globally is bearish for the remainder of the year due to a combination of weak feedstock costs, weak global demand and anticipated plant startups, according to market participants.

An estimated 4 million-5 million mt of new polyethylene supply is expected to come online by end December -- 2.9 million mt of it in the US and the rest in Asia. However, the new polyethylene units are expected to contribute only around half their nameplate capacities initially due to the various delays in the typical ramp-up cycle before reaching on-specification resin, and due to potential delays in receiving on-site monomer from steam crackers.

Market sources were expecting more US shale-based PE to enter the market worldwide excluding China in H2, in regions such as Latin America, Europe and then Asia. Producer sources in the key supply region of the Middle East estimated that around 12 million mt/year of PE in 2019 will continue to diversify end-product portfolios, where competition is less intense.

Weak ethylene feedstock markets were expected to weigh on PE buying ideas, while demand was expected to be generally more bearish in H2 than a year earlier due to uncertain macroeconomics, particularly resulting from the US-China trade tensions.

"Even if there is a resolution with China, there is still no guarantee that China will come back to the market," a US PE distributor said. While US-China trade tensions continue to simmer heading into H2, PE market participants have been more concerned about the recent weakness in global demand. South Asia and Southeast Asia have not seen a rise in polymer finished orders from the US as their manufacturing capacities are not as big as China's, traders said.

The current PE surplus will continue to be absorbed by China's demand through some redirection of regional cargoes, sellers said. Some participants were expecting more Southeast Asian cargoes to be exported to China due to regional plant expansions and the ASEAN-China free trade agreement. Some small Chinese plastic recyclers have also relocated to Southeast Asian countries such as Cambodia and Myanmar due to cheaper labor costs, sources said.

US exports of high density polyethylene, linear low density PE and low density PE combined totaled 1.8 million mt over January-April, surging almost 50% from the same period a year earlier, according to US International Trade Commission data. However, with exports for some grades of PE to China impacted by a 25% tariff, specifically LLDPE and HDPE, US exporters have relied on Latin America as a key export destination.

With escalating tensions between the US and China, Europe has seen imports from the US increase this year, with market participants expecting this will continue into H2. According to latest Eurostat data, HDPE imports between January and April 2019 totaled 35,300 mt, up from 22,160 mt in the same period a year earlier.

Virgin PE was likely to remain the preferred substitute despite the recent government push for recycling; recycled resins account for around 3%-4% of the volume of production used in polymer resins. Recycled material is still less easily available and requires a large capital outlay.

The performance of recycled material was also generally not up to expectations, and a lack of financial incentives to collect and sort waste and a fragmented industry comprising mostly small players continued to constrain development, market sources said. Some traders were not optimistic that recycled PE could replace virgin PE, noting that virgin resin made from ethane was currently very cheap.

Currency depreciation against the US dollar has also dampened imports to several countries.

In one of the leading polymer markets, Turkey, the weak US dollar-Turkish lira exchange rate continues to hamper selling into the Turkish market, as imported material is purchased in US dollars and then sold into the market in the local currency. "Turkey is going through difficult times and businesses are squeezed," one trader said.

Since 4/07/2019 up to date, share price of Lotte Chemical in Korea and Indonesia dropped to lowest 52 week range.

Supply increase and demand flat.

Supply increase and demand flat.

Petrochemicals 09 Jul 2019 | 19:29 UTC Houston
US resin export logistics face more logjams amid growing output
• Author: Kristen Hays
• Editor: Valarie Jackson
• Commodity: Petrochemicals
• Topic Industry Views
Houston — Logjams that hindered moving resin out of US ports from late 2018 through April have lightened up, but market participants expect the same problems to re-emerge later this year and into early 2020 as more polyethylene capacity comes online.
"We are expanding with all the polyethylene projects," a US market source said. "This year will be much worse than last year in terms of the amount of resources needed."
More than $200 billion in new petrochemical infrastructure has started up, is under construction, or planned in Texas, Louisiana, Pennsylvania and Ohio amid the US natural gas shale boom that has unearthed unprecedented access to cheap ethane feedstock.
New polyethylene resin production dominates the expansion renaissance, with capacity set to rise by 13.67 million mt/year, more than 50%, from 2017 through the next decade if all known projects reach fruition.
That new production is targeted for export, although 29% of new capacity that is operational already has taxed supply chains that move resin from producers to docks. Another 17% of the total slated to start up in the second half of 2019 is expected to bring at least a repeat of holdups that delayed resin exports for up to two months or more.

