Asia-Chemicals Outlook 2017 Final

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Asia Chemicals Outlook 2017

ASIA
CHEMICALS
OUTLOOK
2 17
Key markets covered:

Acids Fibre Chains Plastics/Polymers


Alcohols Intermediates Solvents
Aromatics Olefins Surfacants
Base Oils Oleochemicals And so much more...
QUICK NAVIGATION
ACIDS OLEFINS SOLVENTS
ACRYLATE ESTERS/ACRYLIC ACID ETHYLENE ACETONE
ACRYLONITRILE (ACN) PROPYLENE PHENOL
ACETIC ACID BUTADIENE EPOXY RESINS
ADIPIC ACID (ADA)
ETHYLENE VINYL ACETATE (EVA)
PHENOLICS/CHLORALKALI SURFACTANTS AND
BISPHENOL A (BPA) OLEOCHEMICALS
ALCOHOLS METHYL DI-P-PHENYLENE FATTY ACIDS/FATTY ALCOHOLS
OXO-ALCOHOLS ISOCYANATE (MDI)

UPSTREAM FEEDSTOCK
AROMATICS PLASTICS/POLYMERS NAPHTHA
BENZENE POLYCARBONATE METHYL TERTIARY BUTYL ETHER
TOLUENE POLYETHYLENE (PE) (MTBE)
STYRENE POLYPROPYLENE (PP)
PARAXYLENE POLYVINYL CHLORIDE (PVC)
MIXED XYLENES PLASTICIZERS OTHERS
METALLOCENE LINEAR LOW DENSITY BASE OILS
POLYETHYLENE (MLLDPE) CAPROLACTAM
FIBRE INTERMEDIATES CAUSTIC SODA
PURIFIED TEREPHALATIC ACID (PTA) EPICHLOROHYDRIN (ECH)
POLYETHYLENE TEREPHALATE (PET) POLYURETHANE MALEIC ANHYDRIDE (MA)
AND RECYCLED POLYETHYLENE PROPYLENE OXIDE METHYL METHACRYLATE (MMA)
TEREPHALATE (R-PET) TOLUENE DI-ISOCYANATE (TDI) PARAFFIN WAX
MONOETHYLENE GLYCOL (MEG) TITANIUM DIOXIDE (TIO2)
NYLON VINYL ACETATE MONOMER (VAM)
RUBBER PHTHALIC ANHYDRIDE (PA)
STYRENE BUTADIENE RUBBER (SBR)

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help you understand the key price drivers and market conditions and settle your downstream demand overview and outlook, as well as analyses on key issues
contract prices confidently with access to time-sensitive offers, bids and price and developments in the market.
movements.

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demand, trade balances, capacity and margins. It is updates, plant capacities, output and shutdowns, context. Data includes import and export volumes,
a valuable tool to identify commercial opportunities plus so much more. consumption, plant capacities, production and
in the short to mid-term. product trade flows from 1978 up to 2030.

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ACIDS
ACRYLATE ESTERS/ACRYLIC ACID

ASIA ACRYLATES MARKET FACES Demand will likely be stable as most end- You can rely on ICIS for all
TIGHT SUPPLY IN H1 users have not increased production or
increased their allocations of acrylic acid
your acrylate ester/acrylic acid
By Paul Lim
and acrylate ester cargoes, market sources market intelligence needs
SINGAPORE (ICIS)--Supply of acrylic acid said.
and acrylate esters in Asia is expected PRICING INFORMATION
to remain tight in the first half of 2017 Consumption may slow down ahead of the
ICIS offers regional price assessments and
until major plants that were shut this year Lunar New Year - which is observed in most market analysis for the Asian acrylate ester/acrylic
resume production, market sources said. parts of northeast and southeast Asia - but acid market, including price histories and expert
sellers remained optimistic about higher commentary to help you understand the key price
drivers and market conditions and settle your
A spate of major incidents at production prices. contract prices confidently with access to time-
facilities in Asia and Europe caused supply sensitive offers, bids and price movements.
to tighten dramatically in the last quarter of The Lunar New Year falls on 28 January
2016, leading to spikes in acrylates prices, and is celebrated for a full week in China. Request your free sample report
they said.
European buyers had fixed arbitrage NEWS INFORMATION
The incidents include the explosion cargoes from Asia and the Middle East all
Be the first to find out about acrylate ester/acrylic
at BASFs propylene pipeline at its the way into first quarter of 2017. acid-related breaking news and analysis across the
Ludwigshafen site in Germany on 7 global petrochemical markets. Our market-moving
Some Asian acrylic acid and acrylate ester news articles cover production updates, plant
October, prompting the company to declare capacities, output and shutdowns, plus so much
a force majeure on supply of acrylic producers do not have sufficient quantities more.
monomers on 31 October. on hand to sell cargoes to the spot market.
Request your free trial today
The force majeure has remained in place, In the key Chinese market, price spikes were
with repairs at the companys propylene more pronounced since supply is curbed with
SUPPLY AND DEMAND DATABASE
pipeline expected to last until June-July producers running plants at low operating
2017, according to market sources. rates of 40-50% for the most part of 2016. Receive an end-to-end perspective across the
global petrochemical supply chain, enabling you
to grasp the local or regional scenario in a global
In China, Jiangsu Sanmu shut its 140,000 In southeast Asia, spot demand was stable context. Data includes import and export volumes,
tonne/year acrylic acid plant and acrylate but end-users have had to compete with consumption, plant capacities, production and
product trade flows for acrylate ester/acrylic acid
esters production units on 25 November buyers in other regions that were willing from 1978 up to 2030.
following a fire at its feedstock pipeline. to pay higher prices for the cargoes. The
There is no confirmed restart date for the region continues to receive arbitrage
Enquire about the supply/demand database
plant and market sources are saying the cargoes from the Middle East and offers for
shutdown could last a few months. China-origin material.

End-users in Germany and China went In India, the market is expected to continue
scrambling to secure sufficient volumes feeling the adverse effects of the November
from the spot market, consequently driving demonetisation of high-denomination rupee
up acrylic and acrylate esters prices in Asia notes in the first quarter of next year, as
in the fourth quarter. consumers struggle to get their hands on
cash for basic necessities.
Most industry sources expect the high
prices to remain into the first half of 2017. Demand for paints and coatings in the
country had taken a hit from the cash
Scheduled turnarounds in Asia for the crunch. End-consumers were hoarding
period could exacerbate the tightening of cash for purchasing daily necessities such
supply, and thus, maintain firm support on as food, instead of spending on paints to
prices, market sources said. spruce up homes, industry sources said.

But some producers indicated that they may


opt to skip conducting turnarounds at their
plants next year.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
ACIDS
ACRYLONITRILE (ACN)

ASIA ACN TO GET SUPPORT IN 1H ACN prices in northeast Asia fell by 11% and Cornerstone Chemical will have
FROM HEAVY TURNAROUNDS to $1,150-1,250/tonne CFR (cost & freight) turnarounds in May, sources said.
By Judith Wang NE (northeast) Asia from end October while
prices in India plummeted by around 24% The deep-sea cargoes in first half of 2017
SINGAPORE (ICIS)--A slew of turnarounds from late October levels to $1,000-1,100/ will be less as three major US producers will
in the first half of 2017 may exert upward tonne CFR India in the week ended 2 have maintenance plans in May, a regional
pressure on Asian acrylonitrile (ACN) December, according to ICIS. end-user said.
prices, though the second half of the year
may likely see them soften amid resumed The availability of deep-sea cargoes to However, the prices in first half of 2017 will
supply, industry sources said. Asia will be cut in first half of next year as be stronger than the second half given less
three major US producers including INEOS turnarounds in the second half of 2017,
The heavy turnarounds season in Asia Nitriles, Ascend Performance Materials sources said.
will start in February 2017 and end in
May, which will deter the prevailing price
downtrend and lend support to ACN prices.

Asia ACN prices started to drop since end


October, the first time since early March,
and market participants said the downtrend
extended to the end of the year amid the
year-end destocking activities and the
seasonal lull demand.

INEOS Nitriles is due to lift its force


majeure (FM), but sources have previously
speculated that material from the facility
may not become available until January or
even February.

INEOS Nitriles declared force majeure at


its Green Lake facility on 15 July, after it
was discovered that the main feedstock
propylene pipeline had been compromised
by flooding.

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ICIS offers regional price assessments and market Be the first to find out about ACN-related breaking Receive an end-to-end perspective across the global
analysis for the Asian ACN market, including price news and analysis across the global petrochemical petrochemical supply chain, enabling you to grasp
histories and expert commentary to help you markets. Our market-moving news articles cover the local or regional scenario in a global context. Data
understand the key price drivers and market conditions production updates, plant capacities, output and includes import and export volumes, consumption,
and settle your contract prices confidently with access shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for ACN from 1978 up to 2030.

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ACIDS
ACETIC ACID

ASIA ACETIC ACID SUPPLIERS


BULLISH ON Q2/Q3 PRICE
OUTLOOK
By Helen Lee

SINGAPORE (ICIS)--Asias acetic acid


prices may be bolstered in the second and
third quarter by the new normal of higher
feedstock methanol values on new demand
from methanol-to-olefins (MTO) plants
in China and a spate of acetic acid plant
turnarounds.

Acetic Acid producers and traders estimate


that the methanol feedstock price in China
could potentially be supported at the new
normal of the high-$300s/tonne CFR
(cost & freight) China next year, driven by
demand from new MTO plants.

Chinese domestic coal-based methanol values


were also anticipated to remain propped up by
buoyant demand from the MTO sector.

This incremental cost of methanol However, the higher prices may only Producers would start to build their
feedstock was expected to subsequently materialise in the second and third quarter inventory level up right after the Chinese
drive up acetic acid values in the Chinese due to a concentration of maintenance New Year holidays in late January, a
domestic market as well as in Asia, market shutdown scheduled at acetic acid plants northeast Asia based acetic acid
participants noted. during that period. producer said.

2017 Acetic Acid plant shutdown schedule

Company Capacity Location Shutdown schedule

Chang Chun Petrochemcials 600,000 Mailiao, Taiwan April: one month

Jiangsu Sopo Chemical* 1.2m Zhenjiang, Jiangsu, China April: one month (TBC)

Daicel Chemical Industries* 450,000 Himeiji, Hyogo, Japan Mid-May 2017: at least one month

Shanghai Wujing Chemicals 500,000 + Wujing, Shanghai, China Big unit 3 weeks in May
200,000 Smaller unit 2 weeks in June

International Acetyl Company (IAC) 400,000 Jubail, Saudi Arabia Tentatively Q2


affiliate of Sipchem

Lotte BP Chemicals Co. Ltd 600,000 Ulsan, South Korea May: 25 days

BYACO (BP YPC Acetyls Company)* 500,000 Nanjing, Jiangsu, China July: 30 days (TBC)

BP Petronas Acetyls* 550,000 Kerteh, Terengganu, Malaysia Aug-Sept: 60 days (TBC)

Formosa BP* 300,000 Mailiao, Taiwan Sep 2017: 25 days

*according to sources close to the company.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
New Ethyl Acetate Projects

Company Capacity Location Schedule Remarks (start-up/shut down)

Korea Alcohol 45-50kt/year Ulsan, South Korea Feb 2017 Expansion, new plant start-up

New Purified Terephthalic Acid (PTA) Projects

Company Capacity Location Schedule Remarks (start-up/shut down)

Tongkun 2.2 m tonne/year Jiaxing, China Q4-2017 Startup

OPTC 1.5 m tonne/year Kuanyin, China Q2-2017 Startup

JBF Industries 1.1 m tonne/year New Mangalore, India Q1-2017 Startup

The producer added that some of the acetic Acetic acid prices have generally been on market as well higher feedstock costs,
acid producers in northeast Asia who had an uptrend throughout 2016 on tight supply market sources said.
focused on domestic sales would have to and normal demand situation. But they rose
import from the spot market to support their sharply from September onwards on the In terms of demand growth, new
long term domestic customers. back of several turnarounds in key China downstream capacities in 2017 were
confined to China, South Korea and India.

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PRICING INFORMATION NEWS INFORMATION SUPPLY AND DEMAND DATABASE

ICIS offers regional price assessments and market Be the first to find out about acetic acid-related Receive an end-to-end perspective across the global
analysis for the Asian acetic acid market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for acetic acid from 1978 up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
ACIDS
ADIPIC ACID (ADA)

ASIA ADA UPTREND TO WEAKEN IN


Q1 AS SUPPLY RISES
By Judith Wang

SINGAPORE (ICIS)--Asias adipic acid


(ADA) price uptrend is expected to weaken
in the first quarter of 2017 as supply will
increase, with a new capacity coming on
stream in China, while demand is seen to
slow down, market sources said.

A new 140,000 tonne/year ADA plant,


operated by Taiyuan Chemical New Material
Co, is expected to start up early this year in
Shanxi province, they said.

Demand is expected to take a hit when


downstream derivative plants cut production
in the weeks leading to the Lunar New Year,
which falls on 28 January 2017.

Most migrant workers in the key China


market go back to their hometowns to
celebrate the holiday, which lasts a full
week in the country. by higher cost of feedstock benzene and at a major ADA plant in the country. The
tight domestic supply, according to ICIS. producer is currently in the process of
China will be on holiday from 27 January ramping up operating rates at the restarted
to 2 February. The Lunar New Year is also Meanwhile, prices of other Asian cargoes plant.
observed in most parts of northeast and also jumped by 26% from September to
southeast Asia for a shorter duration. $1,450-1,600/tonne CFR NE Asia. In the week ended 21 December, market
activity was a standstill, with sellers not
I hope ADA prices could retreat to acceptable Major Chinese producers were running their keen to offload cargoes at lower prices and
levels in 2017 amid the rising new supply as plants at 50-60% of capacity to cope with buyers not inclined to build stocks toward
the prevailing prices have eroded our margins squeezed margins and amid government- year end, industry sources said.
significantly, a regional buyer said. mandated production cuts.
We have sold out December cargoes and
China is a major ADA supplier in Asia but Some chemical companies, including even January cargoes. So we are now
also imports cargoes. Shandong Haili, were ordered to reduce just delivering customers orders, a major
plant run rates to improve the air quality in Chinese producer said.
Prices of ADA originating in China have north China.
surged 50% since September to $1,500- Industry participants said ADA prices in
1,550/tonne CFR (cost and freight) NE But the supply crunch has started to ease 2017 will continue to track the movement in
(northeast) Asia on 21 December, driven up recently following resumption of operations the feedstock benzene market.

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ICIS offers regional price assessments and market Be the first to find out about adipic acid-related Receive an end-to-end perspective across the global
analysis for the Asian adipic acid market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for adipic acid from 1978 up to 2030.

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ACIDS
ETHYLENE VINYL ACETATE (EVA)

ASIA EVA MAKERS FACE 2016, an increase of around 9% compared In the last 2-3 years we [have] already
CHALLENGES AMID HIGHER to the same period in 2015, China customs diversified our portfolio to make film or
SUPPLY data showed. hotmelt ahesives, solar panel and coatings
By Helen Lee grade EVA or EVA with extra high VA
Several producers in Asia indicated that content for foaming applications, the South
SINGAPORE (ICIS)--Asias ethylene vinyl they will continue to focus their output on Korean producer said.
acetate (EVA) producers face a challenging niche EVA grades rather than the generic
year ahead on shrinking demand in China for foaming grade EVA with 14-20% vinyl The move away from the foaming grade
their cargoes due to increased EVA capacities acetate (VA) content to cope with changing would mean it would be difficult for some
in China as well as the Middle East. market dynamics. Korean producers to maintain their current
market share in India, the producer added.
Among others Chinas Jiangsu Sailboat EVA with 14-20% VA content is used in the
Petrochemical Company plans to start trial foaming/footwear industry. South Korea-origin EVA enjoys duty free
operations at its new 300,000 tonne/year status in India while Middle East and other
EVA plant in Lianyungang city, Jiangsu We are not so positive due to new EVA northeast Asian origin material are subject
province, at the end of December, following capacities, another South Korean EVA to Indias 7.5% import duty.
several rounds of delays. producer said. The demand side in
China is not so clear but obviously the To find our niche market of 15,000 to
Chinas [EVA] production capacity has foaming grade EVA will be a red ocean of 20,000 tonnes of new demand for all grades
increased so imports will be decreased from competitive pricing. although it might be small, but it would be
next year So it will be difficult for us, a enough for us, he added.
South Korea-based EVA producer said. Other producers are diversifying into
EVA grades with higher VA content and In the near term, however, EVA producers
EVA production in China is meeting almost expanding into other markets such as hold a rosy outlook on the pricing due to
35% of the countrys demand but this will Europe, South America and Africa. the prevailing peak production season
rise to 50% from 2017 onwards, according in the downstream footwear materials
to the producer. EVA with 22-30% VA content is used in the sectors in China and India as well as in the
wire and cables industry, as well as the hotmelt adhesives sectors in November and
China imported 693,420 tonnes of primary hotmelt adhesives industry. December.
grade EVA during the first nine months of

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understand the key price drivers and market conditions production updates, plant capacities, output and includes import and export volumes, consumption,
and settle your contract prices confidently with access shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for EVA from 1978 up to 2030.

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ALCOHOLS
OXO-ALCOHOLS

ASIA OXO-ALCOHOLS MARKETS facility in March 2017. The new domestic spot market, giving them more bargaining
HEAD FOR SOFT LANDING IN Q1 capacity may dull imports, market sources power when buying import cargoes.
By Joson Ng said.
The dioctyl phthalate (DOP) spot market
SINGAPORE (ICIS)--Northeast Asias Spot 2-EH prices trended up in November had healthy gains in the month of
oxo-alcohols markets may be heading for 2016 by some 6.6%, tracking gains in the November. Strong feedstock phthalic
a correction in the early 2017, following feedstock propylene spot market. anhydride (PA) market, coupled with tight
an unexpected surge in prices in the last supply drove up DOP prices by some 6.3%
quarter of 2016, but buffered by restocking Popylene is expected to be an important in November.
activity, market sources said. marker for the 2-EH spot market. Northeast
Asias propylene markets may see a dull Like the rest of oxo alcohols, DOP prices
Buyers are expected to be in the market to start to the year with some new start-ups are expected to be slightly weaker at the
replenish inventory ahead of the Lunar New expected in China. start of the year. The market is likely to track
Year, which falls on 28 January 2017, and the Chinese domestic and feedstock PA
this should provide some support to prices, These new start-ups in China have buyers markets for much of 2017.
they said. hoping for more options in the domestic

N-butanol (NBA) might drop in the first


quarter of 2017 because it went up too high
previously, said one Chinese buyer.

NBA prices moved in the range of $730-


740/tonne CFR (cost and freight) NE
(northeast) Asia in November. Southeast
Asian NBA is expected to track the
northeast Asian prices, with suppliers
having the option of sell to both regions.

In the 2-ethylhexanol (2-EH) spot market in


northeast Asia, spot prices are expected to
remain stable-to-soft. Market fundamentals
are expected to remain largely unchanged.

In 2017, there are no expansion plans in


South Korea and Japan. The first quarter
will be stable as a result, said a northeast
Asian trader.

In China, Luxi Chemical is expected to


open its new 300,000 tonne/year NBA/2-EH

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understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for oxo-alcohols from 1978 up to 2030.

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Prices, news and analysis for the
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Aromatics Feedstocks Olefins
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of the Asian markets includes: Oleochemicals
Biofuels Fibres Plastics/Polymers
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Coal Gas/LNG Rubber
Base Oils/Lubes Fertilizers Oleochemicals
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AROMATICS
BENZENE

ASIA BENZENE PLAYERS TO SEEK for CFR China market in 2017. Impact from new supply on the market is
POCKETS OF OPPORTUNITIES likely to be towards H2 2017 rather than H1
By Daphne Ho We were surprised as well with the term 2017 as we have to wait until new plants
results, but nonetheless it is good news, stabilise their productions and it will take
SINGAPORE (ICIS)--Asia benzene players said a producer. time, said a southeast Asia-based trader.
will be seeking pockets of opportunities
in 2017 as the market juggles between In 2016, prices were supported mainly Market players are also cautious about
new capacities as well as maintenance because of heavy maintenance schedule overestimating actual production output
turnarounds at upstream and downstream from South Korea and strong demand from from the new plants as the bigger plants
plants to balance out long supply conditions China am amid heavy styrene monomer might not run at full capacity after starting
amid higher demand. (SM) capacity expansions. up due to technical reasons or the market
conditions.
An unexpected strong performance in the In addition, calculated increase in
benzene spot market in the fourth quarter consumption outweighed increase in supply Saudi Arabias Petro Rabigh and Sadara
of 2016 has led players to reassess their in 2016 because of multiple delays in start- downstream integrated units are expected to
outlook for 2017. ups from the Middle East and India plants, reduce benzene surplus in the spot market.
and low benzene output from the Hyundai
The market was shocked by the aggressive Chemical plant after its start-up, which was Sadara Chemical will have an integrated
bids seen during free on board (FOB) estimated at 60-65% of nameplate capacity. MDI unit which on paper will likely consume
contract negotiations in the last quarter. all of its benzene production.
Please see below the list of benzene plants
Initial 2017 term ideas exchanged in that started up in 2016 with nameplate Petro Rabigh II also has a phenol plant, which
October were stable-to-soft against 2016 capacity versus their actual output. is likely to consume half of its benzene output.
term prices as market players believe that
there would be more downward pressure
as the structurally long Asia market will face
new capacities coming up in 2017.

However, as end-year spot prices were


firmly supported by tight supply on the back
of strong China demand, contract prices
between producers and traders were mostly
concluded at a sharp increase instead.

Despite attempts from end-users to delay


term negotiations to start from February,
the impact could not be negated as CFR
(cost & freight) China/Taiwan/SE Asia
based contracts were either concluded or
discussed at higher levels.

Earlier keen interest on import contract


cargoes for many Chinese end-users was
dampened as term offers rose further.

With negotiations deadlocked into late Similarly, here is a list of downstream units
December and buy-sell indications proving that started up in 2016 with nameplate
difficult to narrow in, there were lesser than capacity versus actual output.
initial expected contractual volumes fixed
for the China market for 2017. There continues to be uncertainty in the
start-up period of new benzene plants in
With greater demand expected from 2017, shifting the impact of these new
downstream expansions, lesser contractual capacities later.
volumes fixed indicate greater spot activities

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
The first half of 2017 will also see several maintenance thus not needing feedstock Market players estimate that downstream
turnarounds, though fewer as compared to benzene. conditions are unlikely to defer largely from
the same period of 2016. 2016 and that run rates for downstream
South Koreas production loss of SM is units in 2017 - outside of turnaround periods
Hanwha Total will be shutting its estimated to be at 250,000 tonnes for - are likely to stay stable or to improve.
420,000 tonnes/year benzene unit for March, 350,000 tonnes for April and
debottlenecking in May for 50 days, which 865,000 tonnes for May as Lotte Chemical, SM and MDI margins are expected to
will add 80,000 tonnes/year additional LG Petrochemical, Hanwha Total and maintain well above break-even spreads
production when it is brought back on line. YNCC shut their units for maintenance. and caprolactam spreads are likely to
improve with supply consolidation, but
Korea Petrochemical Industry Co (KPIC) There are no turnarounds for phenol units in phenol spreads against benzene are likely
will be shutting its 160,000 tonnes/year Korea planned in the first half of the year. to stay marginal.
benzene unit for debottlenecking during
April/May which will increase its production However, the longer supply from Korea New capacities could also establish liquidity
by around 80,000 tonnes/year. could be offset by lower net surplus of in trade routes, where more outflows from
benzene in Japan in the second quarter. India are likely to move into China.
SK Global Chemical (SKGC) pygas units in
Ulsan with 230,000 tonnes/year combined It looks particularly tight during second With strong Chinese demand, outflow of
capacity will be shut in the second half of quarter for Japan with excess benzene southeast Asia cargoes to China could
March for 40 days. balance hovering at around 30,000 tonnes, become a norm in 2017 as well, similar to
said a Japan-based trader. the situation in the second half of 2016,
South Koreas S-oil will also be having resulting in a balanced-to-tight market for
a turnaround at its 300,000 tonnes/year In the second quarter, there are many the structurally long southeast Asia region.
Onsan unit in the second quarter of 2017 benzene units scheduled for maintenance
for around 45 days, according to in Japan, outweighing the downstream In 2017, the benzene market is expected to
market sources. turnarounds from SM, Phenol and remain robust with producers, traders and
cyclohexane units. buyers having to remain creative in their
On the other hand though several ways to diversify risks, expend profits and
downstream SM units will also be shut for increase their influence on the market.

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benzene market, including price histories and expert commentary to help you robust plans for production and investment activities. The study also includes
understand the key price drivers and market conditions and settle your contract supply and demand forecast data, import/export levels, capacity expansion plans,
prices confidently with access to time-sensitive offers, bids and price movements. downstream demand overview and outlook, as well as analyses on key issues
and developments in the market.

