Major Asian petrochemical products follow China’s post-holiday growth and crude oil prices rebound

Supported by the strong rise in upstream crude oil futures, the major petrochemical markets in Asia further strengthened followed the uptrend after the Chinese holiday.

Oil prices hit their highest point in many years on Monday. Both WTI and Brent crude oil prices in the United States rose at least 3% last week. There are signs that demand will further recover from the epidemic.

In the context of global shortages, the prices of natural gas and coal have soared, forcing consumers to switch to fuel and diesel.

China's petrochemical product prices rose sharply after the market was closed for a week due to the tightening of the supply environment and strong crude oil prices.

With logistics bottlenecks and high raw material costs, Chinese buying is strong, and Asian ethylene spot prices rose to about 30-week highs last week.

Spot supply may not be able to meet China's demand for goods arriving in November because the ship's tension exceeds the normal offshore healthy supply provided by Northeast Asian and Southeast Asian producers.

China's domestic ethylene prices have soared thanks to stock replenishment after the holiday and reduction in methanol supply.

After the week-long National Day holiday, some ethylene buyers increased production as local governments eased energy consumption restrictions in certain areas.

At the beginning of last week, due to the strong downstream PP futures in China, the spot price in Northeast Asia soared, but this was eased by the expectation that the supply in the Chinese domestic market in the fourth quarter might be extended.

As most market participants adopt a wait-and-see attitude, spot liquidity is restricted.

In the Southeast Asian PP market, the discussion tracked China’s strong gains at the beginning of last week, but with the progress of this week, the PP futures market lost its vitality and the discussion speed slowed down.

In the styrene monomer (SM) market, the price at the beginning of last week broke through the psychological barrier of US$1,300/ton CFR China for the first time since May 2021.

But after the rally, there was a profit-taking sell-off immediately in the middle of the week.

The fundamentals of market supply and demand are mixed, and this situation may continue for most of the fourth quarter.

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