THE DELAYED SURGE
Hurricane Harvey's assault on the Texas Coast in August 2017 delayed the expected surge of new exports from new PE startups as producers focused on domestic demand for months after the storm.
But in the second half of 2018, PE inventories were high after producers held back volumes through late summer to protect thick margins. Prices began to retreat and export-bound volumes grew amid higher overall production, loading up Houston-area supply chain stops between plants and docks that did not meaningfully begin to clear until late April 2019.
Polyvinyl chloride volumes were mired in in the pileups as well, held up so long at times that customers canceled shipments, according to multiple traders.
The lack of consistent empty container availability in New Orleans also prompted Louisiana PE and PVC output to flow to Houston for packaging and export, exacerbating delays.

PACKAGING EXPANSIONS COMING
More than 5 million mt/year of new PE packaging capacity added in the US as the first wave of new PE production began starting up in 2017 and 2018 got a hefty workout after the Harvey-related lull, and more additions are coming alongside more PE startups. Resin buyers also have pushed for producers to sell prepackaged material so they could bypass SIT yard holdups, and more packaging expansions are starting up or planned.

Petrochemicals 09 Jul 2019 | 19:29 UTC Houston
US resin export logistics face more logjams amid growing output
• Author: Kristen Hays
• Editor: Valarie Jackson
• Commodity: Petrochemicals
• Topic Industry Views
Houston — Logjams that hindered moving resin out of US ports from late 2018 through April have lightened up, but market participants expect the same problems to re-emerge later this year and into early 2020 as more polyethylene capacity comes online.
"We are expanding with all the polyethylene projects," a US market source said. "This year will be much worse than last year in terms of the amount of resources needed."
More than $200 billion in new petrochemical infrastructure has started up, is under construction, or planned in Texas, Louisiana, Pennsylvania and Ohio amid the US natural gas shale boom that has unearthed unprecedented access to cheap ethane feedstock.
New polyethylene resin production dominates the expansion renaissance, with capacity set to rise by 13.67 million mt/year, more than 50%, from 2017 through the next decade if all known projects reach fruition.
That new production is targeted for export, although 29% of new capacity that is operational already has taxed supply chains that move resin from producers to docks. Another 17% of the total slated to start up in the second half of 2019 is expected to bring at least a repeat of holdups that delayed resin exports for up to two months or more.

THE DELAYED SURGE
Hurricane Harvey's assault on the Texas Coast in August 2017 delayed the expected surge of new exports from new PE startups as producers focused on domestic demand for months after the storm.
But in the second half of 2018, PE inventories were high after producers held back volumes through late summer to protect thick margins. Prices began to retreat and export-bound volumes grew amid higher overall production, loading up Houston-area supply chain stops between plants and docks that did not meaningfully begin to clear until late April 2019.
Polyvinyl chloride volumes were mired in in the pileups as well, held up so long at times that customers canceled shipments, according to multiple traders.
The lack of consistent empty container availability in New Orleans also prompted Louisiana PE and PVC output to flow to Houston for packaging and export, exacerbating delays.

PACKAGING EXPANSIONS COMING
More than 5 million mt/year of new PE packaging capacity added in the US as the first wave of new PE production began starting up in 2017 and 2018 got a hefty workout after the Harvey-related lull, and more additions are coming alongside more PE startups. Resin buyers also have pushed for producers to sell prepackaged material so they could bypass SIT yard holdups, and more packaging expansions are starting up or planned.

Petrochemicals: 2019/07/08 07:00

Olefins
Trade for ethylene on a CFR Northeast basis was sluggish. Both sellers and buyers tried to determine market directions going forward and took a cautious stance. It was difficult to pass on costs of ethylene to many derivatives if ethylene prices increased. Further, new ethylene facilities would start operations soon. These factors capped the upside of the market. Under this situation, few bids and offers were heard.

In the Asia propylene market, supply was expected to increase going forward, buying interest from end-users was not strong. In Korea, operations at naphtha crackers were recovering and perceptions of tight supply eased. In Southeast Asia, few bids and offers were heard and prices tracked movements in the CFR Northeast Asia market.

The Asia butadiene market fell. Market sentiment weakened owing to poor demand. Although supply of Asian cargoes was not ample, the derivative synthetic rubber market softened. Moreover, non-regional cargoes were available and buying interest from end-users was weak.