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selected commodities showing a 12-month rolling breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price forecast as well as details of supply and petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
demand, trade balances, capacity and margins. It is articles cover production updates, plant capacities, includes import and export volumes, consumption,
a valuable tool to identify commercial opportunities output and shutdowns, plus so much more. plant capacities, production and product trade flows
in the short to mid-term. for benzene from 1978 up to 2030.

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AROMATICS
TOLUENE

ASIA TOLUENE POISED FOR been increasing at a much slower pace toluene di-isocynate (TDI), benzoic acid,
SHORT-TERM UNCERTAINTY because of the consistent depreciation of benzyl chloride, solvent have been stable
By Trixie Yap the yuan currency against the US dollar. since the third quarter of 2016.

SINGAPORE (ICIS)--Asias toluene prices This, in turn, has resulted in concerns of While there are talks among Chinese
are poised for an uncertain first quarter whether Chinese domestic prices will be market players that local gasoline blending
on concerns over a potentially overheated able to keep up the pace with FOB Korea demand will improve ahead of the Lunar
market since early December amid prices in the short run. New Year period, the presence of other
unchanged Chinese demand despite the more affordable blendstocks such as mixed
recent downstream benzene price rally, If local prices do not move fast enough, aromatics, alkylated oil and methyl tertiary
market participants said. there will be closed arbitrage spread butyl ether (MTBE) is making it difficult for
between import parity prices of domestic toluene to be placed into the blending pool.
Both FOB (free on board) Korea and yuan- cargoes and CFR [cost & freight) China
denominated prices have been consistently discussions, and Chinese importers will not China goes on holiday on 27 January for
rising day on day from 1st December to 12 be able to take January cargoes easily, a almost a week for Lunar new Year holiday.
December, according to ICIS data. southeast Asian trader said.
All these factors indirectly mean that short-
Market players have attributed this mainly Furthermore, market expectations of term demand growth for toluene could be
to the improvement in trading sentiment increasing supply from local producers in heavily dependent on the operating rates of
against rises in international crude values both the east and northeast China regions selective toluene disproportionation (STDP),
and futures market on the commodity stock have led market players to wonder if yuan- TDP or hydrodealkylation (HDA) units.
exchange in China. denominated prices will be able to keep
up with FOB Korea price movements. (see Buyers in other downstream sectors may
FOB Korea prices have risen by at least table for expansion list) even feel deterred from procuring more
14% in that 12-day period, according to toluene if their margins start to become
ICIS data. Prices were last higher in end-While shoretank inventories may not be squeezed because of the recent price run-
July 2015, the data showed. high [at 40,000-50,000 tonnes], we need to up, one south China-based trader said.
bear in mind that prices were only so high in
Yuan-denominated prices, likewise, have November 2015 because inventories Buoyant downstream benzene prices from
added 15.9% from almost two weeks of run- had almost fallen to 25,000-30,000 tonnes, end-November to early December - which
up to the highest point at CNY6,175/tonne that sort of level, an east China-based have resulted in potentially higher toluene
ex-tank on 12 December. trader said. disproportionation [TDP] run rates amid
better margins - upstream crude prices
Early November 2015 was the last time Other than the strong performing and producers insistence of limited spot
prices were this high, ICIS data showed. downstream benzene market, downstream availability for January were key reasons for
plant operating rates for sectors such as toluene price gains in the short run.
Despite gains in both regions prices in early
December, yuan-denominated prices have

Company name Location Feedstock TOL capacity Start-up time


(in kt/year)

Ningbo Daxie Ningbo, China pygas 480 June-July 2016

CNOOC Taizhou Taizhou, China reformate 200 H2 November 2016

Petrochina Yunnan Yunnan, China reformate 480 March-April 2017

CNOOC Huizhou (2nd facility) Huizhou, China reformate 350 May-June 2017

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
The potential for further price gains or at
least price stability is high if the toluene-
benzene spread remains wide because it
will allow cap toluene supply in the short
run if all integrated facilities run their
downstream units higher, one northeast
Asia-based trader said.

Talks of producers interest to keep


toluene cargoes for internal downstream
consumption were also rife after the
benzene-toluene spread continued to
remain at above $130-150/tonne, ICIS data
showed, for the third week in a row.

This provided further support for the overall


trading sentiment from the TDP point of
view.

It will depend on which factor will emerge


stronger the uncertainty in domestic China
and import demand or the movement in the
downstream benzene market, one South
Korea-based trader said.

Already, toluene FOB Korea price gains


have reversed since early December and
discussions have fallen back to $643-658/
tonne on 20 December, following the closed
FOB Korea-CFR China arbitrage spread
and selling pressures from some traders/
producers with prompt January cargoes.

Ultimately if sellers start emerging for


January cargoes, the Chinese import
market has to be there to take in all these
cargoes since the largest spot buyers are
all situated there, one northeast Asian
producer said.

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analysis for the Asian toluene market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for toluene from 1978 up to 2030.

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AROMATICS
STYRENE

ASIA STYRENICS UPTREND COULD Other styrenic resin polystyrene (PS) had Expandable PS (EPS) continued to face the
EASE IN FIRST QUARTER 2017 a harder time matching the uptrend in SM weakest demand among styrenics resins,
By Clive Ong values. Nonetheless, suppliers were mostly with suppliers lamenting squeezed margins,
successful in implementing increments over slow sales and inventory build-up. Suppliers
SINGAPORE (ICIS)--Asias styrenic the past several weeks. have reduced output with the average
resins prices may ease in the first quarter operating rate in China slipping below 50%
of 2017 as market activity is expected to But demand is expected to wane in in November.
slow down with players along the supply the early parts of 2017 before a more
chain currently flushed with stocks, industry substantial rebound to take place in the The key downstream construction sector in
sources said. second quarter, according to sellers. northern and eastern China has slowed with
the onset of cold weather in those regions.
Trading is expected to slow down ahead of We have to target higher price each week
the Lunar New Year holidays across Asia in to maintain workable margins, said a Demand for EPS is usually slow during
late January. producer in Taiwan. winter, said a producer in Taiwan.

It is good for the market to pause in However, with fourth-quarter prices now Apart from the construction sector, the
January as stocks have built up among more elevated than in the previous three packaging sector also reduced consumption
dealers and distributors, said a China- months, some sellers expect increased of EPS as the manufacturing-for-exports
based trader. difficulty in achieving even higher numbers season in China has already passed.
in January to March 2017.
Styrenic resins have enjoyed a strong run- We will probably see a significant pick up in
up post the US elections in early November, PS prices are now at the highest point of EPS demand from the second quarter next
mainly due to higher feedstock styrene the year; buyers will likely seek alternative year, said another producer in Taiwan.
monomer (SM) values. resins if prices increase further, said a
producer in SE Asia. EPS resins are used for packaging and as
Expectations of stronger economic insulation panels in buildings and roads.
growth in the US, propelled by the PS resins are used for packaging, toys,
incoming administrations plan to stimulate consumer electronics and a variety of
the economy via a massive fiscal consumer items.
expenditure, which could boost Asias
economic expansion, lifted prices of many
commodities and petrochemicals.

Asia acrylonitrile-butadiene-styrene (ABS)


prices had a good run to above $1,800/
tonne CFR (cost and freight) NE (northeast)
Asia in December, from under $1,400/tonne
CFR NE Asia in September.

Buying interest was strong among traders


following the US elections as dealers bet
on stronger growth and higher demand for
the resins in the coming months. End-
users were mostly on the sidelines as the
manufacturing-for-exports season in China
had ended in October.

ABS resins are used in appliances,


consumer electronics, toys as well as in the
automotive and construction sectors.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
TIGHT SUPPLY TO BUOY UP ASIA In the US, several plants are also heard to price, although they conceded that supply
STYRENE MARKET IN H1 be shutting down in the first quarter of 2017 would be tight for the first half of the year.
By Clive Ong for maintenance, reducing availability of
deep-sea cargoes bound for Asia, market Nonetheless, they expect availability of spot
SINGAPORE (ICIS)--Spot styrene sources said. cargoes to be ample in the second half,
monomer (SM) prices in Asia are expected given less plant maintenance scheduled
to buoyed up by tight supply in the first half Contract negotiations conducted under this for this period while several new plants in
of 2017, market sources said. scenario has prompted suppliers to ask an China are expected to come on stream.
additional $2/tonne over the 2016 contract
Weekly falling inventories in the key eastern prices. The supply of SM in the second half of
China market has stoked concerns that next year looks much less tight than the first
availability will be snug into the first quarter Suppliers have offered an additional $2/ half, said an end-user in southeast Asia.
of next year. Inventories have fallen under tonne over this years [2016] contracts for
80,000 tonnes since late October, ICIS data CFR-based terms, said an end-user in SM is a liquid chemical used to make resins
showed. Taiwan. like polystyrene (PS) and acrylonitrile-
butadiene-styrene (ABS), as well as synthetic
Tight supply into the first quarter of next Buyers remained unconvinced and were rubbers such as styrene-butadiene-rubber
year is keeping price buoyant, said a trader lobbying for a roll-over of 2016 contract (SBR) and styrene-butadiene-latex (SBL).
in China.

SM was among a number of petrochemical


products whose prices have soared in the
aftermath of Donald Trumps presidential
victory in the US in November 2016.

The plan for massive fiscal spending by the


incoming administration fueled expectations
of stronger economic growth in the US and
its potential spill-over effects in Asia.

In the first half of December, spot prices in


China breached the $1,200/tonne CFR (cost
& freight) China level, which was not seen
since April last year, according to ICIS data.

A slew of scheduled plant turnarounds


across Asia kicking off in February raises
concerns that supply would be tight, with
some market participants expecting this
market condition to extend to June.

The supply situation is looking tight for the


first half, a Singapore-based trader said.

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price histories and expert commentary to help you understand the key price robust plans for production and investment activities. The study also includes
drivers and market conditions and settle your contract prices confidently with supply and demand forecast data, import/export levels, capacity expansion plans,
access to time-sensitive offers, bids and price movements.. downstream demand overview and outlook, as well as analyses on key issues
and developments in the market.

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across the global petrochemical markets. Our market-moving news articles enabling you to grasp the local or regional scenario in a global context. Data
cover production updates, plant capacities, output and shutdowns, plus so includes import and export volumes, consumption, plant capacities, production and
much more. product trade flows for styrene from 1978 up to 2030.

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AROMATICS
PARAXYLENE

ASIA PX OUTLOOK DEPENDS ON downstream purified terephthalic acid (PTA) In 2016, Asia has seen only about 1m
NEW CAPACITY, PTA RESTARTS capacities attempting to restart from the tonne/year of new PX capacity coming
By Paul Lim second quarter onwards. online in India, as Reliance Industries
brought its new 2.25m tonne/year PX unit
SINGAPORE (ICIS)--Asia paraxylene (PX) They were also of the opinion that new PX in Jamnagar on stream in December and
market fundamentals for 2017 will likely capacities will also be slower to come on slowly ramped up operating rates.
hinge new production capacities coming stream.
on stream and on downstream purified This brings the total capacity of PX in the
terephthalic acid (PTA) restarts. PetroRabigh Phase IIs 1.25m tonne/ region to around 48m tonne/year.
year PX unit start up can be delayed and
The market will see some tightness in 2017 on-spec production expected in the fourth In 2017, an additional 3.4m tonnes/year of
during peak demand season, especially for quarter of 2017, with supply reaching the new PX capacity is expected to come on
Asian-origin cargoes heading to northeast market only in 2018. stream in the region.
Asia, while open-origin cargoes will likely
see supply lengthening. However, Nghi Son Refinery and Reliance Industries plans to bring its unit to
Petrochemicals could still bring its 680,000 full throughput and PetroRabigh II and Nghi
Producers are of the opinion that PX could tonne/year PX unit on stream in the third Son Refinery and Petrochemicals will attempt
be tighter in 2017, due to news of major quarter of 2017. to bring their new PX start ups on line.

Hanwha Total is also set to increase the


capacity of its 1m tonne/year No 2 PX
line by 20% in the second quarter of 2017
through a two-month long de-bottlenecking
project.

Other key units such as Singapores Jurong


Aromatics Corp is likely to continue running
its 800,000 tonne/year PX unit in 2017, with
no turnarounds planned.

The same goes for Chinas Ningbo


Zhongjin, which has operated stably after

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
an extensive turnaround in the first quarter Traders who have PX cargoes on hand are Huabins 1.4m tonne/year No 4 PTA line
of 2016. It is also skipping turnarounds in harbouring bullish sentiments, optimistic and one of Xianglu Petrochemicals 1.5 m
2017. that the possible restarts of these idled PTA tonne/year PTA line do start up.
units will mean more demand for import
Naphtha-based refiners had enjoyed cargoes into China, as domestic Chinese If domestic supply is diverted to local units
comfortable margins in 2016. As the new PX trade flows could see some changes. which restart, causing an incumbent major
capacities come on stream, it will remain to end-user to go to the merchant market to
be seen whether the margins will continue A new supply stream of isomer-grade mixed purchase spot cargoes
to remain at such high levels, a producer in xylene coming out of Hyundai Chemicals
Asia said. new 1m tonne/year unit has also led to However, the market situation will depend on
expectations that 2017 will be a better their exact restart dates and operating rates.
Market sources are watching keenly year for MX-based PX producers, such
whether downstream PTA units in China as Lotte Chemical and Hyundai Cosmo Most market sources are in agreement that
like Huabin, Fuling Pengwei and Xianglu Petrochemical, which have typically seen market fundamentals would change only
Petrochemical will start up on time. uneconomical MX-PX spreads. from the fourth quarter of 2017, as new PX
capacities come online and the full supply
There have been mixed news on whether However, sources said that MX-based PX hits the market in 2018. Contract alphas are
these units could restart, as there were no producers will likely increase run rates expected to see further changes from 2018.
physical sales outlets readily available, and in 2017, leading to an overall higher PX
transport and logistics issues will increase operating rate in Asia, with a possible There are even more start ups in the Middle
their operating costs. restart of a northeast Asian MX-based PX East and China due from 2018 onwards.
line in 2017.
The protracted discussions between Market sources said there were continued
a state-owned refiner and Xianglu There are also fewer turnarounds, as negotiations for contract alphas, although
Petrochemicals owner over stake key producers had performance major some producers were holding out for a
holdership were also limiting chances of the maintenances on their units in 2016. rollover of last years contract alphas as they
PTA plant starting up. were of the view that market fundamentals
In the Chinese Yuan-denominated PX would change only from 2018.
However, sources said Huabin had higher market, domestic producers in east China
chances of starting up a 1.4m tonne/year said market fundamentals could see some Discussions ranged from minus $2.50/tonne
PTA line in 2017, as its new owners were improvement with increased demand from for Asian-origin cargoes to up to minus $4/
keen on recouping the money it had spent end-users which had been previously flat. tonne for open-origin cargoes.
on buying over the business.
The RMB market could trend towards Buyers are still resistant to a rollover in
A manageable PX-PTA spread will also tightness if idled producers such as Fuling prices, taking into account new open-origin
encouraged its restart. Pengweis 900,000 tonne/year PTA line, supply hitting the market late 2017-2018.

Turnaround schedule

Company name Location Capacity Duration


000 tonnes/year

Qingdao Lidong Qingdao 800 End-March to end-April

HC Petrochemical Daesan 380 July

S-Oil Onsan 1000 April

SK Global Chemical Ulsan 400 June

Hanwha Total Daesan 1000 April to May

Idemitsu Kosan Chiba 265 Mid-June to early-August

JX Nippon Oil & Energy Mizushima 230 Early-February to end-March

FCFC (No 1) Mailiao 270 March

FCFC (No 3) Mailiao 870 Early-May to mid-June

Aromatics Thailand Map Ta Phut 770 Mid-June to end-July

Aromatics Oman Sohar, Oman 815 Mid-March to early-April

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
This year will also see a new entrant into with end-user Shenghong Petrochemical Reliance Industries said in a statement that
the Asia Contract Price negotiating circle, set to join negotiations from January 2017. it will also join ACP talks from April 2017.

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price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
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AROMATICS
MIXED XYLENES

ASIA ISOMER-GRADE XYLENES Upon its start-up, the company had mostly lower than regional material, denting
MAY SEE NEW TRADE FLOWS increased export and contractual volumes import demand.
By Hazel Kumari to South Korean and Chinese buyers,
according to a source. A lack of support from the gasoline blending
SINGAPORE (ICIS)--Asian isomer-grade sector had added to the supply glut of
xylene market is expected to follow Showa Shells new toluene disproportionate isomer grade xylene in 2016.
its upstream crude and downstream (TDP) unit in Yokkaichi, with an isomer-
paraxylene (PX) markets though the grade xylene template capacity of 200,000 In South Korea, Hyundai Chemical, a joint
existing supply overhang will create new tonnes/year, started production in July. venture between Lotte Chemical Corp
trade flows as traders will be looking at and Hyundai Oilbank started commercial
other markets to relieve their inventories. As domestic demand is expected to remain operations at its new 1m tonne/year isomer-
stable-to-slightly weaker due to the lack of grade xylene facility in October.
Asia, which is traditionally a tight-supplied downstream expansions, producers will try
market, saw capacity increases and a to increase their contractual commitments The unit achieved maximum output by
new plant start-up in 2016 amid stable for 2017, according to sources. November with all output delivered to
downstream demand. Lotte Chemical and Hyundai Cosmo
Japanese producers typically start term Petrochemical (HCP) to be used as a raw
Subsequently, demand for US-origin discussions in February. material for their downstream PX units.
cargoes saw a decline in the latter half of
the year. Most players expect the trend to In China, supply has increased with As a result, these two end-users would
continue this year. expansions at two aromatics plant and two be adequately covered with cargoes from
new start-up. Hyundai Chemical and term volumes which
On the other hand, some traders might will reduce their spot demand.
start sending more cargoes towards the Ningbo Daxie Petrochemicals new plant
US region as year-over-year growth in in Zhejiang yielded on-spec cargoes in There were talks in the market that these
gasoline consumption against a back-drop the first haf of June. The company is able end-users will be looking to reduce their
of a healthy crack spread and stable-to- to produce 340,000 tonne/year of missed contractual volumes with other suppliers in
firm crude oil fundamentals would increase xylenes (MX) and has been selling products 2017.
demand for gasoline blending components. to domestic eastern Chinese buyers.
China will see further capacity increase of
In the US, mixed xylenes (MX) is used as Zhuhai Changlian started commercial over 1.2m tonne/year in 2017 following the
an octane booster in gasoline. operations at its 300,000 tonne/year MX commissioning of an expansion and start-
plant in Guangzhou in June and has been up of two plants.
Some traders are looking for new outlets to supplying to southern Chinese players.
reduce the surplus supply within northeast CNPC Huizhou Refining II is planning
Asia. Already, we have seen some cargoes CNOOC Huayue aromatics unit began MX to integrate 700,000 tonne/year of MX
being sold to the US in October and that is production at its 93,600 tonne/year plant in production with its refinery. According to
going to be the new norm, said a northeast June and achieved on-spec material in July. market sources, the company would be
Asian trader. diverting some of the cargoes towards its
According to market sources, the company is downstream plants.
In the last half of 2016, aromatic expansions diverting most of its production to captive use.
in Japan and China amid continued PetroChina Yunnan will be adding a new
weakness in the global economy had CNOOC Taizhou Petrochemical has started mixed xylenes extraction unit to reduce
lengthened supply of isomer-grade xylene. trial operations at its new reformer in dependence on the spot market and exposure
November but was unable to succeed due to volatile conditions for the feedstock.
Capacity expansion and new plant start- to mechanical difficulties.
ups, totalling close to 2.4m tonne/year The plant will be able to produce 530,000
has added length to supply even as Asian The company was planning to retry in mid- tonne/year of MX in the first quarter of 2017.
producers were already grappling with December with commercial operations due
excess capacity and weakening market for the first quarter of 2017. However, there Demand growth for isomer-grade xylene is
conditions in the overall polyester chain. was no latest update available on the plants expected to lag the gain in supply amid a
status. The reformer has the capacity to lack of incremental PX consumption.
In Japan, Tonen General had started produce 220,000 tonnes/year of MX.
commercial sales of isomer-grade xylene Indian producer, Reliance Industries (RIL),
since June from its new 230,000 tonne/year As supply in China was deemed ample, will be starting its new 2.3m tonne/year PX
recovery unit in Ichihara. discussions for domestic cargoes were unit in Jamnagar in January.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Previously, RIL was expected to start seeking additional spot cargoes from the Others were expecting demand to improve
production by the end of October to reach spot trading arena. as Chinese and Taiwanese end-users will
optimum operating rates by December be looking to build inventories ahead of the
but encountered issues which delayed the Despite the absence of a material Lunar New Year holidays in end-January.
start-up. improvement in downstream demand, the
evident strength in benzene prices had Looking ahead, several derivative purified
Saudi Arabias PetroRabigh 1.3m tonne/ propped sentiment amongst traders in the terephthalic acid (PTA) makers were looking
year unit in Saudi Arabia has been pushed aromatics chain. to restart production at their plants following
to the third quarter of this year due to delays supply shortage and healthy margins, which
in construction of the plant. Toluene prices had surged above isomer- would increase consumption of feedstock
grade xylene, encouraging some traders to PX.
However, demand for January and seek the cheaper alternative for the solvent
February spot isomer-grade xylene cargoes markets. On that basis, some traders expect the
firmed due to regional maintenances and improvements in the PTA market to have a
short position covering. The recent volatilities in benzene, toluene domino effect on isomer-grade xylene.
and downstream paraxylene (PX) markets
On 11 December, isomer-grade xylene bids had encouraged some traders to hedge If some of these PTA makers truly restart
for January loading broke the $700/tonne their risks with the less sought after as they said they would after Lunar New
FOB (free on board) Korea mark after hikes aromatic product, according to a northeast Year, this would definitely encourage
in the upstream and downstream market Asian producer, explaining the recent PX producers to ramp up their output,
had bolstered sentiment amongst players. improved demand for isomer-grade xylene. especially within China. Domestic prices
would rise making South Korean and
The last time isomer-grade xylene was Some players said they were looking to Japanese cargoes more attractive, said a
assessed above $700/tonne FOB Korea stockpile ahead of the shutdown as they northeast Asian producer.
was on 4 November 2015, according to expect term volumes for March to decline.
ICIS data. There were no bids or offers
in the market for January cargoes since In addition, they were expecting an increase
Christmas. The assessment on 3 January in downstream demand from Taiwan due to
was $697-703 FOB Korea. the shutdowns.

Japans Cosmo Oil plans to shut its 30,000


tonnes/year isomer-grade xylene plant
based in Matsuyama for a month to conduct
maintenances beginning mid-March.

Japans Tonen General is planning to shut


its 320,000 tonnes/year isomer-grade
xylene unit base in Wakayama for 40 days
beginning early-February.

Later in the month, the company will be


closing its 230,000 tonnes/year line in Chiba
for a six weeks maintenance.

Taiwans CPC Corp will be closing its


aromatics unit No 7 for a turnaround
beginning mid-February. The shutdown is
expected to last 45 days.

As such, demand for January and February


was deemed firm with several traders

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price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for mixed xylenes from 1978 up to 2030.

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FIBRE INTERMEDIATES
PURIFIED TEREPHALATIC ACID (PTA)

ASIAN PTA MAJORS TO WRESTLE reduce operating rates further, an industry start-up of JBF Industrys 1.1 m tonne/year
FOR GLOBAL MARKET SHARE observer said. PTA lines sometime in late H1 2017 will also
By Paul Lim increase Indias PTA production capacity to
A possible reduction of run rates at some 7.2 m tonne/year.
SINGAPORE (ICIS)--Asian purified northeast Asian PTA plants will likely be
terephthalic acid (PTA) in China and India are offset by restarting idled capacities in Indias domestic consumption is estimated
expected to battle each other this year in order China, where Zhejiang Huabin is targeting to be about 5m tonnes/year. With domestic
to further their global shares as domestic to restart a 1.4m tonne/year PTA line in Q2 demand fully fed by Reliance Industries,
markets become increasingly saturated due to 2017. Market sources said Fuling Pengwei Materials Chemicals and Performance
new production capacities coming on stream, are also trying to restart its 900,000 tonne/ Intermediaris (MCPI) and Indian Oil
according to industry players. year PTA line in Q1 2017. Corporation (IOC)s units, it must now look
towards export outlets.
With massive production capacities While Xianglu Petrochemical was targeting to
and logistical and production economic restart a 1.5 m tonne/year PTA line sometime PTA producers in India have the logistical
efficiencies on their side, the producers in in 2017, there has been no confirmation as to advantage to export cargoes to the Middle
India and China are offering prices which how its discussion of a stake sale with state- East markets, given the countrys proximity
are hard to beat, especially if compared to owned refiner Sinopec was unfolding and to the region compared with China and
smaller, non-integrated PTA units elsewhere that a firm restart date was unclear. South Korea. The Middle East is where
in Asia. Indian PTA producers have been successful
Jiaxing Petrochemical (Tongkun Group) is in 2016, fulfilling the demand of large-
The strong competition among these key looking to start up its new 2.2 m tonne/year volume tenders from buyers.
suppliers for 2017 term contracts has PTA facility in Q4-2017.
translated to lower prices for global end- The ICIS FOB northeast Asia (NE Asia)
users, market sources said. In India, former major importer India has quote is expected to continue gaining more
now turned into a net exporter, moving traction in 2017, after seeing multiple deals
Market sources said these large-capacity regular volumes to the middle Eat. The transacted on an FOB NE Asia basis in
producers had offered steeper discounts
from 2016 in a bid to secure customers.

