Morning Briefing - 16 March 2022
CommoPlast
Morning Briefing
16 March 2022
Brent: $99.91 (- $6.99）
WTI: $96.44 (- $6.57）
Naphtha CFR Japan: $905.8 (- $106.3)
Ethylene CFR NEA: $1300 (- $50)
Ethylene CFR SEA: $1300 (- $50)
Propylene FOB Korea: $1250 (- $35)
Propylene CFR China: $1200 (- $35)
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More Chinese PP and PE producers are cutting operating rates amid squeezed profit margins and lacklustre local demand this week. CNOOC shut four PP and PE lines at both Phase 1 and Phase 2 complex, while Qingdao Jinneng decided to take the PP unit offline for 40 days.
The domestic PP and PE market in China extended the weakening trend as more cities enter some kind of lockdown to stem the COVID-19 spread. A number of converters in the manufacturing hub of Dongguan city have to temporarily stop operating, causing a significant slowdown in trading sentiment. The condition is expected to persist in the next two weeks, if not until early April, market sources said.
Chinese suppliers are pushing hard to export or re-export their on-hand stocks, though also facing tremendous resistance overseas amid the falling crude oil prices.
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The international benchmarks for crude oil settled below the $100/barrel for the first time in nearly three weeks on Tuesday, 15 March 2022, easing pressure on Asian naphtha based petrochemical plants to a certain extent. Naphtha costs CFR Japan fell a total of $260/ton since the peak recorded on 9 March, to $905.8/ton on 15 March.
The naphtha-ethylene spread is now at $394/ton, which is higher than the typical spread of $300-350/ton, suggesting that there is still room for further price reductions ahead, especially when the demand outlook is rather fragile.
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