Platts Petrochemical Analysis: Asian toluene inches up in tandem with crude oil
Houston (Platts)--26Jul2012/813 am EDT/1213 GMT
Asian benzene fell $7.50/mt or 0.7% day on day to $1,126.50/mt FOB Korea
Thursday, shown in red, on expectations that supply tightness in the US will
weaken in August. "I heard that cargoes due for arrival in July are going to
be delayed into August," a South Korean trader said. Another Southeast Asian
trader said: "Supply will be less tight in the US as more arbitrage shipments
arrive, that's why Asian prices are starting to track lower."
Traders in China were heard taking short positions. "I heard that Chinese
traders are trying to take on short selling positions while there are no big
players that are coming in to support the benzene market," a South Korean
trader said. Benzene activity in the Asian trading day Thursday was focused
on September and October cargoes.
In the US, prompt benzene Wednesday was assessed at $1,408.29/mt FOB USG,
shown in blue. European benzene fell to $1,351/mt CIF ARA, shown in green,
over the same period. (See chart 1)
Market commentary continues below...
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Asian toluene snapped a three-day losing streak to close Thursday up $1.50/mt
day on day at $1,077.50/mt FOB Korea, shown in red, inching up in tandem with
crude. The August/September spread was kept backwardated at $1/mt, up from
Sources said the China market is in a state of confusion at present following
an August deal at $1,080/mt on Wednesday. Some traders felt that $1,080/mt
could be the bottom, while others felt there was more room for toluene to
fall since the China domestic price was currently south-bound.
The prompt US price, shown in blue, was assessed Wednesday at $1,200.80/mt
FOB USG. The European price, shown in green, was assessed stable at $1,123/mt
FOB Rdam. (See chart 2)
Asian isomer-grade mixed xylene prices slipped $5/mt day on day Thursday to
$1,170/mt FOB Korea, shown in red, despite an uptick in the energy market.
September ICE Brent crude futures inched up $0.35/barrel from a day earlier
to $103.86/b at 4:30 pm Singapore time (0830 GMT) Thursday.
Isomer-MX buyers were out bargain hunting early Thursday, seeking both FOB
Korea and CFR Taiwan cargoes. The US MX price, shown in blue, was assessed
Wednesday at $1,154.43/mt FOB USG. (See chart 3)
Asian paraxylene prices fell $18.50/mt day on day Thursday to be assessed at
$1,375/mt CFR Taiwan/China, shown in red, with the market continuing to be
hit by a sell-off amid bearish purified terephthalic acid futures. January
PTA futures on China's Zhengzhou Commodity Exchange fell Yuan 158/mt day on
day Thursday to Yuan 7,240/mt.
Selling pressure continued in the Asian PX market Thursday amid a gloomy
outlook for downstream PTA as polyester markets showed no signs of recovery.
The polyester sales/production ratio was pegged at 60-90% Thursday. But the
downside of the PX market was also supported as the physical PTA price was
stable, despite the futures market falling.
The Asian PTA market was supported by limited PTA supplies amid an unplanned
shutdown of BP Zhuhai's PTA plant -- with a total capacity of 1.1 million
mt/year -- this week due to a typhoon. In contract news, the August Asian
Contract Price for PX was announced Thursday.
ExxonMobil set its ACP at $1,475/mt CFR, S-Oil at $1,470/mt CFR and Idemitsu
Kosan and JX Nippon Oil and Energy both at $1,490/mt CFR. No full settlement
was reached for July. The US PX price, shown in blue, was assessed at
$1,345/mt FOB USG. The European price, shown in green, was assessed at
$1,260/mt FOB ARA. (See chart 4)
Asian styrene monomer for H1 September was assessed up $3/mt day on day at
$1,371/mt FOB Korea Thursday, shown in red, as energy markets posted slight
gains. A Chinese trader characterized the market as "stable and quiet". He
said demand had not improved significantly so there was little room for
prices to increase, and they were instead remaining stable. The inventory
level of SM in the east of China dropped almost 6,000 mt week on week to
90,900 mt this week, market sources said.
In other news, China's industrial growth will stabilize and pick up pace in
the second half of the year as the government's pro-growth policies gradually
take effect, chief engineer of the Ministry of Industry and Information
Technology Zhu Hongren said Wednesday, Xinhua News Agency reported. "The
central government has rolled out a string of measures to prioritize growth.
We can see the huge potential in domestic demand ... and we expect the
activities to pick up," he said. The managing director of Singapore's central
bank, Ravi Menon, said Wednesday he saw a soft landing for the Chinese
economy, citing a strong labor market and wage growth as factors supporting
private consumption, Xinhua reported.
He expects China's economy to grow by at least 7.5% in 2012, above hard
landing forecasts of 6.5-7%. The prompt US price, shown in blue, was assessed
Wednesday at $1,477.08/mt FOB USG. The European price for August, shown in
green, was assessed at $1,455/mt FOB Rdam. (See chart 5)
--Nicole Johnson, firstname.lastname@example.org