Supply continue to be long in Asia, and is


expected to grow longer with several idled
capacities in China possibly restarting in the
first half of 2017.

Competition has been very intense for


next years term contracts. The 2017 spot
market could also follow some of the lower
alphas seen in the term contracts, an
industry source said.

This condition applies to US dollar-


denominated cargoes traded in Chinas
domestic market, as well as to exports from
northeast and southeast Asia to the Middle
East, South Africa and Europe.

Asia is a net exporter of PTA, with China,


India and South Korea as the regions
major producers. However, in the EU,
antidumping investigations are ongoing on
South Korean PTA imports.

The progress of the ADD investigations


is crucial to next years PTA market.
Some northeast Asian plants may have to

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
2016. Producers are now considering it a viable price benchmark alongside the veteran CFR China benchmark quote.

Spot buyers of FOB NE Asian cargoes are expected to remain in the market next year, as Asian-origin cargoes continue to head to
Europe, the Middle East, Russia and the Americas. Demand especially spikes when there are production issues at domestic PTA plants,
or when significant arbitrage opportunities arise.

The liquidity of export deals will at times surpass the number of imported CFR or Ex-China Main Port (CMP) deals, depending on the weeks
market situation. The number of market participants in the FOB NE Asia market is also substantial, with healthy trading competition between
sellers in the region.

FOB NE Asia prices typically command some premiums to the CFR or ex-CMP prices, due to logistical considerations.

You can rely on ICIS for all your PTA market intelligence needs

PRICING INFORMATION NEWS INFORMATION SUPPLY AND DEMAND DATABASE

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analysis for the Asian PTA market, including price news and analysis across the global petrochemical petrochemical supply chain, enabling you to grasp
histories and expert commentary to help you markets. Our market-moving news articles cover the local or regional scenario in a global context. Data
understand the key price drivers and market conditions production updates, plant capacities, output and includes import and export volumes, consumption,
and settle your contract prices confidently with access shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for PTA from 1978 up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
FIBRE INTERMEDIATES
POLYETHYLENE TEREPHALATE (PET) AND RECYCLED
POLYETHYLENE TEREPHALATE (R-PET)

ASIA PET OVERCAPACITY CLOUDS A third Chinese producer, Hainan Yisheng As the market remains in overcapacity,
2017 PROSPECTS, R-PET STEADY Petrochemical is planning to start up one and the new production will be coming
By Hazel Goh 250,000 tonne/year plant in March 2017, from China, some local producers feel that
and one more 250,000 tonne/year unit the average operating rates in the country
SINGAPORE (ICIS)--Asian polyethylene in June 2017. Both plants are in Hainan, will likely be reduced to around 70% as
terephthalate (PET) market overcapacity China. compared to the previous years level of
continues into 2017, and is likely to worsen around 80% capacity.
with the additional plants due to come on Lastly, there is a separate 500,000 tonne/
stream, and this might put pressure on its year capacity in Jiangyin, Jiangsu, China Meanwhile, Japan and Indonesia are
prices. under the Chengxing Group looking to start investigating Chinese material imports for
up in the first quarter of 2017. anti-dumping duty (ADD).
Asias bottle grade PET supply capacity
recently increased by 0.3m tonnes/year If all these capacities were to start up Some market participants think that this
upon the startup of China Resources according to plan, the Asia supply will may result in a change in trade flow if the
Changzhou Petrochemical (CRC) plant in add up to around 17m tonnes/year by the ADD were to be imposed, as Chinese
Zhuhai, China in October 2016. middle of 2017 and the global supply to producers may lose their market share in
become near 31m tonnes/year. these countries and gain market share in
There are several other new capacities other markets.
looking to start up in China in the first On the other hand Asias demand is
quarter of 2017, one of which is 500,000 expected to rise by an average of around On the topic of ADD, the European Union
tonne/year capacity in Jiangyin, Jiangsu, 6% to roughly 9m tonnes/year. (EU) had recently reviewed and officially
China from Jiangsu Sanfangxiang Industrial withdrew the ADD imposed on Chinese
Group that had its startup date postponed Demand growth rate will be higher in material, which will take effect in February
from 2015 originally. developing countries as traditional beverage 2017.
packaging material such as glass are in the
A separate plant looking to start up in the process of gradually being replaced by PET. However, some Chinese producers are
first quarter of 2017 is 550,000 tonne/year not too excited on this piece of news
capacity in Haining, Zhejiang, China by The global PET demand is estimated to since there will still be import duty of
Zhejiang Wankai New Material. stand at around 22m tonnes/year in 2017. 6.5% imposed on Chinese material and
Chinese producers are still going to be at
a disadvantage as compared to Korean
producers whose material is at zero import
duty when selling into the EU.

The prices of PET are likely to continue to


track movements in its upstream markets,
as margins are extremely thin amid the
prevailing overcapacity.

There were sharp price increases in


feedstock monoethylene glycol (MEG) and
purified isophthalic acid (IPA) in the fourth
quarter of 2016 and PET price increases
were insufficient to reflect the increase
in production cost amid the seasonal lull
demand, narrowing the margins of PET
producers.

Most market participants will continue to


monitor upstream crude, paraxylene (PX)
and purified terephthalic acid (PTA) prices
for price trend indications for PET.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
In a related market, the recycled PET
(R-PET) outlook for China seems balanced
for 2017 as it is usually a relatively calm
market.

Demand was better than some had


expected for the fourth quarter of 2016 as
offtake had been lacklustre for the earlier
part of the year.

Chinese downstream recycled polyester


converters had switched to buy lower
grade R-PET material with high content of
contaminants that are at lower prices.

They would then process the R-PET


either by themselves or out-source to local
vendors for further cleaning.

Prices saw some increase in the fourth


quarter of 2016, buoyed by the better
demand and price firming in the virgin PET
market.

Downstream recycled polyester converters outlook going into 2017 for January and The producer is inclined to recycle and
have said that they will continue to keep February. produce higher quality R-PET with higher
their productions steady into 2017, apart purity, as it usually fetches better netback
from some which will be shutting for around Moving forward, there is a general gradual margins.
10 days for the upcoming Lunar New Year direction of producers moving to make
holiday in January. higher quality R-PET. A separate Taiwanese R-PET producer
had adjusted its plant conditions to produce
Amid the general good market sentiment in A Thai R-PET producer is looking to expand higher purity R-PET in 2016, citing that
the fourth quarter, some market participants its recycling facility that is expected to be margins were too thin to justify for the
are cautiously optimistic about the market ready in 2017. production of lower quality R-PET.

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analysis for the Asian PET market, including price news and analysis across the global petrochemical petrochemical supply chain, enabling you to grasp
histories and expert commentary to help you markets. Our market-moving news articles cover the local or regional scenario in a global context. Data
understand the key price drivers and market conditions production updates, plant capacities, output and includes import and export volumes, consumption,
and settle your contract prices confidently with access shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for PET from 1978 up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
FIBRE INTERMEDIATES
MONOETHYLENE GLYCOL (MEG)

ASIA MEG MAY SEE TURBULENCE


ON LONG SUPPLY, SLOWER
DEMAND
By Eric Su

SINGAPORE (ICIS)--Asian monoethylene


glycol (MEG) market in 2017 is expected to
face challenges of longer supply and slower
growth in downstream polyester fibre, yarn
and polyester terephthalate (PET) sectors.

The expected listing of MEG futures as


a product in Chinas Dalian Commodity
Exchange (DCE) is also expected to add
uncertainty to MEG price movements.

Year 2016 was a largely volatile and


challenging one for the market.

MEG prices initially saw gains in the


first quarter of 2016 following a spike in
polyester fibre demand and a reduction
in production output from major MEG stronger than expected in the fourth quarter growth rate, hence, limiting demand from
suppliers. of 2016, market players said. the key downstream polyester sector.

Average Asia MEG spot prices rose $699.5/ Traditionally, sharp price hikes were not Chinas gross domestic product (GDP) has
tonne CFR (cost & freight) China Main Port expected in December unless there were been trending down since 2014 and most
(CMP) by end March 2016 from $580.5/ drastic shifts in macroeconomic conditions. market participants expect that trend to
tonne CFR CMP in early January 2016, continue in 2017, albeit at a gentler pace as
according to ICIS data. As such, some market participants were the economy stabilises.
attributing the gains to a boost in some
However, prices began to decline from aspects of Chinas economy such as higher This would likely translate into slower growth
April 2016 onwards, falling to an average fiscal spending or better domestic retail for downstream polyester markets which is
of $604/tonne CFR CMP by end May 2016 performances. mainly used for consumer products.
and were fluctuating frequently within $605-
660.5/tonne CFR CMP until October 2016, In 2017, MEG supply is expected to lengthen Bearish macroeconomic conditions outside
ICIS data showed. upon the start-up of Reliances 750,000 China would also be challenging for
tonnes/year MEG unit in India. The unit is polyester producers as export volumes may
MEG prices may have been mirroring price targeted to come on board by the first quarter see a decrease.
movements of upstream crude futures of 2017. The plant is expected to cater to
values as crude prices had also rising and Indian domestic consumption of MEG. Nonetheless, domestic growth for polyester
falling rapidly within the $40-50/bbl range, demand would likely continue to be the
some market participants said. The start-up India is likely to remain as a net importer of main driver for polyester growth.
of a new MEG facility in Iran also added MEG given the expected growth in Indias
pressure on prices. polyester sectors. Import volumes have fallen in 2016 largely
because of production cut-backs in major
In the fourth quarter of 2016, MEG prices Tradeflow, meanwhile, is expected to be ethylene glycol production facilities, market
began an uptrend, reaching new yearly impacted by the new plant as a portion of players said.
highs for the month of December 2016. MEG MEG volumes currently being exported
spot prices rose from $622/tonne CFR CMP to India may have to re-diverted to other Despite the start-up of a new MEG plant
in end September 2016 to above $815/tonne regions. in Iran, import volumes have continued to
CFR CMP in early December 2016. decline throughout the year.
For major market China, demand for MEG
The performance of downstream polyester is likely to be tapered going forward as Imported MEG adds up to around 70% of
fibre and yarn sectors may have been Chinas economy maintains its slower the total MEG consumption in China and

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
most market participants do not expect used in the polyester markets as compared In the near term, supply were expected
a significant change as domestic MEG to conventional naphtha-based or natural gas to be tighter following an unexpected
facilities were expected to continue running based MEG, market sources said. turnaround at a Middle East facility.
at comparatively lower production rates.
Planned turnarounds for maintenance As a result, December loading cargoes
Nonetheless, operating rates for Chinese for regional MEG plants for 2017 were were expected to be delayed.
MEG plants were expected to continue to expected to be largely similar to 2016,
grow and the China market maintains its market participants said. Given that restocking activities were
shifts to a more self-reliant market structure. expected to take place before first half
A major supplier, meanwhile, is expected to of January in view of an earlier Chinese
Operating rates for coal-based MEG in China perform a maintenance shut down at two of New Year, some market participants were
is likely to remain unstable and low in the near its Middle East facilities in the first quarter, concerned about tighter supply.
term because the product is still not as widely from February to March.

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ICIS offers regional price assessments and market Anticipate where the domestic Chinese MEG market Receive an end-to-end perspective across the global
analysis for the Asian MEG market, including is heading and create robust plans for production and petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you investment activities. The study also includes supply and the local or regional scenario in a global context. Data
understand the key price drivers and market conditions demand forecast data, import/export levels, capacity includes import and export volumes, consumption,
and settle your contract prices confidently with access expansion plans, downstream demand overview plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. and outlook, as well as analyses on key issues and for MEG from 1978 up to 2030.
developments in the market.

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FIBRE INTERMEDIATES
NYLON

ASIA NYLON FACES CHALLENGING The situation is not expected to improve Many existing nylon producers are wary
YEAR ON GROWING CAPACITY significantly in 2017. that this could prove counter-productive, as
By Leanne Tan the increased production can exacerbate
Meanwhile, producers of nylon materials oversupply in the nylon market and drive
SINGAPORE (ICIS)--Asias nylon faces in northeast Asia have noted that the poor margins further down south.
a challenging year ahead as supply is margins that plagued the caprolactam
expected to continue to grow in 2017 (capro) producers in previous years have Margins were negative for many nylon
despite a persistent lacklustre downstream gradually been transferred downstream to producers in the second half of 2016 as a
demand that industry sources believe will the nylon producers. result of firm feedstock prices.
continue to plague the market in the coming
year. Although the supply of feedstock capro The optimum spread between capro and
has begun showing signs of consolidation, nylon is at around $280-300/tonne, based
Although China remains a major net Asias nylon supply has been rising steadily on market feedback.
importer of the material, market players in contrast.
believe that Chinese import volumes will However, some market players are hopeful
gradually decline in 2017, as the country The supply of nylon chips is expected to that recent upstream capro gains caused
inches towards self-sufficiency amid increase further this year, with more nylon by a tightening of supply can eventually
domestic nylon 6 capacity expansions. polymerization plants scheduled to start-up support downstream nylon prices.
in 2017.
Market players expect that the recent sharp Spot prices of nylon chips were at a
devaluation of the Chinese yuan against the Amongst them, phase II of Petro Rabighs 24-month high late in 2016, as producers
dollar is likely to continue to diminish buying expansion, a joint venture between Saudi raised offers sharply in response to surging
appetite for import cargoes even more. Aramco and Japans Sumitomo Chemical, feedstock capro prices.
is expected to include 75,000 tonnes/year
However, Chinese producers have opted to of nylon 6 production capacity. Furthermore, supply in the near term
keep run-rates low for most of 2016 amid is expected to remain tight, as several
poor margins and weak buying appetite in The plant will be Saudi Arabias first nylon polymerization plants in China and Taiwan
the region. 6 manufacturing facility and is expected to are running below full production capacity.
come on stream in early 2017.
Downstream demand for nylon yarn In Taiwan, several nylon polymerization
and textile products in China remains Market players point out a trend where plants were running at below full capacity
lacklustre because of weak macroeconomic more upstream players are venturing further due to a shortage of feedstock, while
conditions and sluggish growth in the downstream where margins are perceived plants in China have cut their production in
Chinese economy. as better, as seen in the nylon market. preparation of the Lunar New Year holiday
which falls on the end of January.

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expert commentary to help you understand the key price markets. Our market-moving news articles cover the local or regional scenario in a global context. Data
drivers and market conditions and settle your contract production updates, plant capacities, output and includes import and export volumes, consumption,
prices confidently with access to time-sensitive offers, bids shutdowns, plus so much more. plant capacities, production and product trade flows
and price movements. for nylon from 1978 up to 2030.

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OLEFINS
ETHYLENE

ASIA ETHYLENE SUPPLY TO STAY


TIGHT; SELLERS UPBEAT
By Yeow Pei Lin

SINGAPORE (ICIS)--Asias ethylene


production is expected to increase in Japan,
South Korea and parts of southeast Asia
in 2017 but the impact on regional supply
could be negated to a large extent by higher
consumption, according to market players.

Supplies from the Middle East, Europe and


the US to the structurally-short Asian market
could remain as healthy as they were in
2016.

The outlook for certain downstream markets


that the key ethylene importers in China
operate in is generally positive but in late
2017, uncertainty looms in the polyethylene
(PE) market due to the prospect of low-cost
exports from the US.
mid-2017. On paper, the producer will have by 23% from the previous corresponding
In ongoing 2017 CFR term contract around 150,000 tonnes of ethylene to sell period, according to data from the Korea
discussions in China, regional sellers are annually. Petrochemical Industry Association. The
seeking premiums of $50-55/tonne to ICIS full-year export volume may reach around
CFR (cost and freight) NE (northeast) Asia SOUTH KOREA ETHYLENE EXPORTS 700,000 tonnes, market sources said.
spot quote. The offers, which are close to TO INCREASE, JAPAN SHIPMENTS
the 2016 regional term premiums finalised POSSIBLY FLAT Domestic demand will likely see some
at around $50/tonne and above, show that The combination of KPICs increased capacity increases next year in line with downstream
sellers continue to have a bullish view of the and a lack of scheduled maintenance at other expansion plans. Hanwha Chemical is
market. domestic facilities will likely boost Koreas raising its polyethylene (PE) production
ethylene exports next year, although the capacity in Yeosu by 30,000 tonnes/year,
On regional supply, Japan and South increases will be somewhat moderated by while Lotte Chemicals 100,000 tonne/
Koreas ethylene output is tipped to grow new domestic demand. year joint venture ethylene propylene diene
next year on the back of a lighter cracker monomer (EPDM) facility, also in Yeosu, is
turnaround schedule and an expansion Koreas exports are on track to rebound in slated to start up in the second half of 2017.
project in Korea. 2016 after two consecutive years of decline.
The country has more surplus ethylene The two projects are expected to boost
Capacity losses owing to cracker this year due to lower turnaround-related ethylene consumption by up to around
maintenance in the two key exporting output losses, a number of downstream 90,000 tonnes/year, assuming that the two
countries are expected to drop to multi-year plant turnarounds in Yeosu and Ulsan in plants operate at capacity levels.
lows of around 253,000 tonnes. the fourth quarter and following reduced
purchases by Hanwha Total Petrochemical, But Hanwhas ethylene consumption in
Only three crackers in Japan and South which raised its ethylene nameplate capacity Ulsan will decrease due to a restructuring of
Korea will undergo maintenance, compared in May 2015 to 1.1m tonnes/year from 1m its vinyls operations.
to the 2016 slate of nine plant shutdowns tonnes/year previously, sources said.
that led to around 684,000 tonnes in Over in Japan, it is unclear if ethylene
combined capacity losses. There have also been more internal exports will rebound in 2017 after
transfers by Yeochun NCC (YNCC) to its registering what would be a sizable year-on-
Onsan-based Korea Petrochemical Industry shareholder Hanwha Chemicals vinyls year drop this year.
Co (KPIC) will turn into a net seller from its plants in Ningbo this year, a source familiar
current balanced-to-tight position once a with the situation said. The balance in Japan tightened
debottlenecking project to raise its crackers considerably this year as a result of
ethylene capacity by 330,000 tonnes/year In January-October 2016, South Korea a relatively heavy cracker turnaround
to 800,000 tonnes/year is completed in shipped out 597,446 tonnes of ethylene, up schedule, the permanent shutdown of Asahi

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
2017 Asia and Middle East cracker turnaround schedule

Company name Location Capacity Duration


(tonnes/year)

Petrokemya Al-Jubail, Saudi Arabia 800,000 (No 1) 2-15 Jan

Lotte Chemical Titan Pasir Gudang, Malaysia 435,000 (No 2) Shut in H1 Feb for around 45 days

Integrated Refinery Rayong, Thailand 350,000 Shut in early Feb for around 40-45 days
Petrochemical Complex (IRPC)

CPC Corp Linyuan, Taiwan 720,000 (No 6) 13 Feb-10 Apr

SK Global Chemical (SKGC) Ulsan, South Korea 190,000 (No 1) Shut in H1 Mar for around 40 days

Shanghai Petrochemical Shanghai, China 700,000 H2 Mar to early May for 45 days

Petrokemya Al-Jubail, Saudi Arabia 800,000 (No 2) Shut in Apr for around 45 days

Korea Petrochemical Onsan, South Korea +330,000 to 800,000 Apr/May for around 45-55 days
Industry Co (KPIC)

PTT Global Chemical (PTTGC) Map Ta Phut, Thailand 515,000 (I-4 No 1) Q2 for around 30-45 days

Asahi Kasei Mitsubishi Mizushima, Japan 570,000 H1 May to end June/early Jul for around
Chemical Ethylene Corp 50 days

Qilu Petrochemical Shandong, China 800,000 Early May to H2 June for 47 days

Fushun Petrochemical Liaoning, China 800,000 May-June for 30-45 days

Yangzi Petrochemical Jiangsu, China 800,000 H2 Jun to mid Aug; No 1 line to shut for
34 days, No 2 line to shut for 52 days

Mitsui Chemicals Chiba, Japan 617,000 Mid June to early Aug

Jubail United Petrochemical Al-Jubail, Saudi Arabia 1.45m June/Jul for around 30 days
Co (JUPC) (to be confirmed)

Lotte Chemical Titan Pasir Gudang, Malaysia 285,000 (No 1) Shutdown of around 40 days postponed
from Apr to likely H2 2017

Formosa Petrochemical Mailiao, Taiwan 1.2m (No 3) End Aug to early Oct for
Corp (FPCC) around 40 days

Saudi Kayan Al-Jubail, Saudi Arabia 1.48m Shut in Oct for around a month

Sadara Chemical Al-Jubail, Saudi Arabia 1.5m H2 2016 (to be confirmed)

Sichuan Petrochemical Sichuan, China 800,000 Dec 2017 to Jan 2018 for around 30 days

Kasei Chemicals 500,000 tonne/year cracker sellers. This explains why ethylene imports cargoes, sources said.
in Mizushima, as well as healthy downstream in Japan surged to 120,696 tonnes in the
production activity, sources said. first 10 months of the year from just 6,901 Depending on how negotiations go, more
tonnes in 2015. volumes could be diverted from the export
Asahi Kasei mothballed its cracker in market, a trader said.
February and took a stake in Mitsubishi In 2017, the market will see the full impact
Chemicals 570,000 tonne/year Mizushima of the restructured Asahi and Mitsubishis Maruzen Petrochemical a major exporter
plant under the Asahi Kasei Mitsubishi olefins operations, although it is unclear if in Japan will likely have more shipments
Chemical Ethylene Corporation joint the changes will be more on the import or compared to 2016 when the companys
venture that started in April. export front. output was lowered by a cracker
maintenance shutdown, according to a
Both companies which prior to 2016 were Mitsubishi, which has the bigger shortfall of source familiar with the situation.
in a relatively balanced position - covered the two companies, will likely try to obtain
their production shortfalls this year by more cargoes from domestic sources, Tilting the other end of the export scale is
purchasing from domestic and regional which are usually lower-cost than import an expected drop in shipment from another

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
key seller Showa Denko. The Japanese
producer is planning to reduce term
commitment to traders and regional buyers
in 2017 due to higher projected downstream
operations at its Oita complex, according
to market sources. Showas downstream
plants will be running at full tilt in order
to stockpile for a major complex-wide
turnaround in March/April 2018.

Other Japanese producers are also


expecting their downstream plants to
continue this years strong operations, with
support from robust domestic demand for
specialty grade polymers and tightened
local styrene monomer (SM) supply after
the closure of Asahis 320,000 tonne/year
plant in February this year.

