Petrochemicals: Feb 3-7: Olefins weighed down by coronavirus and capacity increase
The FOB Korea benzene market softened in the middle of the week. But the market rebounded after that, supported by recovering crude prices and a widening spread with US benzene prices. On the other hand, the toluene and paraxylene (PX) market only recovered slightly. The market was curbed by uncertainty in the situation in China, a major consuming country.
The CFR Northeast Asia ethylene market fell sharply. In China, demand was weakening due to the new coronavirus outbreak. Further, as supply was increasing because of the startup of new naphtha crackers, supply/demand was perceived to be slack. In the week, a deal for delivery to China in March was done at $835/mt and after that, deals were also heard at $800-815/mt. Sources showed views that discussion levels were at $750-800/mt after the deals were done.
The Asia propylene market softened. In Northeast Asia, demand from China receded due to the new coronavirus outbreak and propylene supply was in surplus. As a result, some traders moved to reduce their stocks and the market fell sharply. In the FOB Korea and CFR Southeast Asia market, few bids and offers were heard but prices were weighed down by weakness in the CFR Northeast Asia market.
In the Asia butadiene market, CFR Northeast Asia prices declined while FOB Korea and CFR Southeast Asia prices were unchanged. In Northeast Asia, demand dropped owing to the new coronavirus outbreak and some cargoes that were originally scheduled to be supplied to China were in surplus. This prompted sellers to rush into sales to clear their stocks. In the FOB Korea and CFR Southeast Asia market, supply was tight and discussions were thin.