Petrochemicals 09 Jul 2019 | 16:43 UTC Houston
Americas petrochemicals outlook w/c July 8
Author Staff report Editor: Zac Aiuppa Commodity: Petrochemicals

US OLEFINS
Prompt July ethylene prices remained virtually unchanged over the week. The market is still closely watching the timing of the return of the BASF/Total cracker to normal operations, which has been supporting ethylene prices despite ethane prices being close to an all-time low. Ongoing turnarounds at BASF-Total's cracker and metathesis unit have been the primary reason behind higher spot propylene prices. US propylene stocks dropped slightly over the week, which also supported propylene prices. The market will watch for updated US propylene stocks at the US Energy Information Administration's weekly report Wednesday.

US POLYMERS
US polyethylene market participants looked to finalize domestic June contracts following the holiday-shortened week. Trade participants were divided on whether prices were flat to 3 cents down from May contracts. US polypropylene sources continued to discuss a margin erosion between polymer-grade propylene and PP, anticipating a possible 1-cent shrinkage for July. A disparity regarding the direction of spot PP pricing persisted, with some sources eyeing ample supply plus a soft market while others discussed robust demand and steady price increases.

LATIN POLYMERS
Brazilian polyethylene and polypropylene markets were expected to start the week slow because of a bank holiday in the state of Sao Paulo on Tuesday, which will affect most of the sector's operations. PE and PP have seen their CFR prices at low levels in the past weeks, driving domestic delivered prices down by Real200/mt last week, while local distributors expect a downtrend to continue in mid-July and fall another Real200/mt. Currency exchange is expected to be stable week on week. In Argentina, domestic prices were unchanged last week amid uncertainty in the local market after Dow Chemical's Bahia Blanca complex suffered an explosion in its ethylene cracker BB 2 plant in Dow Argentina at the end of June. The 455,000 mt/year cracker incident is slightly affecting the distribution chain and the severity of the impact will depend on the period of stoppage, which is expected to last at least one more week.

US VINYLS
July pricing for US export polyvinyl chloride was expected to settle this week after protracted negotiations. Market participants pushed back against proposed increases amid lackluster international demand. A producer decided Friday to not offer July volumes amid production issues that reduced export volume availability this month. Others had yet to settle talks that market sources described as a standoff. Offer levels Monday remained unchanged, while market participants pushed for lower pricing.
In Asia, fresh August offers were expected to emerge this week amid expectations of a rollover with July or $10-$20/mt lower. The US domestic PVC market considered a 2-cent/lb price increase for June, which would restore pricing to March levels after prices fell 2 cents/lb in April, market sources said. Domestic demand did not seasonally rise in March and April as is typical because of prolonged winter weather and severe flooding in some regions.

US AROMATICS
US benzene prices were expected to remain flat to lower amid expectations of continued strength in imports. Sources noted that demand was steady but was unlikely to see significant improvement from the downstream styrene segment as prices continued to hover in the low-$900s/mt. Demand for toluene from the chemical segment was expected to remain subdued as conversion margins remained negative on the back of weaker paraxylene pricing. Toluene demand was likely to depend on the gasoline segment, particularly considering a recent spike that pushed blend values north of 270 cents/gal.

Petrochemicals: 2019/07/08 07:00

Olefins
Trade for ethylene on a CFR Northeast basis was sluggish. Both sellers and buyers tried to determine market directions going forward and took a cautious stance. It was difficult to pass on costs of ethylene to many derivatives if ethylene prices increased. Further, new ethylene facilities would start operations soon. These factors capped the upside of the market. Under this situation, few bids and offers were heard.

In the Asia propylene market, supply was expected to increase going forward, buying interest from end-users was not strong. In Korea, operations at naphtha crackers were recovering and perceptions of tight supply eased. In Southeast Asia, few bids and offers were heard and prices tracked movements in the CFR Northeast Asia market.

The Asia butadiene market fell. Market sentiment weakened owing to poor demand. Although supply of Asian cargoes was not ample, the derivative synthetic rubber market softened. Moreover, non-regional cargoes were available and buying interest from end-users was weak.

Petrochemicals 09 Jul 2019 | 16:43 UTC Houston
Americas petrochemicals outlook w/c July 8
Author Staff report Editor: Zac Aiuppa Commodity: Petrochemicals

US OLEFINS
Prompt July ethylene prices remained virtually unchanged over the week. The market is still closely watching the timing of the return of the BASF/Total cracker to normal operations, which has been supporting ethylene prices despite ethane prices being close to an all-time low. Ongoing turnarounds at BASF-Total's cracker and metathesis unit have been the primary reason behind higher spot propylene prices. US propylene stocks dropped slightly over the week, which also supported propylene prices. The market will watch for updated US propylene stocks at the US Energy Information Administration's weekly report Wednesday.