The number of downstream plant


turnarounds will be lower in 2017, in line
with the fewer cracker shutdowns. This
means that some of the increases in
domestic [ethylene] production will go into cracker is expected to improve next 2017. Iranian producers, which resumed
meeting higher domestic consumption, a year after completing a series of furnace exports in the second half of 2016, could
trader said. maintenance works this year. For a large become a regular exporter next year if the
part of 2016, Chandra has had to put its increases in feedstock ethane supply in
Against such a backdrop, exports from domestic term customers on allocation recent months can be sustained.
Japan may be broadly unchanged next because of reduced production owing to
year despite the lighter cracker turnaround technical issues and furnace maintenance.
Meanwhile, exports from Europe are
schedule, traders said. For the first 10 It completed a 260,000 tonne/year capacity
expected to remain healthy in 2017, going
months of this year, shipments totalled expansion in December 2015. by the new term contracts that have been
584,619 tonnes, down 27% from the same signed. Versalis is said to have inked export
period last year. In Malaysia, Lotte Chemical Titan Holding contracts with two to three players and the
will complete in the second half of 2017 quantities from its Porto Marghera cracker
End-users, however, are not convinced. a catalytic cracking unit that can produce will be heading to mainly Asia, according
There are so few cracker turnarounds. around 90,000 tonnes/year of ethylene. This to market sources. One of the term lifters
Surely this will translate to some increases will allow it to ship more cargoes from Pasir has already made back-to-back CFR term
in exports, a Chinese importer said. Gudang to its Indonesian standalone PE contracts with two buyers in northeast
plants and lessen the dependence of the Asia for supplies totalling 90,000-126,000
SE ASIA-NE ASIA ARBITRAGE Indonesian unit on imports in the second tonnes. A separate buyer in southeast Asia
OPPORTUNITIES MAY GROW half of the year. will also be receiving regular quantities from
Ethylene production in southeast Asia should Italy.
see an improvement in 2017 on expectations On balance, Titans ethylene imports into
of a recovery in Shells and Chandra Asris Indonesia may not see significant changes Contract discussions are ongoing for US
operations and new supply in Malaysia. for the full year as it has two cracker supply to northeast Asia, sources said.
turnarounds in 2017 and its expanded Expectations are that the supply will likely
Shell Singapore cracker, which has an capacity will come on stream only in the be similar to this years exports of one
ethylene nameplate capacity of around later part of the year. 11,000-12,000 tonne shipment per month.
960,000 tonnes/year restarted in July
after nearly eight months of outage but However, the overall exports from southeast IMPORT DEMAND OUTLOOK IN CHINA
operations were again disrupted from late Asia to northeast Asia could see an LARGELY UPBEAT
September to late October. increase if the supply from the Middle East Ethylene import demand in the leading
and Europe remain as healthy as this year, China market will likely draw support from
Going into 2017, market players expect market sources said. growing downstream capacities and a
Shells cracker performance to improve. generally healthy outlook for the vinyls and
ALTERNATIVE SUPPLY OUTSIDE ASIA styrene monomer (SM) sectors in 2017.
We cannot rule out production hiccups TO STAY STRONG
or presume the cracker can run at high Shipments from the Middle East, Europe Chinas ethylene imports totalled 1.27m
rates consistently but they should have and Asia are expected to remain ample, tonnes during January-October 2016, up
solved the major issues and the overall according to end-users in Asia. by 4.6% from 1.21m tonnes in the same
performance should be better than this period last year. Demand may remain on an
year, a Singapore source said. Delays in the start-up of Petro Rabigh and upward trajectory in 2017 as well.
Sadara Chemicals derivative projects will
In Indonesia, the performance of Chandra continue to drive Saudi Arabias ethylene A vinyls complex and two SM plants are
Asris expanded 860,000 tonne/year exports to Asia at least in the first half of expected to generate demand of up to

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Q4 2016/2017 China standalone ethylene downstream projects

Company name Location Capacity Start-up schedule


(tonnes/year)

Qingdao Haijing Qingdao, Shandong 400,000 VCM Trial runs at complex during late
400,000 PVC Q3-Nov 2016, started PVC sales in Dec
300,000 EDC

Abel Chemical Taixing, Jiangsu 250,000 Attained on-spec production in end-Nov


2016, started sales in mid-Dec

Qingdao Soda Ash Industrial Qingdao, Shandong 500,000 SM Construction to complete in mid-2017,
start up in Q3

around 400,000 tonnes/year if these plants are less sanguine about the 2017 outlook There are in total around 5m tonnes/year
operate fully. ahead of the start-up of Jiangsu Sailboat of new PE capacities coming on-stream in
Petrochemicals 180,000 tonne/year 2017-2018 from a slew of ethane-based
The impact of the new ethylene plant. The facility in Jiangsu is expected integrated projects in the US.
consumption on Chinas import demand will to begin trial operations by January, and if
be offset to a certain extent by upcoming successful, the company will progress to Obviously, China will be the main market.
domestic supply from a methanol-to-olefins start up its MTO plant in February-March. There is no other market big enough to help
(MTO) plant operator that has no ethylene The MTO plant can produce 370,000 absorb such big supplies, a PE producer said.
derivative plants. Fund Energy is said to tonnes/year of ethylene.
be looking at starting up its Changzhou With capacities in the Middle East
plant with a nameplate ethylene capacity In Taiwan, import demand could be growing as well, competition for a share
of 165,000 tonnes/year in late 2016/early boosted in the first half of 2017 by a long of the market in Asia will intensify, with
2017. Its ethylene production will be mainly maintenance shutdown at CPC Corps No repercussions on the operations of naphtha-
consumed by the currently import-reliant 6 cracker and from higher operating rates based integrated complexes.
New Solar Groups SM plants. at two downstream plants that started up
in 2016. USI Corporation started up its PE margins could be undermined, cracker
On downstream market outlook, ethylene- two 45,000 EVA/LDPE swing plants in operators in Asia may struggle to run their
based vinyls producers in China said Kaohsiung since the second quarter but it plants at high rates and some ethylene
they are likely to continue to benefit is still in the process of stabilising the plant producers may have to put more of their
from Beijings stricter enforcement of operations. supply in the merchant market, players said.
environmental standards which have
impacted the operations of carbide-based Taiwans ethylene imports grew to 250,883 Integrated producers in China and South
competitors. Domestic vinyls prices tonnes in January-October 2016 from Korea are likely most vulnerable to the
strengthened during mid- to second-half 179,264 tonnes in the same period last impact of new PE supply from the US and
2016 as producers using calcium carbide as year, while exports fell to 211,983 tonnes the Middle East, they said.
feedstock faced production restrictions and from 251,502 tonnes.
higher upstream coal costs. Japan producers that focus on higher-end
WILL THE TIDE TURN IN LATE 2017? specialty grade PE for domestic market will
SM producers in China expect their margins Low-cost PE exports from the US will likely be the least affected, they added.
to remain healthy next year although the start making their way to Asia in the fourth
market may be less buoyant than this year quarter of 2017, market players said. Late 2017 could be a turning point for
due to new domestic capacities. Chevron Phillips Chemical could be the the ethylene market. It is questionable if
first off the block, with its ethane-based PE the high margins for cracker operators will
Ethylene oxide (EO) producers in China project on track to start up around mid-2017. continue going into 2018, a buyer said.

You can rely on ICIS for all your ethylene market intelligence needs

PRICING INFORMATION NEWS INFORMATION SUPPLY AND DEMAND DATABASE

ICIS offers regional price assessments and market Be the first to find out about ethylene-related Receive an end-to-end perspective across the global
analysis for the Asian ethylene market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for ethylene from 1978 up to 2030.

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OLEFINS
PROPYLENE

ASIA PROPYLENE FACES


UNCERTAIN Q1 AS SUPPLY
LENGTHENS
By Joson Ng

SINGAPORE (ICIS)--Northeast Asias


propylene markets may see a dull start
to the year amid longer supply following
start-ups of new capacities in China, market
sources said.

These start-ups provide domestic buyers


with more option in sourcing spot material,
giving them more bargaining power when
procuring import cargoes.

In Zhejiang province in eastern China,


Ningbo Fuji Petrochemical started
operations at its propane dehydrogenation
(PDH) plant with a 600,000 tonne/year
propylene capacity around 19 November
2016.

On paper, Ningbo Fuji will have a net Some said they may opt to increase their A buyer has a similar concern, saying:
propylene surplus of up to 200,000 tonnes/ spot requirements should contractual While supply in northeast Asia should
year based on the designed capacities of negotiations not go their way. lengthen on paper, reliability of production
the integrated complex. units could throw a potential spanner in the
According to market sources, propylene works so prices would not necessary head
A lack of planned maintenance in northeast export from South Korea is expected to south.
Asia in the months of January and February increase to above 1.6m tonnes in 2017, a
may also add to the notion of a longer supply. slight increase from 1.55m tonnes in 2016. For sellers, pre-lunar New Year restocking
Export from Japan is expected to stay activities in China may yet provide some
We are expecting to see longer supply roughly unchanged at about 1m tonnes. support to spot prices in the first quarter
from China and Korea next year, said of 2017. The Lunar New Year falls on 28
one Chinese buyer. As such, we hope to While buyers have reasons to be optimistic, January 2017.
negotiate a better contract for 2017. spot propylene prices may not weaken at
all, market sources said. In January to March 2016, propylene prices
A few buyers have told ICIS they hope to in northeast Asia increased by 18.0%
start negotiations for 2017 contract cargoes While supply in Asia will lengthen in from the previous corresponding period
at CFR (cost and freight) NE (northeast) theory, cracker run rates may be a bit of a moderating from the 44.7% year-on-year
Asia plus single-digit premiums, compared question mark in 2017, a market participant surge recorded in the same period in 2015,
with low- double-digit premiums in 2016. cautioned. according to ICIS data.

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ICIS offers regional price assessments and market Be the first to find out about propylene-related Receive an end-to-end perspective across the global
analysis for the Asian propylene market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for propylene from 1978 up to 2030.

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OLEFINS
BUTADIENE

ASIA BD Q1 UPTREND LIKELY above $2,000/tonne CFR NE Asia, and We are confident that the BD price will
DESPITE LUNAR NEW YEAR LULL maybe even hit $2,200/tonne CFR NE Asia hit $2,200/tonne CFR NE Asia, and likely
By Helen Yan early next year as supply is expected to even higher than in early 2017, a regional
remain tight, a regional producer said. producer said.
SINGAPORE (ICIS)--Spot butadiene (BD)
prices in Asia look set to continue their A number of cracker operators in Asia, But there are concerns that the downstream
uptrend in the first quarter of 2017 despite including Malaysia Lotte Chemical Titan, synthetic rubber prices may not be able
the expected lull in market activity in the Petrochemical Corporation of Singapore (PCS) to keep pace with the sharp surge in BD
weeks leading to the Lunar New Year and Taiwans CPC Corp, will shut their BD prices, in spite of strong demand.
holiday in late January, market sources said. units for maintenance during the first quarter.
Demand for synthetic rubber is very strong
Supply is expected to remain tight due to BD spot prices have been on an upward in China as the tyre factories are building up
cracker and BD plant turnarounds in Asia. trajectory since early November, surging inventories, given expectations of stronger
The upward pressure on prices, however, is by nearly 50% from 11 November to 23 demand for tyre replacements in 2017, a
likely to ease slightly since demand typically December, according to ICIS data. Chinese synthetic rubber producer said.
slows down before and during the holiday
that is celebrated in most part of northeast Prices spiked in December as BDs Another producer said: We are targeting a
and southeast Asia, they said. downstream synthetic rubber and acrylonitrile significant increase for the synthetic rubber
butadiene styrene (ABS) plants have ramped prices for January, but it remains to be seen
The Lunar New Year falls on 28 January up production to build up inventories ahead whether the price increases are acceptable
and trading and production activities in the of the Lunar New Year holiday. or sustainable throughout the first quarter
key Chinese market are expected to wind of 2017.
down from mid-January. Market players expect a tapering off of the
price gains from mid-January until after the You can rely on ICIS for
But suppliers have hiked offers for January holiday, which is celebrated for a full week all your butadiene market
BD shipments to $2,200/tonne CFR (cost in China. During this time, Chinas synthetic
and freight) northeast (NE) Asia because of rubber plants are expected to either shut or
intelligence needs
prevailing tight supply and on expectations dial down production rates until mid-February.
of higher crude oil prices in 2017. PRICING INFORMATION
Once players in the key Chinese market
ICIS offers regional price assessments and
On 9 December, BD prices averaged $1,790/ returned, however, BD prices are largely market analysis for the Asian butadiene market,
tonne CFR NE Asia, ICIS data showed. expected to resume their uptrend, market including price histories and expert commentary
to help you understand the key price drivers and
sources said. market conditions and settle your contract prices
We expect BD prices to continue to rise confidently with access to time-sensitive offers,
bids and price movements.

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petrochemical markets. Our market-moving news
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context. Data includes import and export volumes,
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up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
PHENOLICS/CHLORALKALI
BISPHENOL A (BPA)

ASIA BPA MARKETS TO SEE


LIMITED FLUCTUATIONS
By Melanie Wee

SINGAPORE (ICIS)--Asias bisphenol A


(BPA) markets are poised to see limited
fluctuations on expectations of stable
consumer demand in the first half of 2017.
With no capacity expansions in this year,
production will be kept in check, market
players observed.

[BPA markets] should be better than


this year [2016] with no new plant
projects that may otherwise serve to raise
production, a northeast Asia-based market
source said.

But this [also] really depends whether


[upstream] phenol prices in China might
ease further out, the source said.

A separate northeast Asia-based market


source said with no new plant capacities demand in March could pick up, a China- Other market sources, however, have a
coming up compared with 2016 the BPA based market source said. less optimistic outlook on the market, citing
market will gradually find a way to balance continued weakness in the Chinese economy.
itself in terms of supply and demand in A recent improvement in economic data out
2017. of China, the worlds biggest economy and The market [outlook] at the years end to
a major importer of petrochemicals in Asia, the first quarter of 2017 should be stable
Meanwhile, the spread between BPA and bodes well for the market. with limited [price] fluctuations, another
upstream benzene has held up above $450/ market source based in China said.
tonne for most of 2016, in contrast with the The Caixin general manufacturing
previous year when the product spread was purchasing managers index (PMI) for China On a CFR (cost & freight) China basis, spot
squeezed considerably. also rose to 51.9 in December last year, BPA prices averaged at $1,230/tonne in the
up from 50.9 in November, as production week ended 23 December, representing
As of 23 December, the BPA-benzene expanded at the fastest pace in nearly six a 33% increase compared with the same
spread, which can be used by industry years, the Chinese private media group period in the preceding year.
players as a measure of profit margins, was said earlier this week.
around $431/tonne. The spread was lower In India, monthly BPA imports by a major
at around $353/tonne in late December The PMI is a barometer of an economys buyer is expected to be kept on par with
2015, according to ICIS data. manufacturing activities, with a reading of its average monthly consumption for the
50 or higher indicating an expansion, while current year and help soak up supply in the
The BPA market outlook also depends on a number below that denotes a contraction. Asia-Pacific region. The country is a net
where crude oil prices are headed next year. importer of BPA.
A potential increase in China demand is
BPA prices in China should see little likely to be more apparent in the second BPA is used in the production of downstream
movement during January-February, while half of 2017, the China-based source said. epoxy resins and polycarbonate (PC).

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
PHENOLICS/CHLORALKALI
METHYL DI-P-PHENYLENE ISOCYANATE (MDI)

ASIA MDI PRICES TO STAY


LARGELY FLAT IN H1 2017
By Matthew Chong and Izham Ahmad

SINGAPORE (ICIS)--Spot prices of


methyl di-p-phenylene isocyanate (MDI),
particularly of polymeric methyl di-p-
phenylene isocyanate (PMDI) or crude
MDI, in Asia are expected to stay largely
flat in the first half of the year as reduced
supply from plant troubles and scheduled
turnarounds will likely be offset by stagnant
demand.

Feedstock benzene prices are also likely to


play a greater role in determining the MDI
price trend in 2017 as raw material prices,
which have risen in line with crude oil prices
since November, were starting to eat into
MDI producers margins.

Chinese producer Wanhua Chemical,


which is the worlds largest MDI producer
with a total plant nameplate capacity of Average PMDI prices surged by a delay in the restart of Wanhuas Yantai
1.8m tonnes/year, is currently conducting cumulative 64%, or $835/tonne in absolute plant from its original target of second half
maintenance at one of its two Ningbo plants. terms, to hit a peak of $2,150/tonne CFR November.
(cost & freight) China on 12 October over a
Wanhuas 400,000 tonne/year MDI unit in short two-month period before stabilising at Prices in India, in contrast, fell because of
Ningbo, Zhejiang province, was taken off $2,125-2,150/tonne CFR China until early subdued buying interest following the move
line on 10 December and is scheduled to December. by the government to demonetise higher
restart in the second half of January, while denomination currency on 9 November, with
its 800,000 tonne/year MDI unit at the same The surge in prices was partly due to the bulk of buyers being sidelined by weak
site will probably shut down for a turnaround the sudden tightening of supply in China purchasing power following a shortage in
in May 2017, a company source said. when Wanhua cut the run rates at both its currency notes.
Ningbo units from 70% to 30% capacity
In Yantai, Shandong province, the from late-August to early September ahead Downstream demand in the first half of
companys 600,000 tonne/year MDI unit of the G20 summit to ensure better air 2017 is unlikely to see much improvement
has achieved on-spec production on 10 quality for the duration of the summit on from 2016 as the construction sector in the
December, after a prolonged shutdown, the 4-5 September in Hangzhou City, while key Chinese market is expected to remain
source said. the blast at Wanhuas Yantai plant in the in the doldrums amid the slowdown in
second half of September helped push Chinas economic growth.
The unit resumed operation on 24 prices higher.
November after more than two months of PMDI is used to form rigid or rebonded
shutdown following a fatal explosion on 20 Average southeast Asia and India prices foam in system houses and for construction
September, when the unit was about to start failed to close the gap with China prices and applications such as insulation and
a month-long turnaround. were steady and range-bound at $1,850- sandwich panels.
1,950/tonne CFR SE (southeast) Asia/
Meanwhile, PMDI prices are likely to find CIF (cost, insurance, freight) India from 19 The outlook for PMDI in the Middle East
support in the second quarter of 2017 October to 23 November. market is expected to be bullish in the early
amid possible tighter supply as the second months of 2017 as supply shortages persist
quarter is the traditional turnaround season PMDI prices in southeast Asia strengthened in Europe.
for most northeast Asian MDI plants, in early December, in tandem with Chinese
including Japans Tosoh Corp and South prices as suppliers hiked their offers amid PMDI prices in the Middle East and Europe
Koreas Kumho Mitsui Chemicals Inc rising China domestic prices in the second have been on an uptrend since around the
(KMCI) among others. half of November on news of a possible third quarter 2016.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
While PMDI prices have not moved as Middle East players have also been eager Average MMDI prices surged by a
quickly as toluene di-isocyanate (TDI) for news about additional supply coming cumulative 30%, or $550/tonne in absolute
prices, the price gains were still causing from Sadara Chemicals integrated plant. terms, to hit $2,450/tonne CFR NE
concern especially for Middle East Sadara Chemical, which is a joint venture (northeast) Asia on 26 October before
customers as prices have risen to around between USs Dow Chemical and state stabilising and moving sideways within a
$2,100/tonne CFR GCC (Gulf Cooperation energy firm Saudi Aramco, is expected to narrow range until end-November.
Council), compared with around $1,175/ cater to the Middle East and North Africa
tonne CFR GCC about a year ago. markets. A typical MDI plants output is 70-80% PMDI
and 20-30% MMDI or pure MDI, and this
Currently, the Middle East largely depends Sadaras two isocyanates plants, a 400,000 ratio moves within a narrow range and is
on imports from Asia and Europe. tonne/year PMDI and a 200,000 tonne/year not easily adjustable, according to industry
TDI unit, will be the last of its downstream sources.
But prices in Asia in particular have been derivative plants to come on stream and
outpacing Middle Eastern prices and at most market players expect them to start However, Sadaras PMDI unit will not be
times suppliers have redirected cargoes up in the third 2017 at the earliest, although producing MMDI in the early stages when it
there instead of trying to secure buyers in a company source said all its downstream comes on stream, a company source said.
the Middle East region. derivative plants will be up and running by
mid-2017. Sadaras decision to produce only PMDI
That in turn, resulted in Middle East prices and not MMDI is a deliberate one as
having to keep up with the higher Asian In the long term, once Sadara, Covestro demand for MMDI in the Middle East is
prices. and Huntsman start to run their plants minimal due to an underdeveloped MMDI
normally at high rates, the polyurethane downstream industry, market sources said.
In Europe, Covestro on 6 October (PU) market is still widely expected to be an
announced force majeure across all of its oversupplied one, and this could eventually MMDI, when combined with adipic acid,
European isocyanates operations including lead to further closures and price falls. butanediol (BDO) and methyl ethyl ketone
MDI, TDI and intermediate products due to (MEK), is used as a pre-polymer for
issues in supply of feedstock nitric acid, and In the monomeric MDI (MMDI) market, prices applications in shoe soles, adhesives,
was slated to return to full production on 11 will likely continue to track that of PMDI and thermoplastic polyurethane (TPU) resins,
December. price fluctuations are expected to be relatively spandex and synthetic leather.
more contained compared with PMDI as
However, the current status of their MMDI has a shorter shelf life of three to six
operations were not immediately clear. months compared with PMDIs two years.

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PLASTICS/POLYMERS
POLYCARBONATE

ASIA PC SEEN STABLE; MAY


TRACK CHINA BPA MARKETS
By Melanie Wee

SINGAPORE (ICIS)--Asias polycarbonate


(PC) prices are likely to hold steady on
expectations of stable consumer demand
for most grades, industry sources said.

Spot price movement is expected to take its


cue from upstream raw material bisphenol A
(BPA) markets in China.

[Import] PC demand in northeast Asia should


be stable and not much different from 2016
maybe there could be some increase, a
China-based market source said.

But [the markets condition] will largely depend


on how overall PC plant production is matched
with actual demand, the source said.

PC prices should hold stable in the first


quarter of 2017 but beyond that, is difficult Meanwhile, the product spread between PC Further, the depreciation of the Chinese
to say as it depends on where crude oil and BPA has improved considerably year yuan against the US dollar does not bode
prices are headed, a northeast Asia-based on year. well in terms of encouraging import demand
market source said. for PC resins and the chain of engineering
The spread has largely stayed at the low- plastics, a northeast Asia-based market
On the macroeconomic side, Chinas official $1,000/tonne level average for most of 2016. source said.
manufacturing purchasing managers index BPA is used in the production of PC resins.
(PMI) was at 51.4 in December, down from The devaluation of the Chinese yuan had
51.7 in November. Taking into account expanded PC plant generated downward pressure on PC prices
capacities in 2016, there is a possibility that earlier in 2016 that was more apparent for
The PMI is a barometer of an economys supply availability could outweigh regional some grades.
manufacturing activities, with a reading of consumption if most regional plants operate
50 or higher indicating an expansion, while at full capacity, according to some market Optical-grade PC in Taiwan and Hong Kong
a number below that denotes a contraction. sources. were stable-to-soft during the second half
of 2016, partly due to a gradual decline in
China is the worlds second-biggest But volatility from upstream crude oil and consumer demand for the grade and ample
economy and a major importer of energy sectors along with market conditions supply. This grade is used in applications
petrochemicals in Asia. might serve to temper market sentiment, like media storage.
according to market sources.

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understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for polycarbonate from 1978 up to 2030.

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PLASTICS/POLYMERS
POLYETHYLENE (PE)

SUBDUED DEMAND TO WEIGH ON However, most suppliers had moved the mouth basis and/or opt to reduce
SOUTHEAST ASIA PE MARKET bulk of their December and part of their their regular import volumes, market
By Felita Widjaja January shipment cargoes to China for sources said.
better netback in late November.
SINGAPORE (ICIS)--Spot import prices In Indonesia, a converter said: Local
of polyethylene (PE) grades in southeast Thus, supply for LDPE film in southeast markets end-product demand in 2016
Asia are expected to be under downward Asian region might be relatively tight which had been dull for most of the year, even
pressure should demand remained might support prices in early 2017. during Hari Raya Eid-ul-Fitr season which is
subdued in the first quarter of 2017, industry supposed to be the peak period.
sources said. Overall demand and trade activity in
December 2016 have remained subdued Eid-ul-Fitr, which was in July this year, is
A relatively weak demand throughout 2016 despite a jump in crude prices after OPECs a holiday marking the end of the Muslim
weighed down on PE prices, which peaked decision to cut output next year. fasting month of Ramadan. It is observed in
at $1,255/tonne CFR (cost and freight) most parts of southeast Asia.
SE (southeast) Asia, lower by $175/tonne Crude prices rallied in the week of 2
from the highest level recorded in 2015, December after OPEC members reached In Malaysia, market concerns included the
according to ICIS data. an agreement to cut production to 32.5m depreciation of the countrys currency and
bbl/day from 1 January 2017. political instability.
In the Chinese market, on the other hand,
prices had firmed from early October to Most players in the southeast Asian PE Weak [Malaysian] ringgit against the
late November. The average price of low market reckoned that although general US dollar has made import cargoes less
density polyethylene (LDPE) film hit a 2016 sentiment might improve a little, this might attractive, prompting some buyers to refrain
high of $1,360/tonne CFR China on strong not translate into real demand for PE resins. from importing any cargo as local prices are
demand from the agricultural sector, ICIS more competitive, said a Malaysian trader.
data showed. They are opting to monitor the key China
market, other macroeconomic factors, The countrys implementation of pro-ringgit
But demand is expected to slow down including exchange rates, and political stability. policy in early December, in which exporters
closer to the Lunar New Year holidays in need to convert 75% of their proceeds into
late January, when most players in China Downstream converters are expected to the local currency, might hamper trading
would exit the market. continue procuring cargoes on a hand-to- activity in the PE market further.

The Lunar New Year, which falls on 28


January 2017, is celebrated in most parts of
northeast and southeast Asia. China will be
on holiday for a full week.

Southeast Asian market players were


concerned that the arbitrage window might
be opened for deep-sea imported cargoes
should China PE prices head south in the
near term.

Industry players are taking a cautious


stance on the PE market next year, with
traders unlikely to take any big positions to
minimise risk.

