Morning Briefing - 13 June 2022
CommoPlast
Morning Briefing
13 June 2022
Brent: $122.01 (- $1.06）
WTI: $120.67 (- $0.84)
Naphtha CFR Japan: $810.9 (- $30.1)
Ethylene CFR NEA: $1010 (- $20)
Ethylene CFR SEA: $1150 (Stable)
Propylene FOB Korea: $1030 (Stable)
Propylene CFR China: $1030 (Stable)
*Data represent closing prices of the previous trading day
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Despite the rising crude oil prices, the Asian naphtha market has been tracking the downtrend over the past week on the back of weak demand and lengthy supply. While regional naphtha crackers have been running at about 80% rates over the past months due to weak margins, oil refineries are operating at maximum capacities to meet the strong refined products demand. About 10-15% of crude refinery outputs are naphtha.
The rapid falling naphtha costs ease costs pressure on the Asian naphtha cracking operators, but would it be enough to encourage higher operating rates when the downstream demand continues to dwindle?
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In Vietnam, following a $40/ton increase in import homo-PP offers from a key Thailand and Indian producer earlier last week, market participants were stunned by the $90-100/ton hikes from a major South Korean producer. The same extent of price increment was applied to the China market [by the same producer].
“The price decision might be too rushed, but the supplier claimed to be free from any sales pressure. Everyone wants to monitor the flare-up of COVID-19 cases in China; however, it is also clear that buyers are not ready to chase after the new offers,” a market source said.
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The Asian PVC market outlook is changing rapidly as Shanghai ended the two-month strict lockdown, boosting domestic trading sentiment and casting a positive spillover effect on other markets. Export offers for carbide-based PVC rose as much as $40/ton last week, with transactions achieved at $1190/ton FOB China.
Ahead of the July price announcement from a major Taiwanese producer, Asian market participants turn to the state of demand in India to gauge the potential direction. Weighing the impact of softening demand as the monsoon spreads and the comfortable supply of previously purchased Chinese cargoes against the uptick in demand in China, many believed that new offers from the Taiwanese major might be rolled over from the previous month.
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