Rebound in oil reflected on Asian feedstocks, monomers but for ethylene

In early May, crude oil prices had dipped to the lowest levels seen since November 2016 upon concerns over US stock piles, rising oil output from Libya’s oil ports, falling energy demand from China as well as pre-discussions about a possible extension of OPEC’s oil cut decision to the second half of the year. However, prices started to rebound as of May 10 with the decrease in US stock piles and the likelihood of the oil cut extension. The rebound accelerated when Russia and Saudi Arabia agreed on extending the oil cut deal into 2018 on May 15. The recent rebound in oil prices has immediately been reflected on feedstock costs and monomers in Asia as well.

The most visible response came from styrene and MEG, which were respectively up by around $70/ton and $50/ton from Friday to be last reported at $730/ton and $1070/ton respectively on FOB Korea basis.

They were followed by Asian benzene at $760/ton, PX and propylene each standing at $810/ton on FOB Korea basis and PTA at around $630/ton CFR China. The latest levels indicate respective increases of $40/ton, $25/ton, $10/ton and $15/ton from last Friday.

Asian naphtha prices have also seen an increase of $10/ton so far from Friday to be reported at $450/ton on CFR Japan.

However, a contrary trend has been visible in ethylene prices on CFR NE Asia basis. Unlike the abovementioned price increases, Asian ethylene posted a decrease of $90/ton from Friday to be reported at $1100/ton, the lowest of five months. This was due to weaker spot ethylene demand as a result of increasing deep-sea supply as well as the upcoming end of the steam cracker turnaround season in June and July.