Chinese buyers will only buy cargoes


which can arrive before the Chinese New
Year if they need the cargo and will buy
deep-sea cargo only when they think the
prices are low enough, said a Malaysian
converter.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Most local converters in southeast Asia India demonetized the 500 and 1,000 rupee producer was actively offering PE cargoes,
are not keen to stock up on their inventory notes effective 9 November in a surprise move which were not usually available for export,
and may opt to rely more on prompt local to crack down on black money, or unaccounted to southeast Asia and China.
material for their immediate requirements income. Those rupee notes had more than
for most of the first quarter 2017. 80% share of the currency in circulation in the A major price upswing in the southeast
country when the ban took effect. Asia PE market can only happen if there
On the supply side, scheduled plant are major supply constraints or a strong
shutdowns in Malaysia and Thailand might Some buyers and traders in southeast Asia rebound in market demand for end-
reduce supply availability of non-dutiable PE had expressed concerns that India-origin products, industry sources said.
cargoes in the first three months of next year. import cargoes might be available as early
as December 2016 in the aftermath of the Some market participants are hopeful that
But a domestic cash crunch in India may lead demonetization, the trader said. prices might rebound in February, after the
to increased PE exports to the southeast Lunar New Year holiday, when converters
Asian market, a regional trader said. In late November, a prominent Indian re-enter the markets to restock.

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polyethylene market, including price histories and expert commentary to help you create robust plans for production and investment activities. The study also
understand the key price drivers and market conditions and settle your contract includes supply and demand forecast data, import/export levels, capacity
prices confidently with access to time-sensitive offers, bids and price movements. expansion plans, downstream demand overview and outlook, as well as analyses
on key issues and developments in the market.

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FORECAST REPORTS NEWS INFORMATION SUPPLY AND DEMAND DATABASE

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selected commodities showing a 12-month rolling breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price forecast as well as details of supply and petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
demand, trade balances, capacity and margins. It is articles cover production updates, plant capacities, includes import and export volumes, consumption,
a valuable tool to identify commercial opportunities output and shutdowns, plus so much more. plant capacities, production and product trade flows
in the short to mid-term. for polyethylene from 1978 up to 2030.

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PLASTICS/POLYMERS
POLYPROPYLENE (PP)

SE ASIA PP OUTLOOK CLOUDY ON


RISING MARKET VOLATILITY
By Leanne Tan

SINGAPORE (ICIS)--The southeast (SE)


Asia polypropylene (PP) market faces a
cloudy outlook as lacklustre downstream
demand amid economical and geopolitical
stresses across the region threatens to
offset potential bullishness in the market
following OPECs agreement to curb oil
production, industry sources said.

Prices in southeast Asia bottomed out early


in the year in January 2016, weighed down
by turmoil in Chinas equity markets and
sharp falls in crude oil prices.

According to ICIS data, spot prices for PP


flat yarn grade fell to $855/tonne CFR (cost
and freight) SE (southeast) Asia in late
January.
following president-elect Donald Trumps sectors of Thailand, and market players
Not long after, spot prices began its steep
announcement that the US will withdraw say reduced growth may have a negative
uptrend, peaking for the year at $1,120/
from it as soon as he takes office later in impact on the consumer goods sector and
tonne CFR SE Asia in mid-April, buoyed by
January. upstream polymers market.
a short supply of spot cargoes early in the
second quarter.
However, recent gains in crude futures The year 2017 is expected to be an
provided some optimism for the coming especially challenging one for the PP
Late in 2016, spot PP prices in southeast
year. market in Malaysia as well.
Asia have been on a roller coaster, as
highly volatile futures prices in China and
Market players were hopeful that the A weak manufacturing sector in 2017 is
increased speculation took its toll on the
agreement reached between OPEC expected to take a toll on demand for
physical market.
and non-OPEC members on a global finished goods.
production cuts in 2017 would help support
The recent devaluation of many southeast
downstream polymer prices in the near Furthermore, downstream consumer
Asian currencies against the US dollar in
future. spending is expected to be subdued in
the fourth quarter of 2016 amid a broad sell-
the first half of the year on the back of a
off in emerging markets will likely continue
Despite the production cut agreements, weakened Malaysian Ringgit (MYR).
to hamper import buying in the first quarter
some people remain sceptical as to whether
of 2017.
the producers involved would ultimately Market players believe both factors will
adhere to the agreed cuts. likely have a negative impact on the
PP supply is expected to continue to rise,
upstream polymer industry.
as Thailands IRPC announced plans to
In Thailand, market players say the outlook
invest baht (Bt) 10bn ($280m) in 2017 year
for 2017 was cloudy amid concerns over a In Indonesia, the PP market has been
to expand its PP production capacity by
possible slowdown in tourism growth. plagued by a persistent weak downstream
63% or 300,000 tonnes. By the middle of
demand for finished goods for most of
2017, its PP production is set to increase to
The Thai governments crackdown on zero- 2016.
775,000 tonnes.
dollar package tours is expected to curtail
tourism growth in the country. Hopes for a recovery in 2017 rests on the
In the medium to long run, market players
countrys ability to overcome current political
in southeast Asia were concerned about
Tourism remains one of the key economic instabilities plaguing its capital. Delayed
the fate of the Trans-Pacific Partnership
payments from downstream buyers remain
(TPP), which now hangs in the balance

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
a key concern amongst suppliers in the
country.

Meanwhile, market plays say that despite


expected PP capacity expansions in China,
it is unlikely that Indonesia will see an influx
of Chinese coal-to-olefins (CTO) or MTO
(methanol-to-olefins) exports to Indonesia in
the foreseeable future.

While limited buyers in Indonesia have


experimented procuring small volumes
of Chinese CTO PP cargoes in the past,
market players say it remains more cost-
effective to procure spot cargoes from the
Middle East and India.

We did try to bring in a fairly small volume of


MTO PP cargoes from China previously, but
have since stopped as the prices are just too
high, a trader based in Indonesia said.

Spot prices from the Middle East are much


more competitive, so it will remain a big Some market players say that the The increased duty would mean that cargoes
challenge to market Chinese cargoes in increased duty may have potential impacts from non-Asean countries will be relatively
Indonesia, the trader added. on the buying behaviour of downstream more expensive in the future. While this is
converters, as the price gap between unlikely to impact re-exporters as they are able
In Vietnam, an increase in the import duty dutiable and non-dutiable cargoes in to enjoy tax refunds, other buyers who do not
of several commodities, including PP, might Vietnam widens. re-export may be encouraged to procure non-
result in more converters and end-users dutiable cargoes instead, the trader added.
opting to procure cargoes from the domestic In the past, interest in non-dutiable cargoes
market instead. The import duty for PP in in Vietnam has been rather limited, but this As a whole, market players say spot import PP
Vietnam was to be raised to 3% from the might change with the higher import duties prices in China will continue to set the direction
current 1% effective 1 January 2017. in 2017, a Vietnamese trader said. for prices across southeast Asia in 2017.

INDIA PE/PP OUTLOOK DAMPENED In a move that caught the industry as well as Market players, however, remain optimistic
BY CURRENCY ILLIQUIDITY citizens by surprise, the Indian government of the Indian economy to emerge stronger in
By Veena Pathare had announced the demonetization of Indian the next six months.
rupees (Rs) 500 and 1,000 notes effective
SINGAPORE (ICIS)--Indias polymer market from 9 November 2016. Strong polymer demand growth figures
is expected to see weak demand extend in the recent years coupled with a sound
into the first quarter of 2017, as purchasing Trade was significantly hit, as the currency economic situation is likely to support PE/
capacity remains curtailed by a lack of that was withdrawn previously accounted for PP demand in the year ahead, despite the
currency availability, industry sources said. 86% of the total money in circulation. current situation, market sources said.

Polyethylene (PE) as well as polypropylene With a large chunk of polymer business Market players also expect polymer business
(PP) prices are likely to remain weighed typically undertaken on cash basis, PE to become more organized, transparent
down by weak demand for imports as well and PP demand remained weak through and streamlined in the years ahead, buoyed
as domestic product, as buyers remain November and December as purchasing by the Indian governments efforts towards
sidelined by the persistent cash crunch. capacity was curbed by a lack of cash. bringing down unaccounted black money.

According to market players, a weakness in Market players estimate the situation to The governments crackdown on black
polymer demand is likely to persist in the first remain mostly weak until March and expect money and this demonetisation drive will
quarter of 2017 which also marks the end of to business to pick up April onwards. change the way business is done. Trade
the financial year 2016-17 in India. will eventually become fair, open and
We hope things get better in the new transparent, especially for those who have
An adverse impact on the countrys gross financial year. It will definitely be challenging found it difficult to compete with players
domestic product (GDP) is also anticipated because GDP is mostly going to be hit, and involved in cash-based trade, an Indian
in the third and fourth quarters of fiscal year demand will hence take time to come back, polymers importer said.
2016-17, as manufacturing activity is likely to but we hope things improve by 1 April, an
be affected by the currency shortage. Indian importer said.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
CHINAS PE/PP IMPORT PRICES TO in the country that in turn led to weaker sales November 2016, a South Korean
WEAKEN IN Q1 of many petrochemicals. supplier said.
By Angie Li
Moreover, the resumed production from Moreover, the arrival of Uzbekistan cargoes
SINGAPORE (ICIS)--Chinas import prices Indias Reliance also resulted in an were expected to be increase after the
for polyolefin are expected to weaken in the increased supply of polypropylene (PP) Uz-Kor Gas Chemical restarted its 400,000
first quarter of 2017 as a result of increased cargoes, an Indian supplier said. tonne/year HDPE unit in mid-October 2016,
supply and weaker demand, industry a South Korean supplier said.
sources said. The Middle East and South East Asia supply
is also expected to rise in the first quarter of While import supply into China is set to rise,
The import supply was expected to increase 2017 as most suppliers from there sold their the demand may turn out to be weak in
early next year due to firm prices in China in January and February shipment cargoes to 2017, industry source said.
the fourth quarter of 2016, local distributors China because of better net backs.
said. In the polyolefin market, players were
For Iranian cargoes, the PE supply will gradually retreating from early January
The arbitrage window between China and recover in January 2017 after several Iranian 2017 ahead of the Chinese Lunar New Year
the US opened up after polyolefin prices suppliers resumed production in mid- holiday, which falls on 28 January.
in the Chinese market soared in the fourth October, 2016.
quarter of 2016. However, demand is likely to pick up after
In the Middle East, Saudi Polymers restarted the Lantern Festival on 11 February 2017, a
For low density polyethylene (LDPE), the up its 1.1m tonne/year high density PE market source said.
average price hit a 2016 high of $1,360/ (HDPE) unit and 400,000tonne/year PP
tonne CFR (cost & freight) China in the unit in end November after a two-month Some downstream factories in north China
fourth quarter on tight supply and increased maintenance turnaround, a source close to have been forced to shut down in end
domestic prices. the company said. December 2016 due to the heavy haze, a
local distributor based in north China said.
And for PP yarn, the average price also hit a Oman Petrochemical restarted its 340,000
2016 high of $1,055/tonne CFR China in the tonne/year PP unit in early December after a Moreover, the downstream industries related
fourth quarter due to firm domestic prices, month because of unexpected maintenance, to the real estate sector were also not
ICIS data showed. a source close to the company said. optimistic.

Meanwhile, the supply from India had also For Asian cargoes, SCG restarted its The government adopted some policies
been growing due to weaker Indian rupee 400,000 tonne/year PP unit in early recently to help stabilise housing prices
and new capacity from Gail, an international December after one-month turnaround, a in the country, which will result in a
trader said. Thailand supplier said. decreased demand for polyolefins, an
industry source said.
India demonetised high-denomination rupee Samsung Total also resumed it production
notes on 9 November, creating a cash crisis on its 400,000tonne/year PP3 unit in late

Copyright 2017 Reed Business Information Ltd. ICIS is a member of RBI is part of RELX Group plc. ICIS accepts no liability for Back to Quick Navigation | 46
commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
You can rely on ICIS for all your polypropylene market intelligence needs

PRICING INFORMATION ICIS CHINA POLYPROPYLENE (PP) ANNUAL STUDY

ICIS offers regional price assessments and market analysis for the Asian Anticipate where the domestic Chinese polypropylene market is heading and
polypropylene market, including price histories and expert commentary to help create robust plans for production and investment activities. The study also
you understand the key price drivers and market conditions and settle your includes supply and demand forecast data, import/export levels, capacity
contract prices confidently with access to time-sensitive offers, bids and price expansion plans, downstream demand overview and outlook, as well as analyses
movements. on key issues and developments in the market.

Request your free sample report Enquire about the ICIS China Polypropylene Annual Study

FORECAST REPORTS NEWS INFORMATION SUPPLY AND DEMAND DATABASE

ICIS publishes monthly forecast reports for Be the first to find out about polypropylene-related Receive an end-to-end perspective across the global
selected commodities showing a 12-month rolling breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price forecast as well as details of supply and petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
demand, trade balances, capacity and margins. It is articles cover production updates, plant capacities, includes import and export volumes, consumption,
a valuable tool to identify commercial opportunities output and shutdowns, plus so much more. plant capacities, production and product trade flows
in the short to mid-term. for polypropylene from 1978 up to 2030.

Enquire about the forecast reports Request your free trial today Enquire about the supply/demand database

Copyright 2017 Reed Business Information Ltd. ICIS is a member of RBI is part of RELX Group plc. ICIS accepts no liability for Back to Quick Navigation | 47
commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
PLASTICS/POLYMERS
POLYVINYL CHLORIDE (PVC)

ASIA PVC MAY CONTINUE TO SEE


BULLISH SENTIMENT IN Q1
By Kite Chong

SINGAPORE (ICIS)--Asia polyvinyl chloride


(PCV) is likely to see the current bullish
sentiments carried over in the first quarter of
next year as China became a net importer
of the material in the past few months.

The current year proved to be an unexpected


bumper period for PVC producers in Asia.

Prices were on an uptrend in the second


half of the year despite seasonal lull factors
such as the monsoon and Diwali holiday in
India; and heavy rains in southeast Asia.

Most market participants expected the


current bullish sentiments to be carried over
to the first quarter of 2017 at the very least.

In addition, the second quarter could see based and carbide-based PVC to being a Prices of vinyl chloride monomer (VCM),
continual support from the India market, as net importer. the immediate derivate of PVC, closely
they would have long since recovered from followed PVC price trends in 2016 and this
the currency ban that plagued the market The Chinese government began a series of is expected to remain unchanged for 2017.
in November 2016, and improved end-use environmental inspections prior to the start
demand usually seen before the start of the of the G20 conference held in Hangzhou, However, some market participants expect
monsoon season. China in early September 2016, which led the narrowing spread between PVC and
to a number of Chinese vinyl facilities to VCM prices in northeast Asia seen in the
Indias government demonetised high- lower their operating rates, or to shut down. second half of 2016 to continue in 2017.
denomination rupee notes on 9 November
resulting in a cash crisis in the country. However, after the end of the G20 In northeast Asia, VCM sellers were able
conference, the Chinese government did to steadily shrink the spread between VCM
Overall PVC demand in Asia was not not stop carrying out the environmental and PVC spot prices in the key buying
expected to be much different in 2017 from inspections, resulting in persistently low market of China, due to the surge in
the current year, sources said. domestic PVC production resulting in tight domestic Chinese PVC prices.
supply and soaring prices.
Northeast (NE) and southeast (SE) Asia In southeast Asia, a major VCM producer
would likely see the same single-digit growth The immediate effect was that Chinese completed an expansion to its VCM facility
in end-use demand as it is currently but PVC producers, both carbide-based and in early 2016 and targeted another smaller
India could possibly see double-digit growth. ethylene-based, were less inclined to export expansion to come online by the end pf
PVC, with domestic prices higher than spot 2017.
On the other hand, market players expected prices.
a huge shift in trade dynamics due to the There was no spot VCM volume southeast
supply side. At the same time, Chinese buyers were Asia origin heard available in 2016 and it
keener than ever to import PVC. was expected to remain this way in 2017.
Traditionally, northeast Asia is the largest
exporter of PVC in the Asia Pacific region, In light of declining of Chinese PVC Compared to PVC prices, spot ethylene
with India, southeast and Australia being exports, especially carbide-based PVC, and dichloride (EDC) prices were less volatile in
the largest recipients of these cargoes. improved Chinese buying interest, other 2016 and only saw a very gradual firming in
Asian PVC producers were able to achieve prices when downstream PVC prices were
However, in the second half of 2016, China consecutive months of firmer spot prices surging.
went from being a net exporter of ethylene- from July to December 2016.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
From July to end December, PVC prices
firmed from $760/tonne CFR (cost & freight)
China to $970/tonne CFR China, while EDC
prices only firmed from $255/tonne CFR NE
Asia to $295/tonne CFR NE Asia.

However, market players expect more spot


liquidity in Asia in 2017, which might result
in more price volatility and spot prices more
in line with PVC movements.

This was due to less term contracts signed


for 2017.

Market players indicated that US EDC


producers signed less volumes with Asian
buyers in the hopes of introducing more
liquidity into the spot Asia market.

A major EDC producer in northeast


Asia also reduced its 2017 contractual
obligations due to reduced feedstock from
one of its upstream chlor-alkali units, which
was currently undergoing expansion and While Chinas domestic PVC prices started with prices largely tracking the Chinese and
would only come online in March 2017. to soften at the end of 2016, market players India market.
attributed this to a correction in prices rather
The India market continued to be an than a sustained improvement in domestic However, with the reduction of Chinese
attractive export destination for Asian PVC supply. exports into southeast Asia in the last
producers in 2016 although demand saw a quarter of 2016, southeast Asian buyers
dip by the end of 2016 due to the sudden Chinese players did not expect the Chinese had turned to purchasing from southeast
announcement of a currency ban by the government to stop conducting the Asian producers instead.
Indian government in November. environmental inspections anytime soon.
This was expected to remain unchanged
In the long term, market players expect the Hence, Asian vinyl players forecasted China heading into 2017.
currency ban to have a positive impact on to be a smaller PVC exporter in 2017, with
the India economy and by extension, the producers catering to the more attractive Australia became a major PVC importer of
PVC market too. domestic market instead of the export northeast and southeast Asian PVC after a
market. major domestic PVC producer shut down
However, in the few months within the its PVC production facility in end 2015.
announcement, the PVC industry in India Compared to the Chinese market, the Similarly, Australia was expected to remain
took a severe beating, as many transactions southeast Asian market did not see too a net importer of PVC in 2017.
involving PVC and PVC products in India much changes in 2016 compared to 2015,
involved cash rather than credit, especially
in the pipe industry which is responsible for
50% of PVC demand in the country.

While no one can be certain when India


will fully recover from the ban, PVC market
participants said some recovery should be
seen after 30 December at the very latest,
as that was the deadline for everyone to
replace their banned currencies with new
ones.

From January to August 2016, Chinas PVC


demand was subdued but stable.

However starting September, domestic


prices surged, with prices hitting a high, not
seen since 2010, in November 2016.

This was due to lowered production and


tightened supply, resulting in bullish PVC
futures, and soaring PVC prices.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
CASH CRISIS TO DAMPEN INDIA cash. People cannot buy even if they want domestic supply is just not enough to meet
PVC OFF TAKE IN EARLY-2017 to, an Indian PVC end-user said. Indias demand [for PVC], a domestic Indian
By Jeslyn Lerh producer said.
The PVC market is largely operated in cash
SINGAPORE (ICIS)--The near-term offtake and most market participants expected According to ICIS data, total PVC demand
for polyvinyl chloride (PVC) in India may business to recover only after there is enough in India is expected to exceed 3m tonnes
still be limited by the demonetization policy circulation of new currency in the market. in 2017. In the financial year 2015-2016,
introduced late last year, despite earlier Indias PVC imports amounted to about 1.6m
expectations of robust demand in the first Producers also expressed concerns about tonnes, accounting for more than half of the
half of this year, industry sources said. their sales to India in the near term. total PVC demand in the country.

Agricultural demand [for PVC pipes] is The situation seems serious. People have
always there. Our new government is very no money to buy and farmers are the most You can rely on ICIS for all
focused on infrastructural development. We affected, a northeast Asian producer said. your polyvinyl chloride (PVC)
were expecting a lot of demand for pipes,
especially from end-February to April, an At least 70% of PVC demand in India comes market intelligence needs
India-based trader said. from the agricultural sector, where pipes are
used for the irrigation of crops. PRICING INFORMATION
The fourth quarter of the Indian financial year
ICIS offers regional price assessments and
is traditionally a peak demand period for Most customers already have inventories market analysis for the Asian PVC market,
PVC, due to restocking activities ahead of from the past months. Buying is likely to pick including price histories and expert commentary
the pipe-laying season. Indias financial year up only after the currency situation is more to help you understand the key price drivers and
market conditions and settle your contract prices
begins in April and ends in March. stable which is going to take a long time, confidently with access to time-sensitive offers,
said a trader who deals in deep-sea cargoes. bids and price movements.
Many processors said that demand had
started to pick up in November. People However, other market participants were Request your free sample report
were expecting a good round of PVC more optimistic of the situation.
for the next six months till May, another NEWS INFORMATION
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news and analysis across the global petrochemical
season of PVC [offtake]. ones who transact with cash, said another markets. Our market-moving news articles cover
northeast Asian producer, who did not think production updates, plant capacities, output and
shutdowns, plus so much more.
In November Indian Prime Minister Narendra that offer prices will be lowered in the near
Modi announced a ban of Rs500 and term to boost buying.
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Rs1000 rupee notes in an attempt to curb
corruption and tax evasion in the country. Since July last year, Indian PVC spot
prices have been on an uptrend due to ICIS CHINA POLYVINYL CHLORIDE (PVC)
The move caught many by surprise and limited export availability from China. This has ANNUAL STUDY
resulted in a cash crisis, with people flocking to caused Asian exporters to hike offers to India. Anticipate where the domestic Chinese PVC
banks to cash in their old notes. More than 85% market is heading and create robust plans for
production and investment activities. The study
of transactions occur on a cash basis in India. The cash crisis has impacted both local and also includes supply and demand forecast data,
import markets. But, it is possible that people import/export levels, capacity expansion plans,
The problem lies with the cash, there is no will still buy in one way or another because downstream demand overview and outlook, as well
as analyses on key issues and developments in
the market.

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volumes, consumption, plant capacities,
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from 1978 up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
PLASTICS/POLYMERS
PLASTICIZERS

CHINA PLASTICIZERS LIKELY


STABLE-TO-SOFT IN Q1
By Joson Ng

SINGAPORE (ICIS)--Chinas plasticizers


market is expected to be stable-to-soft in
the first quarter of 2017 following a general
uptrend toward the end of 2016, with prices
of both dioctyl terephthalate (DOTP) and di-
isononyl phthalate (DINP) hitting their highest
for the year in November, market sources said.

DOTP prices were losing steam, said a


northeast Asian producer.

The same fate is expected for DINP as spot


prices of feedstock phthalic anhydride (PA)
lost their upward momentum. DINP tends
to track DOP prices closely in the Chinese
import spot market, according to market
sources.

An early Lunar New Year, however, may


be a silver lining for most suppliers since vacuum that producers outside of China DOTP gained some 17.8% in January to
it could trigger some downstream buying may be able to fill. November 2016 in the Chinese import
activities, industry sources said. market to about $1,025/tonne CFR China.
Chinas DINP import prices gained 30.3%
Restocking activities may start as early in the first 11 months of 2016, to average DOTP is employed in food contact products,
as December since the Lunar New Year is around $990/tonne CFR (cost and freight) medical goods and toys.
earlier in 2017, said one northeast Asian China in end-November, according to ICIS
producer. data. The dioctyl phthalate (DOP) spot market saw
healthy gains in the month of November as
The Lunar New Year falls on 28 January 2017. In the FOB (free on board) NE (northeast) a strong feedstock phthalic anhydride (PA),
Asia market, DINP gained some 20.5% coupled with tightness of supply for DOP, acted
Plasticizers prices will increase in the first over the same period to about $1,000/tonne as drivers to push prices up by some 6.3%.
quarter, said a separate northeast Asian FOB NE Asia.
producer. Like the rest of oxo alcohols, DOP prices
Some 95% of DINP is used in polyvinyl are expected to be slightly weaker at the
More stringent environmental checks in chloride (PVC) applications. More than half start of the year. The market is likely to track
China may affect utilization rates at some of the DINP used in non-PVC applications the Chinese domestic and feedstock PA
domestic plants, creating a potential involves polymer related-uses. markets for much of the year.

You can rely on ICIS for all your plasticizers market intelligence needs

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ICIS offers regional price assessments and market Be the first to find out about plasticizers-related Receive an end-to-end perspective across the global
analysis for the Asian plasticizers market, including price breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
histories and expert commentary to help you understand petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
the key price drivers and market conditions and settle articles cover production updates, plant capacities, includes import and export volumes, consumption,
your contract prices confidently with access to time- output and shutdowns, plus so much more. plant capacities, production and product trade flows
sensitive offers, bids and price movements. for plasticizers from 1978 up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
PLASTICS/POLYMERS
METALLOCENE LINEAR LOW DENSITY POLYETHYLENE (MLLDPE)

ASIA MLLDPE IN FOR CHALLENGE,


AIMING MARKET EXPANSION
By Felita Widjaja

SINGAPORE (ICIS)--Asia suppliers


continue to face an uphill task promoting
the use of more specialty metallocene linear
low density polyethylene (MLLDPE) grades
over that of traditional butane-based (C4)
LLDPE, which is less costly.

