Novel coronavirus pneumonia continues to be affected by the continuing demand for key petrochemical products in Asia. In the second half of this year, the prospect of Asian petrochemical market is dim. Although China’s economy grew by 3.2% year-on-year in the second quarter, reversing the 6.8% decline in the previous quarter, the average decline in the first half of this year is still 1.6%.
Ethylene glycol under pressure
The ethylene glycol market in Asia is under pressure due to the increase of port inventory in China and the slowdown of polyester demand. Ethylene glycol inventories in eastern China have risen to nearly 1.5 million tons, the highest level since 2014, casting a shadow on market sentiment. The off-season in July and August further weakened the demand of downstream polyester industry. China’s major polyester producers began to reduce production due to factors such as profit margin squeeze and poor sales.
In addition, the strong cost of raw materials also supports the Asian ethylene glycol market. The ongoing reduction of raw material production in the region has, to some extent, curbed the sharp fall in glycol prices.
PX in downturn
The market for paraxylene (PX) in Asia has also fallen into a downturn, with market participants remaining cautious due to uncertain prospects. Liquidity in the spot market remains low. Although the price difference between PX and upstream naphtha is currently small, buyers are reluctant to actively raise prices in China with sufficient domestic supply and high inventories.
In addition, the market demand for PX is expected to decline in the short term due to the planned shutdown of the downstream PTA plant. Because of the negative profit margin of aromatics production, the seller’s quotation is not positive.
Ethanolamine demand was particularly hit
In terms of ethanolamine, the overall demand for monoethanolamine (MEA), diethanolamine (DEA) and triethanolamine (tea) in the Chinese market has been affected by the prolonged rainy season and extensive flooding. Demand for DEA was particularly hit by the slowdown in demand for deipa (diethanol isopropanolamine), a cement admixture, in the construction industry during the rainy season. The main raw material of deipa is DEA.
After the blockade or flow restrictions imposed by Southeast Asian countries to curb the spread of new coronavirus, they have now reopened, and some market participants have also seen a slight rise in demand for DEA. As buyers remained cautious, some suppliers reduced their offers to attract buyers’ interest.
A major downstream detergent manufacturer of MEA in India has resumed production, so the demand for mea in India is generally the strongest.
Butadiene performs well
The Asian butadiene market performed well. As the sales bidding documents of two regional manufacturers have attracted strong interest from traders, the current spot buying interest has increased.
Traders buy butadiene goods shipped in August on the spot market to meet contractual commitments. Their demand for butadiene cargo shipped in August and arriving in September also increased as a major cracking unit in Asia is expected to shut down in mid August. Formosa Plastics and Petrochemical Company of Taiwan will close its 176000 T / a butadiene plant in Mailiao for 45 days starting from mid August.
Demand for butadiene has picked up due to the easing of the blockade and increased plant activity. Butadiene consumption by downstream synthetic rubber (SR) manufacturers and acrylonitrile butadiene styrene polymer (ABS) manufacturers is expected to increase gradually in the coming months. SR market has shown signs of improvement and the price is on the rise.
Propylene supply reduced
The mild supply of propylene from South Korea supports the rising trend of propylene price in Northeast Asian market to a certain extent.
Recently, a fire broke out in Formosa Petrochemical’s refinery in Mailiao, Taiwan, which forced one of its two residual oil desulfurization (RDS) units to shut down. Although it is not clear how much the RFCC unit of Formosa Plastics was affected, it did lead to some spot propylene purchases.