Morning Briefing - 3 March 2022
CommoPlast
Morning Briefing
3 March 2022
Brent: $112.93 (+ $7.96）
WTI: $110.6 (+ $7.19）
Naphtha CFR Japan: $1055.6 (+ $118.3)
Ethylene CFR NEA: $1250 (+ $20)
Ethylene CFR SEA: $1250 (+ $50)
Propylene FOB Korea: $1230 (+ $15)
Propylene CFR China: $1200 (+ $15)
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The domestic PP and PE market in China surged as much as CNY300/ton ($47/ton) in the previous trading day following the strong rebound on Dalian Commodity Exchange and the energy complex.
Arbitrage traders are especially bullish on the near to medium-term outlook, anticipating the government to introduce more measures to promote growth in the National People’s Congress on 5 March. In the meantime, manufacturers in the packaging sector continue to claim mediocre end-product demand and rising raw material costs are squeezing profit margins.
Chinese PP suppliers also see a narrower export opportunity window after implementing additional increases on export offers to reflect the upward movement in the local ground. Exports homo-PP offers hit $1300-1305/ton FOB China.
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The Asian naphtha market surged above the $1000/ton threshold for the first time since CommoPlast started tracking the market in 2014 on the back of rising crude oil prices and fears of sanctions that push traders away from Russian supply.
The naphtha-ethylene spread fell sharply to $194.4/ton on 2 March 2022, well below the typical gap of $300-350/ton, indicating negative profit margins among naphtha cracking operators.
Margin erosions also escalated in the downstream PP and PE market, raising the possibility that producers might cut operating rates again amid the sluggish demand across the Asia region.
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