While MLLDPE is known to have superior


mechanical properties, not all Asian buyers
have been receptive of the new technology,
as it comes with a premium over traditional
C4 LLDPE. In addition, converters and end-
users will need to upgrade their existing
equipment in order to be able to process
metallocene resins.

Around 50-60% of downstream converters


in other regions outside of China have
already tweaked their production facilities
to be able to accommodate MLLDPE In addition, a rising tide of competition from after the week-long holidays, which could
resins. However, in China, that figure is a up-coming coal-to-olefins (CTO) projects in help support prices of MLLDPE in mid-
mere 10%, a distributor based in China China is expected to exert further pressure February.
estimated. on the MLLDPE market in the long run.
In 2017, additional MLLDPE supply would
While limited producers in southeast Asia Upcoming CTO projects in China is likely to come from PTTGCs new 400,000 tonnes/
had reported some headway this past increase the supply of cheap commodity PE year capacity plant which is scheduled to be
year in persuading plastic converters in grades in the country. commissioned in the fourth quarter of 2017.
China to upgrade their equipment, others
acknowledge that this will remain a major With more domestic supply, prices of A source with knowledge of the matter said
challenge in 2017. domestic PE grades could come under that the plant will be commercially ready by
pressure, and more buyers are likely to the first quarter of 2018.
Chinese buyers still gravitate towards favour these lower-cost commodity PE
cheaper, domestically produced C4 LLDPE. grades over that of MLLDPE. PTTGC had been trying to pre-market their
The biggest hurdle in 2017 for suppliers MLLDPE materials from its existing LLDPE
is to work on changing that mind-set, and In the short term, the Chinese yuans plant in Map Ta Phut but were restrained
continue to educate converters on the as well as other southeast Asian local by the limited quantity that it can produce
superior qualities of metallocene-based currencies depreciation against the US annually.
stretch film, a producer based in Europe dollar will likely continue to keep buyers
said. away from the import market in the first In India, the market went quiet from early
quarter of 2017. November as demand for both polymer
Meanwhile, import volumes in China are resins and end products had been curbed
expected grow in 2017 on the back of Beyond the currency exchange, following the demonetisation of the two
lengthening global supply of MLLDPE amid downstream demand for finished goods is bank notes on 9 November.
upcoming expansion plans. expected to slow further in the first half of
the first quarter, particularly in China as the Some traders had felt the demand in India
With fresh productions coming on stream, Lunar New Year holidays approaches, which for both polymer resins and end products
Asian market players expect aggressive falls on 28 January - 2 February in 2017. weakened further week-on week in November
pricing competition to ensue, as producers and December as business owners and end
struggle to establish a strong foothold in the Some market players were hopeful that users alike were distracted by the sudden
rapidly growing Chinese market. there will be a pick-up in buying appetite cash crunch following the demonetisation.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Most buyers in India opt to utilise their However, it had not led to real demand for competitive, particularly in southeast Asia
existing inventory till a clearer market polyethylene (PE) and metallocene linear and India markets at the moment.
direction emerged and opt to restart price low density PE (MLLDPE) cargoes.
discussion for January shipment cargoes On the other hand, a sudden increase in
instead towards the end of December. Local PE suppliers in India extended their import offers might also be able to kick-start
discount schemes which exert pressure on demand as buyers are sitting on relatively
Some local manufacturers in India were commodity PE prices as well as MLLDPE low inventory in towards the end of the year
running their factories at as low as 40% prices in domestic market. with some converters sitting on at most one
capacity, purchasing limited cargoes on week of inventory level in a bid to minimise
need-to basis. Most Indian market players expect import risks.
market to rebound sometime in January
This led some distributors to cut their cargo to February 2017 period when cash flow Prices of commodity polyethylene (PE)
procurement by as much as 50% for the would have improved amid availability grades in 2017 is expected to continue
month of December, according to market of new currency denominations and the to play a crucial role in setting the price
sources. market also needs time to pick up its pace. direction of MLLDPE in Asia moving
forward.
Market sentiment slightly improved in early A distributor said that import MLLDPE
December as crude oil prices increased prices in the first quarter of 2017 need
after OPECs decision to cut output in to be lower in order for buying interest to
January. return as import prices were deemed as not

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price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for MLLDPE from 1978 up to 2030.

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Trusted industry
intelligence for Chinas
commodity markets
Developments in Chinas petrochemical industry
continue to affect the global marketplace. It is
therefore vital for domestic and international
market players to keep track of changes within
the country, to know where opportunities lie.

ICIS has long been recognised as a reliable


source of information; our locally based experts
compile reports and analyses in both English
and Chinese, to support industry participants
participating in China markets, or seeking to trade
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POLYURETHANE
PROPYLENE OXIDE

CHINA PO DECLINES TO HASTEN IN lengthening supply from new PO capacities


2H ON ADDITIONAL CAPACITY Domestic prices had slumped despite expected to come on-stream in China and
By Matthew Chong shorter supply from output cuts due to Saudi Arabia around the middle of the year.
ongoing environmental checks at Shandong
SINGAPORE (ICIS)--Chinas propylene plants since October. Jinling Huntsman New Materials Co, a
oxide (PO) prices will likely trend stable to joint venture between Chinas Sinopec and
soft in the beginning one to two months This was because buyers concerns over USs Huntsman, is scheduled to start up
this year as demand is expected to prolonged supply disruptions from the its PO/ Methyl Tertiary Butyl Ether (MTBE)
diminish ahead of the Lunar New Year in checks were largely unfounded, with most unit, with a 240,000 tonne/year PO and a
late-January and market activity will likely plants having resumed normal operations 742,000 tonne/year MTBE capacity, in June
remain subdued until mid-February, industry by November. or July 2017, according to market sources.
sources said.
Moreover, reduced output from foam Middle East players have also been eager
The Lunar New Year holiday in China in makers as a result of sky-high feedstock for news about new supply coming from
2017 will be from 27 January to 2 February. TDI prices has stifled the demand for other Sadara Chemicals integrated plant based
feedstock polyols. in Saudi Arabia.
Downstream polyols producers are unlikely
to stock up significant PO volumes ahead Spot import prices for PO in China peaked Sadara Chemical, which is a joint venture
of the Lunar New Year holiday this time in early October in line with the surge in between USs Dow Chemical and state
round as foam makers the downstream domestic prices. energy firm Saudi Aramco, will mostly cater
of polyols are still running their plants at to the Middle East and North Africa markets.
reduced rates following the excessive surge Thereafter, average import prices tumbled
in the domestic prices of other feedstock by a cumulative 35% over a short span of Sadaras 390,000 tonne/year PO and
toluene di-isocyanate (TDI) in October. one month to first-half July pre-upsurge 400,000 tonne/year polyether polyols units
levels at $1,100/tonne CFR (cost & freight) are expected to be up and running by mid-
Polyols and TDI are the two main China on 4 November before stabilising 2017, a company source said.
components used in the production of and moving sideways within a narrow range
polyurethane (PU) foam. until first-half December. While northeast and southeast Asian
suppliers have acknowledged that it is
However, the extent of any downside may Looking further ahead, PO price declines almost a foregone conclusion that they will
be curbed by rising raw material prices may accelerate in second-half 2017 due to concede market share to Sadara in the
including that of feedstock propylene in line
with strengthening crude oil prices since
November, albeit Shandong-based PO
producers were still generating reasonable
margins as of mid-December.

On 23 December, average domestic


PO prices were at yuan Chinese yuan
(CNY) 10,775/tonne ($1,553/tonne) DEL
(delivered) China, while average domestic
propylene prices were at CNY8,075/
tonne ($1,164/tonne) ex-tank Shandong,
according to ICIS data.

China domestic prices went through a


roller coaster ride by plunging from its
peak in mid-October by a cumulative 36%,
or CNY5,000/tonne in absolute terms, to
reach CNY8,900/tonne DEL China on 4
November.

Prices subsequently rebounded a tad to


CNY10,425/tonne DEL China on 9 December.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Middle East and Africa, the main concern Rigid polyols combined with polymeric More PO volume being converted into
now is whether these suppliers will be able methyl di-p-phenylene isocyanate (PMDI) is polyols in-house in integrated facilities will
to ward off the Sadara assault in their home used in refrigerators as well as insulation in thereby dampen the demand for PO and
turf in Asia. the construction sector. may indirectly put downward pressure on
PO prices, the sources said.
Many of these suppliers are apprehensive For polyols production, Sadara will focus
about a reversal of trade flows in which on flexible slabstocks and polymer polyols Meanwhile, China PO import volume which
Sadaras methyl di-p-phenylene isocyanate when its polyols plant comes on stream has been dwindling over the past couple of
(MDI), TDI, polyols and propylene glycol while Dows plant in Thailand will produce years will likely remain largely stable in 2017,
(PG) cargoes would infiltrate into most less of flexible slabstocks and shift to with regular shipment to come from the usual
Asian regions, although its PO is believed produce more coatings, adhesives, sealants two sources, namely Saudi Arabias Rabigh
to be entirely for captive use and will not be and elastomers (CASE) polyols, market Refining and Petrochemical Co (Petro Rabigh)
for commercial sales. sources said. and USs LyondellBasell Chemical Co.

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ICIS offers regional price assessments and market Be the first to find out about propylene oxide- Receive an end-to-end perspective across the global
analysis for the Asian propylene oxide market, including related breaking news and analysis across the petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you global petrochemical markets. Our market-moving the local or regional scenario in a global context. Data
understand the key price drivers and market conditions news articles cover production updates, plant includes import and export volumes, consumption,
and settle your contract prices confidently with access capacities, output and shutdowns, plus so plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. much more. for propylene oxide from 1978 up to 2030.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
POLYURETHANE
TOLUENE DI-ISOCYANATE (TDI)

ASIA AND MIDDLE EAST TDI but this could not be confirmed with the BASF and Sadara start running their plants
PRICES TO EXTEND LOSSES company. normally at high rates.
By Matthew Chong & Izham Ahmad
There were concerns that some of the TDI spot import prices in Asia surged to
SINGAPORE (ICIS)--Toluene di-isocyanate material from the new plant will find its way over eight-year highs in October amid the
(TDI) prices in Asia and the Middle East into Asia besides the Middle East, and exorbitant rise in China domestic prices due
are expected to edge lower in the first the start-up delay will bring some relief to to a myriad of factors.
few months of 2017 but may start to drop northeast Asian suppliers, albeit temporarily.
faster thereafter as tight supply conditions Overall supply was relatively tight due to
in Europe are expected to be alleviated by Middle East players have also been eager turnarounds at several northeast Asian
the second quarter, according to market for news about additional supply coming plants in October and November.
sources. from Sadara Chemicals integrated plant.
Average TDI import prices jumped by
Feedstock toluene prices may also play a Sadara Chemical, which is a joint venture a cumulative 89%, or $2,100/tonne in
greater role in determining the TDI price between USs Dow Chemical and state absolute terms, to hit $4,450/tonne China/
trend in 2017 as raw material prices which energy firm Saudi Aramco, is expected to Hong Kong on 19 October in the short span
have risen in line with crude oil prices since cater to the Middle East and North Africa of three weeks.
November will start to erode TDI producers markets.
margins, sources said. Average China domestic prices nearly
Sadaras two isocyanates plants, a 200,000 tripled to a historical high of Chinese yuan
The supply shortage has stemmed from a tonne/year TDI and a 400,000 tonne/year (CNY) 49,500/tonne DEL (delivered) south
series of plant troubles, which began when PMDI unit, will be the last of its downstream China on 19 October over a four-week
Covestro in early October announced force derivative plants to come on stream and period. Prices have since corrected from its
majeure (FM) across all of its European most market players expect them to start peak and were hovering at slightly below
isocyanates operations including TDI, up in Q3 2017 at the earliest, although a CNY30,000/tonne DEL south China from
methyl di-p-phenylene isocyanate (MDI) company source said all its downstream mid-November to December.
and intermediate products due to issues in derivative plants will be up and running by
supply of feedstock nitric acid. mid-2017. The excessive rise in China domestic prices
could be partly attributed to panic buying
These operations were slated to return to From Q2 2017 onwards, the TDI market is as buyers were holding on to low TDI stock
full production on 11 December but there expected to return to the oversupplied state inventory due to suppressed TDI prices
have been no official updates on their it had been in early-2016 once Covestro, over the past couple of years and they
current status.

Covestro have been shipping cargoes


from its Shanghai plant to help support the
European market during this period, market
sources said, thereby resulting in lesser
supply availability in Asia.

An explosion and fire at BASFs


Ludwigshafen facility in Germany then took
place in the second half of October but at
the time BASF said that it was still supplying
TDI.

On 23 November, however, BASF


suspended all TDI production at the
facility for an indefinite period due to an
unspecified production problem.

On-spec production at the new 300,000


tonne/year plant has been delayed yet
again to April 2017 from its prior target of
end-October, according to a market source,

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
started to snap up cargoes when prices Middle East TDI prices peaked at $4,100/ November when prices started retreating
began to increase amid tighter supply. tonne CFR GCC (Gulf Cooperation Council) from their peak.
in October but the prices began to ease in
In October 2016, TDI import prices in Asia early November amid an ample availability Chinese foam makers, the downstream
and the Middle East took cues from China of cargoes from northeast Asia. Buyers also of TDI, have cut their production following
domestic prices and skyrocketed by over pushed for lower prices as more material the exorbitant surge in TDI domestic
$1,000/tonne in the short span of three became available. prices in October, thereby suppressing the
weeks as supply shortage sparked weeks consumption of both TDI and polyols.
of panic buying from customers. There were fears that prices would fall back
as quickly as they had risen but so far these TDI, when combined with flexible polyols,
Since November, prices have been on a fears appear unfounded. By late-November, find outlets in polyurethane (PU) foam for
downtrend but the pace of decline has been TDI prices were only down by about $500/ mattresses, furniture and automotive seats.
relatively moderate, and TDI prices have yet tonne CFR GCC from their October highs.
to retrace October moves. This correction
process is expected to extend into the first On the demand side, buyers have been
few months of 2017. adopting a wait-and-see stance since

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RUBBER
STYRENE BUTADIENE RUBBER (SBR)

ASIA SBR MAY RESUME GAINS


POST-LUNAR NEW YEAR
By Helen Yan

SINGAPORE (ICIS)--Asias synthetic rubber


(SR) prices are likely to be stable in early
2017, as trading activities and production in
the key China market will slow down ahead
of the Lunar New Year holiday in late
January, market players said.

But gains may be possible in February,


when market players are back from the
holidays, they said.

Overall market activity typically slows down


in the weeks leading to the Lunar New Year,
which falls on 28 January in 2017.

In the key Chinese market, the holiday is


celebrated for a full week. Factories in the
country are expected to wind down trades SBR and PBR are key raw materials in Similarly, NBR prices also surged by 29% in
and production from mid-January up to the production of tyres for the automotive the space of a month to $2,250/tonne CIF
early February, industry sources said. industry, while NBR is used in a wide range China on 22 December, ICIS data showed.
of automotive parts and components.
The factory workers, who are mostly BD spot prices in Asia have surged by
migrant workers, will stay back at their rural In light of the lull in activities and demand,
more than 40% over a period of one month
villages to tend to their family farms and spot prices for SBR, PBR and NBR are likely
because of tight supply, and the uptrend
some may not return to the factories, which to remain stable in early 2017 but should
is expected to continue into early January,
are mostly located in the coastal regions, a recover thereafter, market sources said.
market sources said. We expect prices in
Chinese synthetic rubber producer said. the first quarter of 2017 to remain stable, but
In December 2016, demand in the key prices [will] pick up after the Lunar New Year
The Lunar New Year is widely celebrated in China market has been strong as producers holiday lull, a synthetic rubber producer said.
Asia, including countries such as South Korea, have started building their inventories
Singapore, Malaysia, Vietnam and Taiwan. ahead of the Lunar New Year. A rubber trader said: The market has been
rather dull and lacklustre in the first half of
With downstream tyres factories and Spot prices of SBR 1502 rose by 17% from 2016, but has picked up significantly in the
automotive plants expected to run at reduced late November to $2,050/tonne CIF China fourth quarter and we expect 2017 to be a
capacities during the holiday, demand on 21 December, while PBR jumped by better year.
for synthetic rubber including styrene 30% over the same period to $2,275/tonne
butadiene rubber (SBR), polybutadiene CFR NE Asia on 22 December, according But there are still concerns over the
rubber (PBR) and acrylonitrile butadiene to ICIS data. US governments policy on trade and
rubber (NBR) is likely to remain limited. investment towards Asia, the trader said.

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ICIS offers regional price assessments and market Anticipate where the domestic Chinese SBR market Receive an end-to-end perspective across the global
analysis for the Asian SBR markets, including is heading and create robust plans for production and petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you investment activities. The study also includes supply the local or regional scenario in a global context. Data
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and settle your contract prices confidently with access capacity expansion plans, downstream demand plant capacities, production and product trade flows
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issues and developments in the market.

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SOLVENTS
ACETONE

CAPACITY EXPANSION TO market slump and the strain on producers (zero ADD basis, subject to import duty) on
EXACERBATE ASIA ACETONE margin prompted China-based phenol/ 2 December 2016, 89% above the trough
GLUT acetone makers to cap their overall in January.
By Trisha Huang utilisation rates at 50-60% capacity by
the fourth quarter of 2015, according to A previous force majeure (FM) declared by
MELBOURNE (ICIS)--The existing acetone estimates by market participants. Shell on base chemical supplies from its
supply overhang in Asia is expected to Pulau Bukom cracker complex had crimped
worsen in 2017 as the regions capacity In January 2016, spot acetone prices into Mitsui Phenols Singapores phenol/acetone
expansion outpaces the growth in demand. China, Asias biggest market, sank to a 14- output between December 2015 and end-
year low average of $385/tonne CFR (cost April 2016.
Asia, which already has about half the & freight) China on a zero antidumping duty
worlds phenol/acetone capacity, will see (ADD) basis, subject to import duty. Shells cracker outage also constrained
further capacity increase in 2017. China-based Changshu Changchun
The prices were last lower in March 2002, Chemicals Singapore cumene output
The anticipated commissioning of two new according to data compiled by ICIS. and its Changshu phenol/acetone plant
phenol/acetone plants is set to boost the operations.
regions acetone capacity by a further 6.5% The yuan-denominated domestic acetone
to 4.12 million tonnes by end 2017. prices in east China, a key market gauge, The commissioning of Thai producer PTT
plunged to an all-time low close of yuan Phenols new unit, PTT Phenol II, had
Following a pause in capacity addition in (CNY) 3,280/tonne ex-tank on 30 October been postponed from late 2015 to May
2016, phenol/acetone capacity in China is 2015, ICIS data showed. 2016. PTT Phenols plant operations were
set to increase in the second half of 2017 subsequently disrupted in August by an
as CNOOC and Shell Petrochemicals Co However, 2016 witnessed a heavy phenol/ explosion and fire at a waste water tank.
(CSPC) starts up a new plant. acetone plant turnaround schedule and a
string of accidents which, alongside the year- And in China, an outage at Changshu
The construction of Deepak Phenolics on-year drop in deep-sea imports and a pick- Changchuns waste water treatment facility
new phenol/acetone plant, Indias largest, up in Americas demand for Asian material in also prevented the producer from operating
is expected to be completed in the final the second half of the year, set the stage for its phenol/acetone plant between late July
quarter of 2017. acetone to make a spectacular comeback. and end-August.

Further afield, Petro Rabighs new phenol/ The CFR China acetone market closed at a A second force majeure declared by Shell on
acetone plant in Rabigh, Saudi Arabia is 20-month high of $727.50/tonne CFR China 29 September again curtailed Mitsui Phenols
expected to add a further 150,000 tonnes/
year of acetone to an already saturated
market in the second half of 2017.
The three new plants will add to the length
in supply even as Asian producers are
already grappling with excess capacity and
weak margins especially for primary product
phenol.

2016 saw the commissioning of two new


phenol/acetone plants in Asia: Thailands
PTT Phenol and South Koreas Kumho
P&B each started up a new plant, adding
335,000 tonnes/year to Asian capacity.

The new start-ups in Thailand and


South Korea came on the heels of the
commissioning of three new worldscale
phenol/acetone plants in China in the first
half of 2015.

The start-up of three new phenol/acetone


plants in China, the ensuing domestic

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Singapore and Changshu Changchun Demand growth for acetone is expected to tonne/year MMA plant while Dongming
Chemicals phenol/acetone output. again lag the gain in supply in 2017. Huayi New Materials is scheduled to
commission a new 50,000 tonne/year MMA
The evident strength in acetones In the downstream bisphenol A (BPA) plant, according to data compiled by the
supply/demand fundamentals and the sector, only Covestro is expected to bring China editorial team at ICIS.
comparatively soft conditions in the onstream a new 110,000 tonne/year line in
primary product phenol sector also led to China in the first quarter of 2017. Mitsubishi Rayon Co, parent company of
an accelerated narrowing in the spread MMA major Lucite International, plans to
between CFR China acetone and CFR Despite expanding acetone supply, none of start up a 250,000 tonne/year MMA plant in
China phenol prices in November 2016. the new methyl methacrylate (MMA) plants mid-2017 in partnership with Saudi Arabias
scheduled for commissioning in 2017 are SABIC. The plant will use the companys
However, by their nature, unplanned outages designed to use acetone as a feedstock. highly productive Alpha process.
are unpredictable and without unanticipated
cuts to supply, acetone is likely to return to a In China, the two new plants starting up Petro Rabigh, the joint venture between
state of oversupply next year. in 2017 will produce MMA using the C4 Japans Sumitomo Chemical and state-
process, through the direct oxidation of iso- owned energy firm Saudi Aramco, will also
The second half of 2017 is likely to see a butylene. commission a new 90,000 tonne/year MMA
return to 2015 and [phenol/acetone] producers plant in 2017 using the C4 manufacturing
margins will depend on their willingness to rein In the third quarter of 2017, Shandong Yidali process.
in output, an Asian trader said. plans to bring onstream a new 100,000

Company name Location Phenol Acetone Expected start-up


(kt/year) (kt/year)

CNOOC and Shell Huizhou, Guangdong 220 130 H2 2017


Petrochemicals Co (CSPC) province, China

Petro Rabigh Rabigh, Saudi Arabia 250 150 H2 2017

Deepak Phenolics Dahej, Gujarat State, India 200 120 Construction to be completed by Q4 2017

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analysis for the Asian acetone market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for acetone from 1978 up to 2030.

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SOLVENTS
PHENOL

ASIA PHENOL MAY SURPRISE TO


THE UPSIDE
By Trisha Huang

MELBOURNE (ICIS)The Asian phenol


market may surprise to the upside in 2017
as downstream capacity expansion and
potential project delays ease the imbalance
between supply and demand.

However, the dominant narrative of


overcapacity is unlikely to change.

The Asian phenol market has been mired


in an overabundance of supply for the
past two years as the commissioning of
new plants in China, Thailand and South
Korea outpaced the growth in downstream
demand.

The anticipated commissioning of two new


phenol plants in 2017 is set to boost the
regions phenol capacity by a further 6.6%
to 6.79m tonnes by end 2017. its phenol/acetone plant between late July Following a pause in capacity addition in
and end-August. 2016, phenol capacity in China is set to
Phenol market participants had braced increase in the second half of 2017 as
themselves for an avalanche of new A second FM declared by Shell on 29 CNOOC and Shell Petrochemicals Co
supplies this year. September again curtailed Mitsui Phenols (CSPC) starts up a new plant.
Singapore and Changshu Changchun
However, a heavy phenol plant turnaround Chemicals phenol output. The construction of Deepak Phenolics new
schedule and a string of accidents had phenol plant, Indias largest, is expected to
provided unexpected support to phenol But things quickly went south in the fourth be completed in the final quarter of 2017.
prices for most of 2016. quarter.
Further afield, Petro Rabighs new phenol
A previous force majeure (FM) declared by The restoration of supply at the end plant in Rabigh, Saudi Arabia is expected
Shell on base chemical supplies from its of the peak August-to-October phenol to add a further 250,000 tonnes/year of
Pulau Bukom cracker complex had crimped plant turnaround season in China, the phenol to an already saturated market in
Mitsui Phenols Singapores phenol output early November lifting of Shells second the second half of 2017.
between December 2015 and end-April 2016. force majeure, the year-end increase in
the supply of competitively-priced deep- However, judging by recent history, the
Shells cracker outage also constrained sea material, alongside the unexpected chances that the new plants will be delayed
China-based Changshu Changchun demand collapse caused by Indias surprise are very real, according to several market
Chemicals Singapore cumene output and demonetisation move on 9 November, sent participants.
its Changshu phenol plant operations. phenols premium to raw material benzene
plummeting in November. Perhaps only one of the three new projects
The commissioning of Thai producer PTT will begin commercial operations in 2017,
Phenols new unit, PTT Phenol II, had By their nature, unplanned outages are some market participants said.
been postponed from late 2015 to May unpredictable and without unanticipated
2016. PTT Phenols plant operations were cuts to supply, Asian phenol makers will 2017 will also see some catch up in
subsequently disrupted in August by an continue to grapple with the challenges of downstream demand.
explosion and fire at a waste water tank. an oversupplied market in 2017.
In the derivate bisphenol A (BPA) sector,
And in China, an outage at Changshu However, the glut of new supply that most Covestro is expected to bring onstream a
Changchuns waste water treatment facility market participants are expecting may not new 110,000 tonne/year line in China in the
also prevented the producer from operating materialise. first quarter of 2017.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
In addition, the first half of 2017 will likely The typical production ratio means that The surge in benzene prices in the fourth
see the commissioning of Chinas first Fujian Shenyuan may consume up to quarter of 2016, which has pummelled
phenol-based cyclohexanone (anone) plant 200,000 tonnes/year of phenol at full phenol makers margins, may also be a
by caprolactam (capro) and nylon producer operations. blessing in disguise, according to one
Fujian Shenyuan New Materials. school of thought.

