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Asian monomer markets unresponsive to multi-month high oil prices

by Pınar Polat -
  • 02/01/2020 (08:34)
Global oil futures hovered around their highest levels since May during the final days of 2019, according to ChemOrbis data. However, Asian monomer markets mostly defied the surge in crude amid the year-end slowness.

WTI crude gains 17% in the past three months

According to the weekly average data obtained from ChemOrbis Price Wizard, WTI and Brent crude oil futures gained respectively 17% and 15% since the uptrend kicked-off by the second half of October.

This was attributed to soothing concerns over a US-China trade deal after 17-month long tensions, rising OPEC output cuts and fears of supply disruption from the Middle East.

Naphtha, benzene stabilize at multi-month highs

ChemOrbis data also suggest that spot naphtha prices on CFR Japan basis and benzene prices on FOB Korea basis recently stabilized at their highest levels in the past 8 months and 14 months respectively, in sync with steady gains in crude and the year-end lull.

Spot ethylene looks for direction

Having reached their highest levels throughout 2019 by mid-February, spot ethylene prices on CFR China basis lost around 37% until late December, ChemOrbis data reveal.

Asian spot ethylene market is now seeking direction amid opposite factors. On one hand, there are firmer oil futures and spot naphtha costs while the downstream PE trend is weak under the shadow of upcoming capacities on the other hand.

Spot propylene cautiously responds to firmer oil, yet still weak

Asian propylene market is the only monomer displaying a recovery during the final days of the year with the upward pressure from crude.

Yet, spot prices on FOB Korea basis are still closing the year at a more than three year-low. Thin demand and the lack of support from the downstream polypropylene markets were cited as factors behind the propylene market’s weak performance in 2019.

Spot styrene market lacks clarity

Spot styrene prices on CFR China/FOB Korea basis mostly fluctuated throughout December, pushing market players to maintain their cautious stance despite the bullish run in crude.

Going forward, the upcoming maintenance shutdowns at styrene plants across Asia scheduled for the first half of 2020 and new styrene capacities set to be launched by the same period in China lead to more uncertainty.
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