US POLYMERS
US polyethylene market participants looked to finalize domestic June contracts following the holiday-shortened week. Trade participants were divided on whether prices were flat to 3 cents down from May contracts. US polypropylene sources continued to discuss a margin erosion between polymer-grade propylene and PP, anticipating a possible 1-cent shrinkage for July. A disparity regarding the direction of spot PP pricing persisted, with some sources eyeing ample supply plus a soft market while others discussed robust demand and steady price increases.

LATIN POLYMERS
Brazilian polyethylene and polypropylene markets were expected to start the week slow because of a bank holiday in the state of Sao Paulo on Tuesday, which will affect most of the sector's operations. PE and PP have seen their CFR prices at low levels in the past weeks, driving domestic delivered prices down by Real200/mt last week, while local distributors expect a downtrend to continue in mid-July and fall another Real200/mt. Currency exchange is expected to be stable week on week. In Argentina, domestic prices were unchanged last week amid uncertainty in the local market after Dow Chemical's Bahia Blanca complex suffered an explosion in its ethylene cracker BB 2 plant in Dow Argentina at the end of June. The 455,000 mt/year cracker incident is slightly affecting the distribution chain and the severity of the impact will depend on the period of stoppage, which is expected to last at least one more week.

US VINYLS
July pricing for US export polyvinyl chloride was expected to settle this week after protracted negotiations. Market participants pushed back against proposed increases amid lackluster international demand. A producer decided Friday to not offer July volumes amid production issues that reduced export volume availability this month. Others had yet to settle talks that market sources described as a standoff. Offer levels Monday remained unchanged, while market participants pushed for lower pricing.
In Asia, fresh August offers were expected to emerge this week amid expectations of a rollover with July or $10-$20/mt lower. The US domestic PVC market considered a 2-cent/lb price increase for June, which would restore pricing to March levels after prices fell 2 cents/lb in April, market sources said. Domestic demand did not seasonally rise in March and April as is typical because of prolonged winter weather and severe flooding in some regions.

US AROMATICS
US benzene prices were expected to remain flat to lower amid expectations of continued strength in imports. Sources noted that demand was steady but was unlikely to see significant improvement from the downstream styrene segment as prices continued to hover in the low-$900s/mt. Demand for toluene from the chemical segment was expected to remain subdued as conversion margins remained negative on the back of weaker paraxylene pricing. Toluene demand was likely to depend on the gasoline segment, particularly considering a recent spike that pushed blend values north of 270 cents/gal.

Petrochemicals: Jun 10-14: Ethylene falls further on weak demand
2019/06/17 07:00

Aromatics
FOB Korea benzene prices temporarily decreased along with movements in crude prices but strengthened in the second half of the week. Paraxylene (PX) prices decreased sharply in the middle of the week. A fall in crude prices and PTA futures pressured the PX market. Further, supply was perceived to increase owing to restart of PX facilities in India and Vietnam. This was also cited as a bearish factor.

Olefins
CFR Northeast Asia ethylene prices fell further. On the demand side, profitability of derivatives was improving but demand for derivatives was weak. For this reason, buying interest was not likely to strengthen. On the supply side, some petrochemical makers reduced production of derivatives and sell ethylene. In the middle of the week, July delivery cargoes were traded at $800-810/mt. Some end-users aimed to buy at a bottom price but supply/demand had not tightened and prices seemed not to have bottomed out.

Petrochemicals: Jun 10-14: Ethylene falls further on weak demand
2019/06/17 07:00

Aromatics
FOB Korea benzene prices temporarily decreased along with movements in crude prices but strengthened in the second half of the week. Paraxylene (PX) prices decreased sharply in the middle of the week. A fall in crude prices and PTA futures pressured the PX market. Further, supply was perceived to increase owing to restart of PX facilities in India and Vietnam. This was also cited as a bearish factor.

Olefins
CFR Northeast Asia ethylene prices fell further. On the demand side, profitability of derivatives was improving but demand for derivatives was weak. For this reason, buying interest was not likely to strengthen. On the supply side, some petrochemical makers reduced production of derivatives and sell ethylene. In the middle of the week, July delivery cargoes were traded at $800-810/mt. Some end-users aimed to buy at a bottom price but supply/demand had not tightened and prices seemed not to have bottomed out.