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analysis for the Asian phenol market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for phenol from 1978 up to 2030.

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SOLVENTS
EPOXY RESINS

ASIA EPOXY RESINS PRICES SET


TO RISE ON FIRMER UPSTREAM
By Amy Tan

SINGAPORE (ICIS)--Asias liquid epoxy


resins (LER) spot prices may have room to
increase further in the first quarter following
recent gains in feedstock bisphenol A
(BPA), market sources said.

On 20 December, northeast Asian


producers were raising offers to around
$1,720/tonne FOB (free on board) NE
(northeast) Asia compared with deal done
levels at $1,620/tonne FOB NE Asia in the
previous week.

Asian iso-tank LER prices were stable at


$1,620-1,800/tonne FOB NE Asia for most
of the third quarter of 2016, according to
ICIS pricing data.

The low end of the price range reflects


offers into southeast Asia while the high end around $1,650/tonne FOB NE Asia on 20 One domestic LER producer said demand
of the price range reflects offers into Japan. December. from Japans construction and automotive
business sectors continue to support
We cannot continue offering cargoes at However, the bulk of northeast Asian demand for LER.
$1,620/tonne FOB NE Asia given the recent producers placed minimum workable
gains in feedstock BPA. We are not making levels at $1,700-1,720/tonne FOB NE Asia, Epoxy resins are used in downstream
any money at this price, said one northeast resulting in a buy-sell gap. sectors such as automotive and industrial
Asian producer. paints, electrical laminates as well as linings
While the outlook of raw material price for storage tanks.
While no deals were heard concluded movements is still unclear, some producers
at this price level yet, northeast Asian said they were looking at increasing prices Meanwhile, demand from the Middle East
producers are confident that buyers would further in mid-January. is expected to remain tepid due to the
eventually accept higher prices, given the availability of competitively-priced domestic
possibility of further upside to BPA costs. In 2016, demand for LER was stable in cargoes.
Japan compared with weak demand in
If customers are resistant to the higher southeast Asia, Europe and North America. Most of our regular customers in the
prices, it is likely they wont be able to get Middle East have been buying small
cargoes ahead of the Lunar New Year According to market sources, this stable quantities of cargoes in order to maintain
festival, said a separate northeast Asian demand is expected to extend to 2017. our business relationship. I dont think
producer. anyone there would import cargoes to
Offers for northeast Asian cargoes into stockpile since they can get domestic
Consequently, buyers were also heard Japan were heard at $1,900/tonne FOB NE cargoes easily, said one northeast
increasing their buying indications to Asia on 20 December. Asian producer.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
ASIA SOLVENTS SEEN STABLE TO to major Asian markets, China and India markets in the Asian region could boost the
FIRM ON HIGHER OIL PRICES though it was committed to cut production demand, but most said that the increased
By Angeline Soh by 210,000 bbl/day. demand may not be able to offset the falling
demand in other countries.
SINGAPORE (ICIS)--Asia isopropanol, POOR DEMAND
methyl ethyl ketone (MEK) and methyl If the solvents lose their bolster from the SUPPLY GLUT
isobutyl ketone (MIBK) prices are expected upstream markets, prices may tumble, In addition, the persistent supply glut has
to be stable-to-firm in 2017 on the back of due to their dwindling demand from poor been consistently weighed on the prices.
higher feedstock crude oil prices, according downstream performance since crude New plant start-up may further weigh on
to industry players. prices crashed in 2014. prices. However, while some plants are
slated to come on stream, the exact dates
An agreement between the Organization of Some players are hopeful that the emerging are not confirmed.
the Petroleum Exporting Countries (OPEC)
and several non-members to cut production
by 1.2m bbl/day kicked in on 1 January, The downstream end-user markets for individual solvents:
which caused a sharp rally in crude oil prices.

These OPEC producers include including


Kuwait and Saudi Arabia. Other non-OPEC
producers and Russia will seek to reduce
by 50%.

Solvent market players in Asia are hopeful


that prices will rise in the longer term, after
two years of supply glut.

Goldman Sachs has raised its WTI price


forecast for the second quarter of 2017 to
$57.50 per barrel from $55.

Players added that the higher feedstock


crude prices will have a strengthening impact
on downstream petrochemicals prices,
including solvents IPA, MEK and MIBK.

However, some cautioned that the crude


prices may remain flat if production remains
high. Iraq, OPECs second-biggest producer
after Saudi Arabia, has increased sales

Product Country Demand pre-crude crash (mt/year) Demand post-crude crash (mt/year)

IPA Japan 130,000 100,000

IPA S Korea 90,000 80,000

MEK S Korea 100,000 90,000 and below

MEK China 290,000 280,000 and below

MIBK China 150,000 in 2010; 110,000 in 2013 90,000-100,000


Country Product Demand previous (mt/year) Demand current (mt/year)

India IPA 100,000 110,000

India MEK Below 30,000 30,000-40,000

Vietnam MEK Less than 10,000 in 2010 20,000

Philippines MEK 8,000 anticipated to grow to double-digits in five years

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
Product Company Capacity (mt/year) Location Start-up

IPA Superchem 50,000 Map Ta Phut, Thailand Unknown

MEK Hubei Zhongchuan 100,000 Hubei, China Unknown

MEK Taizhou Petrochemical 80,000 Taizhou, China Unknown

MEK Zibo Qixiang 30,000 Zibo, China Unknown

MIBK Zhongneng Petrochemical 30,000 Guangdong, China

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understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for solvents from 1978 up to 2030.

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SURFACTANTS AND OLEOCHEMICALS
FATTY ALCOHOLS/FATTY ACIDS

ASIA AE Q1 TO BE SUPPORTED BY
FIRM UPSTREAM MARKETS
By Jeslyn Lerh

SINGAPORE (ICIS)--Asias spot fatty alcohol


ethoxylate (AE) market may be buoyed in
the first quarter, with prices expected to be
driven by trends in the upstream fatty alcohol
(C12-14) and palm kernel oil (PKO) prices,
industry sources said.

AE prices have been trending higher since


July last year, amid climbing C12-14 prices
and stable downstream demand.

Spot AE prices in China rose to an average


of $1,560/tonne CIF (cost, insurance and
freight) China in end-December, gaining
around 18% in the second half of 2016,
according to ICIS data.

Meanwhile, prices in southeast Asia rose to


an average of $1,575/tonne CIF Southeast
Asia in end-December, gaining around 18% unlikely to take a plunge in the near term In the domestic Chinese market, the outlook
over the same period, the data showed. based on palm kernel oil price trends. is uncertain ahead of the Lunar New Year
holiday which begins on 28 January.
This week, spot prices surged to approximately PKO is the feedstock for C12-14.
$1,650/tonne CIF China and Southeast Asia Restocking activities may gain after the
following a further uptick in feedstocks. Demand for AE is likely to sustain throughout festivities, providing further uptick in AE
the year due to stable consumption patterns prices, market sources said.
Most producers said they are likely to keep in downstream AE products, including
prices steady in the first quarter, to recover laundry detergents, cleaning agents, leather In the meantime, some sellers are
margins from rising C12-14 feedstock costs cleaning and textile auxiliaries. expecting stable offtake ahead of the
over the second half of last year. festivities, in light of more spring-cleaning
On the supply front, there are no additional activities ahead of the New Year which may
Despite some signs of softening in plans for capacity expansion in the near boost demand for AE products.
November last year, C12-14 prices are term, producers said.

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UPSTREAM FEEDSTOCKS
NAPHTHA

ASIA NAPHTHA MARKET TO SEE be the highest level in at least six months, More producers are switching to cheaper
LIMITED BULLISH FACTORS according to traders. LPG cracker feedstock over naphtha, the
By Melanie Wee source said.
Deep-sea supply flows at around 1.2m
SINGAPORE (ICIS)--Asias naphtha tonnes are already expected to land in Asia LPG presents better economics for regional
markets are likely to see limited bullish in December, up from around 600,000- petrochemical producers, while the naphtha
factors at least in the early half of 2017 700,000 tonnes estimated in November, market is awash with supply. The gas
on account of increased transatlantic deep- traders said. feedstock was estimated to be cheaper by
sea supply and a greater use of competing about $30-40/tonne compared with naphtha
liquefied petroleum gas (LPG) feedstock, The recent rally in crude oil futures following for now, traders said.
market sources said. a deal among global producers to trim
output has generated downward pressure Meanwhile, expansion is on the cards for
Weak market fundamentals might persist on naphtha crack spreads, even as Asia Asia-Pacific crackers and refineries.
through next year against a backdrop of a naphtha physical prices were driven up by
recent crude oil rally and growing availability gains in crude oil futures. In South Korea, Lotte Chemical plans to
of naphtha cargoes in the region. expand the ethylene capacity of its Yeosu
As of 9 December, Asias naphtha crack cracker to around 1.2m tonnes/year by
Q1 [the first quarter] could be supported spread versus February ICE Brent crude 2018 from the current 1m tonnes/year,
[by] seasonal demand but its was assessed at $55.83/tonne, levels not according to sources with knowledge of the
suppressed by more arbs [arbitrage seen in seven weeks. matter.
cargoes] coming in December and
January, a southeast Asia-based market The spread was down from $58.60/tonne In India, Bharat Petroleum Corp Ltd (BPCL)
source said. on 8 December and $61.00/tonne on 2 has ongoing expansion at its 190,000 bbl/
December, according to ICIS data. day Kochi refinery. The refinerys capacity
But moving forward in the year [2017] will will be raised to 310,000 bbl/day by March
be a bit more bearish with some crackers The [flipped] contango market is caused 2017, according to a source familiar with
moving to run more LPG 88-Ron by arbitrage [flows], combined with a the matter.
[gasoline] Indonesian demand [could] narrower naphtha and liquefied petroleum
drop, so naphtha blending demand will be gas (LPG) spread, a regional market Meanwhile, naphtha consumption from key
lessened, the source said. source said. importer China has slowed. In October, the

Asias naphtha forward time spread


had flipped in early December from a
backwardation to a contango, which
deepened on expectations of increased
arbitrage flows from the West.

A contango market structure reflects weak


fundamentals, with prompt month prices
lower than forward months.

On 9 December, the forward time spread


between the second half of January and
the second half of February was assessed
at a contango of $2.00/tonne, wider than
the 50 cents/tonne contango recorded
on 2 December. The spread was at a
backwardation of 50 cents/tonne on 1
December.

Arbitrage cargoes estimated near 1.5mn


tonnes are expected to arrive in Asia in
January. The volume coming from the
Mediterranean and northwest Europe will

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
countrys naphtha imports stood at 338,769 The spread between naphtha and benzene such as LPG and ethane, with new ethane
tonnes, down 27% year on year and 24% consequently spiked to above $390/tonne crackers coming online in the US and
lower month on month, according to China as of 9 December from around $172/tonne elsewhere, said Trafigura head of oil and
Customs data. at this time last year, ICIS data showed. petroleum products trading Jose Larocca in
the report.
But the market took heart from overall In the coming months, naphtha is expected
positive economic data in China, helping to to feel the pressure from having to compete Key to success will be finding ways of
cushion the negative sentiment. with other available feedstocks like LPG. maximising other uses of naphtha into
gasoline blending, splitting, or as a diluent
Chinas official manufacturing purchasing Most crackers in Asia use naphtha as for crude oil, Larocca said.
managers index (PMI) rose to a two-year feedstock for production, but can substitute On 2 December, naphtha-based ethylene
high of 51.7 in November, up from 51.2 in a portion of the feed with LPG. margins in northeast Asia stood at $665/
October. tonne, down by some 0.3% from the
Commodities trader Trafigura expects 2017 previous week. LPG-based margins in the
The PMI is a barometer of an economys to see a heavy surplus of oil products, region rose by about 5.1% to $613/tonne
manufacturing activities, with a reading of particularly diesel and naphtha, it said in its in the same comparison, according to ICIS
50 or higher indicating an expansion, while 2016 annual report. weekly margin report.
a number below that denotes a contraction.
Looking forward, we expect naphtha
In downstream benzene markets, robust to continue to lose ground in the
China demand has pushed up spot prices. petrochemical complex to other feedstocks

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price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for naphtha from 1978 up to 2030.

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UPSTREAM FEEDSTOCKS
METHYL TERTIARY BUTYL ETHER (MTBE)

ASIA MTBE MAY SEE LONGER Separately, the US-Asia arbitrage spread activity is not the worst among the lot and
SUPPLY AMID CHINA WILDCARD was also opened during the same period this has proved to be the key for more
By Trixie Yap and there were cargoes of at least 15,000- producers trying to sell cargoes there, a
20,000 tonnes of MTBE heading to Western-based trader said.
SINGAPORE (ICIS)--Asias methyl tertiary Singapore, Taiwan and China. This was the
butyl ether (MTBE) market is expected to second arbitrage phenomenon not seen in Furthermore, with supply in markets such
see longer supply mainly from the Middle the past two years, market players said. as the US dependent on propylene oxide
East in 2017, with Chinese importers to (PO) margins because of swing PO/MTBE
continue being the demand wildcard, plants, there is an even higher likelihood
market participants said. The 2016 arbitrage trade flow and evidently of deep-sea cargoes adding on to the
higher FOB Singapore and CFR China lengthening supply situation in Asia.
While market players expected gasoline prices, in comparison to US gulf and FOB
demand in regions such as Europe, the Rotterdam prices, have set the stage for If PO margins stay healthy, of course
US and Asia to be a firm supporter of sellers in 2017 to shift their focus to Asias these swing producers will maximise their
MTBE prices in 2016, the market moved import market. production and have more MTBE since it
in a different way as consumers stockpiled is just a by-product, one northeast Asia-
gasoline on expectations of a rise in prices. Already, some of them mainly the Middle based producer said.
As a result, the demand in both Europe and East-based producers have indicated
the US were lower than expected. their interest to maximise and increase their
To match up with this increment in supply,
contractual volumes heading to Singapore
regional market players are hoping that
This led to deep-sea sellers offloading or northeast Asia such as Taiwan, several
Chinese import demand will be the key
MTBE cargoes into Asia instead because of market sources said. wildcard for 2017. Chinese buyers had
the opened arbitrage spread in most parts of exceeded all expectations for 2016,
the year in 2016. There is a firm interest from these importing a total of 368,885 tonnes of
producers to shift their focus from Europe or MTBE, according to customs data.
The opening of the Europe-Asia arbitrage US back to Asia, just because 2016 proved
spread was the most unexpected of that Asian importers had the strongest An open CFR China-FOB Singapore
all because usually we send cargoes buying appetite, a southeast Asia-based arbitrage spread (please see graph on
to Europe instead since there is better trader said. next page), workable distributor margins
blending demand in that region, one and better-than-expected demand in the
Singapore-based trader said. While exact estimates could not be wholesale gasoline trading market were key
confirmed, most MTBE blenders and factors in the unexpectedly large volumes
The Europe-Asia arbitrage spread was traders say they are expecting an increase arriving at south and east China shores up
opened for almost the entire first-half of of at least 30-40% in quantities coming from to November 2016.
2016 and this caused several swing these producers.
traders to redirect their Middle East-origin Therefore, market players are mostly
material into Asia instead because of the Even though MTBE demand has not been placing their bets on Chinese demand
better netbacks. fantastic for most of 2016, Asias gasoline to continue to provide support to the
increasing supply fundamentals at least up
to the Lunar New Year period.

Furthermore, with the implementation of


Guobiao V gasoline standard in all cities
and provinces together with Beijing VI
gasoline standard by 1 January, hopes that
Chinese import demand for MTBE have
been staying afloat.

However, much of the wildcard nations


demand for imports will rest on the supply
sufficiency within its domestic market.

Already, talks of some north Chinese


producers such as Heilongjiang Anruijia

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There are heavy expectations that teapot
refineries will redirect their focus to the
domestic selling activities because of this,
which could in turn have an impact on the
amount of gasoline blending activities by
private blenders.

If Chinese demand fails to neutralise the


supply rise, potentially better blending
demand within southeast Asia for the first
quarter of 2017 may absorb all these cargoes.

Market players are expecting some gasoline


demand increase from regions such as
Indonesia because of turnarounds such as
Pertaminas Balikpapan refinery in March,
but Singapore-led demand for MTBE will
restarting their 300,000 tonne/year unit after plant, which has been delayed for at least a still be heavily dependent on whether prices
a long hiatus following their successful year, in June-July 2017. hit the workable blend value level.
procurement of raffinate feedstock from
Russia have led most market players to MTBE import demand will also be heavily Already, buying interest for January and
believe that domestic China will still see dependent on the uncertain gasoline February MTBE shipments has been strong
lengthening supply in 2017. demand-supply landscape in local China, because of better-than-expected gasoline
after the government delayed the issue blending activities, which were attributed to
Sinopec Huntsman Jinling has also of gasoline export quotas for Chinese stronger gasoline demand from Indonesia
scheduled to start up its PO/MTBE swing independent teapot refineries for 2017. and lower exports from India following a
prolonged turnaround at a key refiners unit.

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price histories and expert commentary to help you markets. Our market-moving news articles cover the local or regional scenario in a global context. Data
understand the key price drivers and market conditions production updates, plant capacities, output and includes import and export volumes, consumption,
and settle your contract prices confidently with access shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for MTBE from 1978 up to 2030.

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OTHERS
BASE OILS

NE ASIA GROUP II BASE OILS


PRICES LIKELY STABLE-TO-FIRM
IN Q1
By Jasmine Khoo

SINGAPORE (ICIS)--Northeast Asias


Group II base oils spot export prices are
poised to either hold steady, or register
gains, in the first quarter of 2017 on the
back of stable demand but tight availability,
market sources said.

Low spot inventories among Group II


regional refiners, especially for high
viscosity grade 500/600N, led the majority
of sellers to either hold on to existing
workable selling indications or offer at
higher levels.

Market sources added that largely


unchanged demand conditions in the
fourth quarter of 2016 also played a part in
stabilizing spot prices.

Traditionally in the fourth quarter, demand base oils were mostly kept buoyant by the I got offers for which I would have to
wanes as buyers and traders attempt to snug spot availability, sources said. purchase in the ratio of 1:3, with 150N
keep inventories lean ahead of the closing volumes being three times that of
of accounts. For December-loading cargoes, some 500/600N. 500/600N cargoes are really
Group II refiners maintained that they have tight in supply now, the northeast Asian
Price declines can also be observed limited spot lots to sell, especially for heavy buyer added.
especially since sellers usually cut offers to grade 500/600N.
encourage cargo uptake among customers Spot supply conditions in the first quarter
to bring seller inventory levels down. Buyers echoed similar sentiments, adding of 2017 look tight because of scheduled
that they faced difficulty in obtaining turnarounds, a northeast Asia-based Group
However, the fourth quarter of 2016 defied December shipment spot cargoes from II refiner said.
traditional expectations, most market regional Group II refiners.
players said. With scheduled turnarounds coming up
I did not receive any offers for December- in the first quarter for some refineries, be
Scheduled shutdown maintenance, loading cargoes as most of the South it Group I or II base oils, supply would
persistent plant issues and contractual Korean refiners do not have spot cargoes to undoubtedly be compromised. Furthermore,
commitments resulted in a market in offer, a southeast Asia-based buyer said. during supply crunch periods, we would
which availability of Group II spot cargoes typically receive requests for more cargoes
remained tight. We are now mostly relying on our term from our term customers, so spot availability
volumes for supply. It is unlikely that would most likely be affected, the refiner
Group II heavy grade material 500/600N January supply would be any different from added.
was comparatively tighter in supply against Decembers, the buyer added.
low viscosity grade 150N, as some refiners Most market participants were of the
kept their 500/600N for captive usage in A separate northeast Asian buyer said if the opinion that spot prices for Group II cargoes
downstream lubricants production. refineries want to sell 500/600N, they would could register further gains going forward
almost surely try to bundle it with 150N so into the first quarter, especially since
As a result, spot prices throughout the as to liquidate the more amply-available Januarys spot supply is poised to remain
earlier part of the fourth quarter for Group II grade. snug as well.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
ASIA GROUP I BASE OIL SPOT about by lacklustre demand in the year end Furthermore, unlike previous years whereby
PRICES TO HOLD STABLE-TO-FIRM ahead of the closing of accounts. Lunar New Year fell in February, 2017s
IN Q1 Lunar New Year period is set to commence
By Jasmine Khoo Other factors which contributed to the earlier in late January 2017.
softening prices included stiff competition
SINGAPORE (ICIS)--Asia group I base oils from other base oils groups such as Group With Lunar New Year coming earlier in
spot prices are set to stand largely stable- II 150N and 500N, which could replace 2017, we saw an increased number of
to-firm in the first quarter of 2017 as a Group Is SN150 and SN500 for some enquiries from mostly northeast Asian
result of well-balanced demand and supply downstream applications, market sources buyers, who said that they were hoping for
conditions, market sources said. said. the cargoes to arrive in January, ahead of
the Lunar New Year festivities, a northeast
Market players mostly described the fourth Back then in 2014, new start-ups in the third Asia-based Group I refiner said.
quarter of 2016 as being significantly quarter of the year had led to increased
different from that of the past years such supply of Group II base oils, which exerted These enquiries for December or early-
as 2014 and 2015, when spot prices had downward pressure on Group I numbers, January shipment cargoes are significantly
registered steep drops. sources added. more compared with the previous years,
the refiner said.
According to ICIS data, spot prices for As for 2016, spot prices for Group I base
SN500 shed 16%, falling from an average oils saw price stability for the early fourth A regional buyer looking for the material
of $580/tonne FOB (free on board) Asia quarter as spot supply was snug among echoed similar sentiments.
to $485/tonne FOB Asia during the period some regional refiners due to shutdowns
from 2 October to 25 December in 2015. and contractual commitments, market We are seeking to replenish inventories
players said. and stock up on Group I material ahead of
ICIS data also showed that a separate the Lunar New Year festive holidays, and
Group I grade, brightstock, observed There is no need for us to actively cut are currently gearing up for negotiations for
declines when prices went down from $940/ prices to encourage cargo uptake among December-loading spot cargoes, the buyer
tonne FOB Asia to $910/tonne FOB Asia buyers this fourth quarter. Buyers are said.
amid tepid demand during the same time purchasing spot lots regularly and we are
period. also grappling with healthy demand in the With this Decembers demand conditions
domestic market, a regional base oils comparatively healthier than the past years,
Back in 2014, spot prices for Group I Group I refiner said, most market players held on to a more
base oils had also decreased in the fourth optimistic outlook for the near-term price
quarter, with brightstock experiencing As a result, discussions for most movement, adding that declines in Group I
significantly hefty drops of around 10% in December-loading cargoes were range- spot prices were unlikely.
prices, according to ICIS data. bound within the existing ICIS assessed
ranges, prompting expectations of largely
During the fourth quarter for both 2014 and stable spot prices among regional market
2015, price declines were largely brought participants.

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analysis for the Asian base oils market, including breaking news and analysis across the global market is heading and create robust plans for
price histories and expert commentary to help you petrochemical markets. Our market-moving news production and investment activities. The study also
understand the key price drivers and market conditions articles cover production updates, plant capacities, include supply and demand forecast data, import/
and settle your contract prices confidently with access output and shutdowns, plus so much more. export levels, capacity expansion plans, downstream
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OTHERS
CAPROLACTAM

ASIA CAPRO MARKET OPTIMISTIC The caprolactam spread against benzene


ON SUPPLY CONSOLIDATION Global capacity reductions are expected to spot prices hovered around $500-700/tonne
By Leanne Tan have an impact on annual contractual capro for most of 2016.
volume discussions for 2017.
SINGAPORE (ICIS)--Asias caprolactam According to market players, a healthy
(capro) market players are cautiously Market players estimated that the German spread between the two products should be
optimistic that 2017 will see better margins producer BASF exports around 7,000 around $800-1,000/tonne.
following global supply consolidation in tonnes/month of capro under contracts to
2016, industry sources said. buyers across Asia. Market players say that margins in late 2016,
following steep gains in import prices, have
The global capro industry has begun to As the year-end approaches, most capro improved significantly from previous years,
show signs of consolidation in late 2016, market players in the region are gearing up and many were hopeful that the current spread
with several major producers in the US and for year-end contract discussions regarding could be maintained in the coming year.
Europe announcing plans to scale down capro volume obligations for the next year
productions at their production facilities. Some buyers may be looking to plug any Market players are also braced for changes to
gaps in requirements [caused by BASFs trade flows across the globe that may come in
In late June, Fibrant announced plans plant shutdown], the producer said. 2017, amid consolidation in the capro market.
to close its capro production facility in
Augusta, Georgia. The plant, which has an Most producers in Asia and east Europe are With Fibrants ceasing of operations at its
estimated 205,000 tonnes/year capacity, hopeful that the reduction in global supply production facility in Augusta, Georgia,
has since closed in late 2016. could support capro prices in the coming year, supply of capro in the US market is
and allow them to generate better margins. expected to become increasingly tight.
Less than three months later, German-
based producer BASF announced in early Capro spot prices experienced an Suppliers in the US are likely to divert cargoes
September its plans to shut down 100,000 unprecedented surge late in 2016, up by currently sold to Asia to buyers in America,
tonnes/year of its capro production capacity around 22% from mid-November to mid- where they are able to fetch better margins.
at the companys Ludwigshafen flagship December, fuelled by firm upstream feedstock
chemical complex due to unfavourable benzene prices and a tighter supply. Some capro buyers in the US were heard
market conditions. to already be making enquiries for spot
Many global producers of the material have availability from producers in Asia and
Despite huge growth in capro capacities previously struggled with eroded margins Europe as of late 2016, and some market
in China in recent years, Asia remains as the capro industry has been structurally players mulled the possibility of more
a net importer of caprolactam importing oversupplied, following a wave of new cargoes flowing from Asia and Europe into
significant volumes of capro from producers Chinese capacities that came on stream in the US in 2017.
mainly in Europe, and some smaller recent years.
volumes from the US. As such, most market players expect
Competition from Chinese producers supply of capro in 2017 to be relatively tight
According to estimates from industry resulted in plummeting capro prices over in comparison to 2016, which may help
sources, China alone takes in around the past two years, reaching levels deemed support prices and improve margins for
223,000 tonnes of imported material unsustainable for some producers. producers in Asia in the coming year.
annually, 60% of which is from Europe.

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analysis for the Asian caprolactam market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for caprolactam from 1978 up to 2030.

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OTHERS
CAUSTIC SODA

ASIA CAUSTIC SODA MULTI-YEAR


HIGH PRICES TO ROLL INTO Q1
By Kite Chong

SINGAPORE (ICIS)--Asia liquid caustic


soda prices may not see the same price
surge - which it underwent in the second
half of 2016 year - or maybe just soften very
slightly, in the first quarter of next year as
supply improves but market participants do
not see a major fall.

Most market participants agree that current


levels cannot not be sustained for long but
they also feel that a new norm will be set
in 2017, which would be higher than spot
prices in the earlier half of 2016.

Due to the various environmental


inspections carried out in 2016 and likely
in the earlier months of 2017, some of the
older, more polluting chlor-alkali plants will
be forced to cease operations, reducing the
overall capacity in China. Liquid caustic soda prices were relatively As a result, chlor-alkali producers were
stagnant from January to late July 2016, unable to operate at high rates, resulting in
Chinese export availability should remain fluctuating within a narrow range of $285- rising caustic soda prices.
limited in the first quarter of 2017 as plants 297.50/dmt (dry metric tonne) FOB (free on
lower their operating rates due to the Lunar board) NE (northeast) Asia. With extremely attractive domestic Chinese
New Year celebrations in late January; prices and limited volumes, producers were
chlorine demand is traditionally extremely However, spot prices continued to surge till only willing to offer to the export market at
weak during this time, leading to lowered year-end, hitting a multi-year high of $420/ firmer prices.
chlor-alkali operating rates. dmt FOB NE Asia on 9 December, largely
because Chinese supply tightened. Japanese and South Korea cargoes were
Similarly for South Korea, total chlor-alkali more limited in the last quarter of 2016,
capacity will be slightly lowered moving A series of environmental inspections in late leaving many buyers with little alternative
forward as the expansion at one of a major July to August were conducted ahead of the but to purchase Chinese volumes.
producers plants will not be enough to fully G20 Conference held in Hangzhou, China
replace the sale of its other plant. in early September, causing a number of Japanese producers were unable to supply
chlor-alkali plants and chlorine end-users more spot volumes during the second
Similarly in South Korea, a major producers to shut down their units, or lower their half of the year due to turnarounds, and
expansion at its chlor-alkali facility was only operating rates. contractual obligations.
expected to come online in March 2017.
However, even with the conclusion of In addition, they were unwilling to divert
Producers in Japan might be able to offer the G20 Conference, the environmental volumes from the domestic market to the
more spot volumes in 2017 as they signed inspection did not cease, resulting in export market, despite stagnant domestic
less term contracts, but this could not be persistently subdued demand for chlorine. prices, as they would have to give up their
confirmed with all producers. local market shares.
China domestic prices fell into the
Japanese producers would not have negatives, as some chlor-alkali producers South Korean producers also offered limited
much spot volumes due to heavy contract struggled with the high inventories. cargoes over the same period.
commitments at the start of the year.
In the third quarter, some sellers in China Besides contractual obligations, a major
The first quarter of 2017 might see slightly encountered logistical difficulties in producer sold off and ceased operations
softer prices but not by much, some market transporting chlorine out of their factories at one of its chlor-alkali plant while another
players said. due to adverse weather. major producer lowered its chlor-alkali

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
operating rates due to poor margins caused started firming more sharply in the third hampered in their negotiations with northeast
by poor chlorine derivative prices. quarter, they eventually accepted higher Asian sellers due to anti-dumping duties.
prices, although many buyers were heard
The tight supply situation was slightly eased to have reduced their purchasing volumes Indian buyers were unable to accept the
by a major southeast Asian producer who or delay their purchases repeatedly in an sudden gains in export offers from northeast
started offering one spot cargo monthly in attempt to hold out for lower prices. Asia, resulting in a widening price gap.
the last quarter of the year.
Others bought domestic volumes instead. Near the end of 2016, there was a
A company source expected that they noticeable slowdown in price increases.
would be able to continue doing so Buying interest from the US West Coast
assuming smooth operations. remained stable despite the uptrend in prices. Domestic Chinese prices started to soften
as supply built up, leading to more Chinese
While buyers initially resisted the increase Spot sales to India, however, virtually producers turning their attention back to the
in spot offers, especially when prices stopped. Indian buyers were already export market.

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OTHERS
EPICHLOROHYDRIN (ECH)

ASIA ECH SELLERS SEEK


ALTERNATIVE MARKETS TO CHINA
By Amy Tan

SINGAPORE (ICIS)--Epichlorohydrin (ECH)


sellers in Asia are seeking alternative
markets to China, where a wide buy-
sell gap is expected to persist into 2017,
industry sources said.

They are looking at markets in India,


Europe and North America where
margins were said to be higher.

China, a key MA market in Asia, has been


importing the material mostly under term
contracts since the second quarter of 2016,
as a huge gap between buying and selling
ideas in the spot market has prevailed,
market sources said.

Asian producers have been reiterating


since August that their lowest workable
offers at above $1,200/tonne CFR (cost and Most Asian ECH producers may shun the The domestic offers were at their lowest
freight) CMP (China Main Port) on the back Chinese market in the near term amid the last year as the producers were absorbing
of firmer feedstock propylene prices, but current buy-sell gap, industry sources said. the higher costs of propylene, to compete
buying indications have remained at around with imports amid a general weakness
$950/tonne CFR CMP. Buyers based in China said there was no in demand.
need for them to import cargoes if domestic
Meanwhile, selling indications for northeast producers continue to offer competitively- Some Asian producers have stopped
Asian cargoes to Europe and North America priced cargoes. entertaining enquiries from China as they
were higher at around $1,200-1,500/tonne deemed it pointless to negotiate with buyers
FOB (free on board) NE Asia (northeast Domestic ECH producers in the country since no actual deals were being done,
Asia) on average, market sources said. were offering cargoes at an average of yuan market sources said.
(CNY) 8,500/tonne DEL (delivered) east
To the Indian market, selling indications China, which has an import party of $1,179/ To tackle weak ECH demand, some
were at around $1,200/tonne FOB NE Asia tonne, industry sources said. producers were contemplating lowering the
on average. operating rates at their plants in 2017.

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histories and expert commentary to help you markets. Our market-moving news articles cover the local or regional scenario in a global context. Data
understand the key price drivers and market conditions production updates, plant capacities, output and includes import and export volumes, consumption,
and settle your contract prices confidently with access shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for ECH from 1978 up to 2030.

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OTHERS
MALEIC ANHYDRIDE (MA)

MA MAY GAIN ON HIGHER excluding China, the bulk of MA facilities are MA exports have been limited since 2013
FEEDSTOCK COSTS butane-based. even though prices of Chinese benzene-
By Amy Tan based MA are on par with butane-based
Meanwhile, spot benzene prices in Asia material.
SINGAPORE (ICIS)--Spot prices of maleic surged above $900/tonne on 8 December,
anhydride (MA) briquette are expected to tracking sharp increases in the Chinese Buyers in southeast Asia said at current price
trend higher in January amid recent gains domestic market, according to ICIS data. levels, they are not eager to stock in excess.
in the feedstocks butane and benzene
markets, industry sources said. Only two companies in Asia outside of Price expectations from buyers are very
China Japans Nippon Shokubai and low but we feel that soon inventory will
Since mid-November, MA prices have been Indonesias Justus Sakti Raya produce reduce and buyers will start accepting the
stable at a one-year high of $1,050-1,060/ MA using benzene as feedstock. They new prices, said one regional producer.
tonne CFR (cost and freight) SE (southeast) account for about 11% of the total MA
Asia, ICIS data showed. nameplate capacity in Asia outside China, Most butane-based and benzene-based
according to ICIS data. producers said they were looking to
Suppliers were hesitant to lower offers in increase MA offers in January as their
spite of the recent decline in butane prices, In China, most producers use benzene as margins are being squeezed by higher
as their margins were squeezed by the high feedstock for MA production. The countrys feedstock costs.
cost of the feedstock since August.

December butane contract prices fell by


$20/tonne from the previous month to $420/
tonne FOB (free on board) Ras Tanura,
bucking expectations of an uptrend.

Butane prices traditionally increase towards


year end with the approach of winter due to
higher consumption for heating purposes,
market sources said.

Winter seems to have arrived later this


year [2016] so I expect the demand for
butane to pick up in January. As such, I may
consider raising minimum workable offers
for MA to $1,060/tonne CFR SE Asia, said
one northeast Asian producer in December.

Both butane and benzene can be used


as feedstock for MA production. In Asia,

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
OTHERS
METHYL METHACRYLATE (MMA)

ASIA MMA MARKETS LIKELY


STABLE; EYES ON SUPPLY
By Melanie Wee

SINGAPORE (ICIS)--Spot methyl


methacrylate (MMA) markets in Asia are
poised to hold stable going into 2017 on
expectations that supply will stay snug and
demand steady, producers and industry
players said.

MMA prices have registered substantial


gains in the last quarter of 2016, bolstered
by a persistent tight supply situation in the
Asia-Pacific region.

This was in part triggered by a combination


of plant shutdowns, both planned and
unplanned, along with a steady flow of
enquiries for regional MMA cargoes.

The MMA availability shortfall has had


a trickle-down effect on downstream
polymethyl methacrylate (PMMA) markets.
PMMA production was affected due to index (PMI) rose a two-year high of 51.7 in The start-up [of a new plant] is one thing
shortage of raw material supply. November, up from 51.2 in October. producing on-spec material commercially is
another, a separate southeast Asia-based
Meanwhile, term and frame contract The PMI is a barometer of an economys market source said.
negotiations for 2017 were ongoing at manufacturing activities, with a reading
the time of writing, while overall market of 50 or higher indicating an expansion, In Saudi Arabia, a 250,000 tonne/year MMA
sentiment was optimistic. while a number below that denotes facility is due to come on stream in 2017.
a contraction. The plant is a joint venture (JV) between
There are no additional [MMA plant] Mitsubishi Rayon Co and SABIC.
capacities coming up yet at least for the Some customers asking for December Their downstream 40,000 tonne/year
first-half of 2017 so the market will still [MMA] supplies maybe they anticipate PMMA plant is also set to come on stream
be tight, a southeast Asia-based market prices to go up, so the tight situation will in the second half of 2017.
source said. likely continue, a northeast Asia-based
market source said. Meanwhile, construction of Petro Rabighs
Maybe there will be [price] fluctuations new 90,000 tonne/year MMA plant, also in
along the way, depending on seasonal A second southeast Asia-based source Saudi Arabia, is scheduled to be completed
demand but a stable to firm trend is said: The first half [2017] shouldnt be as next year, market sources said.
likely, the source said. tight as currently but spot [supply] may not
be as easy to get. Petro Rabigh is a joint venture between
There were market participants who Japans Sumitomo Chemical and Saudi
envisage potential MMA growth in cast New MMA plant capacities are expected to Aramco.
sheet and emulsion resins applications. come on stream near the third quarter of
2017, but there might be possible delays. MMA is used as a raw material in the
The market took heart from steady markets, The actual impact on market fundamentals production of PMMA resins, a type of
at least in China. The countrys official is difficult to ascertain for now, market engineering plastic.
manufacturing purchasing managers sources said.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
OTHERS
PARAFFIN WAX

ASIA PARAFFIN WAX TRADE


UNLIKELY TO REBOUND
SIGNIFICANTLY
By Melanie Wee

SINGAPORE (ICIS)--The paraffin wax


market in Asia is likely to remain in a
stalemate in the near term, with industry
sources expecting trade to remain slow on
the whole.

In key export market China, offtake may


be limited in January ahead of the Lunar
New Year festivities at the end of the
month. Market participants are expecting
more spot trade to take off from
February onwards.

China goes on holiday for the Lunar New


Year from 27 January.

However, some sources cited other


factors of concern which may hinder trade
going forward.
Business seems to be getting worse every However, other challenges existed for
The greatest challenge is that this market year, the same trader added. paraffin wax import trade to India, way
is too stable. It is hard to get something before the demonetization policy.
going on, except during the seasonal Demand in the southeast Asian import market
periods, a Chinese trader said. is expected to be largely stable throughout A lot of people prefer to buy domestic wax
the year, driven by need-based buying for now, which are priced reasonably. Chinese
Solid wax prices are usually bolstered downstream product manufacturing. wax is too expensive, said an Indian trader.
sometime from September to October,
with market players foreseeing improved Meanwhile, market sources in India expect Nonetheless, import trade to India may pick
seasonal demand in the period leading up buying interests for imports to remain up ahead of the Diwali festival or Festival
to Christmas. lacklustre in the near term. of Lights, which is celebrated at around
October.
Even so, wax trade is unlikely to pick up Transactions plummeted after
by a large extent against a backdrop of Prime Minister Modi announced the Common paraffin wax applications include
slower macroeconomic performance across demonetization of high-denomination rupee candles, coatings and laminates for food
the region. notes in November 2016. packaging.

[Downstream wax] manufacturing activities The move caught many people by surprise
are no longer as robust as say, a few years and hampered transactions, which largely Demand usually picks up a few months
ago, said another Chinese trader. occur on a cash basis. before festivities.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
OTHERS
TITANIUM DIOXIDE (TIO2)

ASIANS TIO2 MARKET SEEN result of forced plant shutdowns ordered by all separately announced price hikes to be
BULLISH AMID TIGHT GLOBAL the government to curb pollution during effected from January 2017.
SUPPLY the winter.
By Leanne Tan However, further up-swings in prices could
Some market players believed that if these potentially be undermined by a weak
SINGAPORE (ICIS)--The titanium dioxide stricter environmental regulations persist downstream demand across most regions
(TiO2) market in Asia is seen to be bullish in China, it might lead to the closure of in Asia.
in the near term as prices remain supported smaller plants that are unable to pass
by tight supply of the material globally, down extra cost required to manage waste In southeast Asia, the depreciation of many
according to market players. disposal generated by sulphate-based TiO2 emerging market currencies against the
production. US dollar is expected to make imports
TiO2 prices hit rock bottom in early 2016, more expensive, and buyers are likely to
with the market price averaging around Strong TiO2 prices were also supported adopt a need-to-basis approach towards
$2,000/tonne CFR (cost and freight) Asia by higher cost of feedstock ilmenite and procurements as a result.
for the first quarter of 2016 amid a global increased transportation fees in China.
supply glut. Meanwhile, in India, TiO2 demand in the
Other international producers outside of country is expected to remain weak in the
Many regional producers were operating China have similarly announced intentions near-term following the demonetisation of
at negative margins at the start of the to hike prices for TiO2 contracts in the first high-denomination rupee notes.
year, but were unable to implement price quarter of 2017.
hikes as buyers had been unable to The Indian government implemented the
absorb increases due to prevailing weak Major producers including Ishihara Sangyo ban on rupees (Rs) 500 and Rs1,000 notes
downstream demand. Kaisha (ISK), Huntsman and Cristal have from 9 November to curb black money or
unaccounted income.
Import prices in Asia then rose from
the second quarter onwards, as many
producers adjusted operating rates
downwards due to poor margins, tightening
global supply levels.

Many suppliers continued to announce


price increases in the second half of 2016
in order to recoup lost profitability following
previous price erosions.

Market players say the outlook for 2017 being


bullish, as prices in Asia are likely to remain
supported by a tight global supply.
TiO2 supply in China has been especially tight.

Ongoing environmental protection


inspections at key manufacturing sites
in China has resulted in several TiO2
producers in the country operating at
reduced rates, tightening the supply of
Chinese cargoes.

In December 2016, producers raised export


prices on the back of low inventory as a

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OTHERS
VINYL ACETATE MONOMER (VAM)

ASIA VAM TO GET LIFT FROM expansions in the EVA sector. Taiwan in 2017 and prices in Korea could
FEEDSTOCKS, EVA START-UPS be higher than other northeast Asian
By Helen Lee Hanwha Total commenced operations in destinations due to the restriction of import
mid-November at its expanded 280,000 choices, a trader said.
SINGAPORE (ICIS)--Asias vinyl acetate tonne/year EVA plant in Daesan. The plants
monomer (VAM) prices may be buoyed up in capacity was raised by 40,000 tonnes For the first nine months of 2016, South
the first quarter by escalating feedstock costs following a shutdown from 23 October to 15 Korea imported 193,739 tonnes of VAM,
and improved demand, with recent start-ups November. up by 7% from the previous corresponding
of downstream ethylene vinyl acetate (EVA) period, according to data from Korea
plants in the region, market sources said. Korea will have to import more VAM from International Trade Association (KITA).

For most of 2016, VAM prices had


languished at historical lows as supply
was sufficient to meet demand while sales
outlets into Europe were limited.

It [2016 was] a very difficult [time] for


all players from makers to end-users,
a southeast Asia-based VAM distributor
said, adding that VAM producers had
reduced production but the regional market
has remained in oversupply, leading to
undercutting among sellers.

Come 2017, however, China which is a


major exporter of the material in Asia
may curtail overseas shipments on start-
ups of domestic downstream ethylene
vinyl acetate (EVA) capacities and
increased captive usage for polyvinyl
alcohol (PVA) production as idled plants
were restarted.

In South Korea, VAM demand is also


expected to increase following capacity

EVA/LDPE
Company Location Capacity Start-up schedule/status
(tonnes/year)

Jiangsu Sailboat Lianyungang, Jiangsu, China 300,000 End of 2016 to early 2017. In final state of
Petrochemical preparations.

Shanghai Petrochemical Jinshan, Shanghai, China 100,000 2017. Under Construction now.
Corporation

Yangzi Petrochemical Nanjing, Jiangsu, China 100,000 2018. Construction started on 20 Sep 2016.

Sinochem, Quanzhou Quanzhou, Fujian, China 100,000 2020. Government approval, plans to start
Petrochemical Co., Ltd. construction in 2017

Petrochemical Ligure Zhangzhou, Fujian, China 300,000 2020. Environmental assessment approval,
plans to start construction at the end of 2016 to
early 2017.

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
VAM plant turnaround schedule 2017

Company Capacity Location Turnaround Plans


(tonnes/year)

Showa Denko 175,000 Oita, Japan Skip for 2017

Japan Vam & Poval Co.,Ltd 150,000 Sakai, Osaka, Japan Skip for 2017

Dairen Chemical Corp 350,000 No 3 Mailiao, Taiwan Skip for 2017

Nippon Gohsei 180,000 Mizushima, Okayama, Japan Mar: 1 month

Dairen Chemical Corp 300,000 No 2 Mailiao, Taiwan Q1/April: 3 weeks

Dairen Chemical Corp 120,000 No 1 Dasheh, Taiwan Feb/Mar : 4 weeks

Dairen Chemical Corp 350,000 Jurong Island, Singapore Tentatively Q2: 3-4 weeks

Celanese 210,000 Jurong Island, Singapore H1 2017: 2-3 weeks

Lotte BP Chemical 210,000 Ulsan, South Korea May 2017: 25 days

SIPCHEM/IVC 330,000 Jubail Industrial City, Saudi Arabia TBC

Sinopec Sichuan 300,000 + 200,000 Chongqing, Sichuan province, China No major shutdown plans
Vinylon Works

Sinopec Shanghai 90,000 Jinshan, China No major shutdown plans


Petrochemicals

Sinopec Great Wall Energy 450,000 Sinopec Great Wall Energy No major shutdown plans

Celanese 300,000 Nanjing, Jiangsu, China H1 2017: 2-3 weeks

In Europe, which is a major market for to increased costs of production following


Asian VAM, stiff competition weighed down price spikes in the upstream coal, methanol
on VAM prices in the second half of 2016. and acetic acid markets in the country.

But this export market may exert upward VAM offtakes from downstream plants in the
pressure on VAM prices in the first quarter polyvinyl alcohol (PVOH) and butanediol
amid expectations of improved buying (BDO) sectors in China had also increased
following the lifting of Europes 5.5% import after these plants resumed operations in
duty on imports of the material in 2017. late November, industry sources said.

Europes duty-free quota for VAM next year


will be raised to 350,000 tonnes from the
200,000 tonnes in 2015 and 2016.

VAM producers in Asia have hiked their


offers for January shipments, taking into
account price spikes in feedstocks ethylene,
methanol and acetic acid markets in
December, and an expected recovery in
crude futures pricing following the decision
by OPEC and non-OPEC countries to cut
crude output from 1 January 2017.

Availability of commercial VAM output for


exports from China had also dried up due

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.
OTHERS
PHTHALIC ANHYDRIDE

ASIA PA LIKELY TO FIRM IN Q1 ON A separate northeast Asian producer Market players anticipate that southeast
UPSTREAM TIGHT SUPPLY concurred and added that the lack of firm Asia prices will firm in tandem with the key
By Amy Tan discussions is largely due to the fact that China market in February, amid tight supply.
Chinas main ports will be closed during the
SINGAPORE (ICIS)--Asia phthalic Lunar New Year festival. Meanwhile, buyers in southeast Asia are
anhydride (PA) spot prices are expected expected to continue to procure cargoes
to firm in the first quarter on the back of In addition, production of downstream on a need-to basis. On 5 January, offers
tight supply seen in upstream feedstock dioctyl phthalate (DOP), a plasticiser, is for cargoes into southeast Asia were heard
orthoxylene (OX) market. likely to ease by 20 January, according to at $1,015-1,030/tonne CFR SE
market sources. (southeast) Asia.
PA supply is also expected to remain tight
despite the expected lull in market activity Once players in the key Chinese market My buying indication is still around $1,000/
in the weeks leading to the Lunar New Year return, however, PA prices are largely tonne CFR SE Asia. However, I have not
holiday at end-January, they said. expected to be firmer, market players said. been able to procure any cargoes at this
price, said a buyer based in southeast Asia.
Production activities in the key Chinese For now, most PA suppliers are reiterating
market are expected to wind down from the workable offers at $1,020/tonne CFR CMP. The buyer added that it managed to procure
middle of January. January cargoes at $1,020/tonne CFR SE
Over in southeast Asia, deals were concluded Asia and will continue to monitor the market
While buying interest was subdued in the at around $1,020-1,030/tonne CFR CMP on before purchasing more.
week ended 23 December, suppliers were 23 December, according to ICIS data.
hiking offers for January OX-based PA to
$1,050/tonne CFR (cost and freight) CMP
(China Main Ports) because of prevailing
tight supply and expectations of firmer OX
prices in 2017.

Many buyers had procured January


cargoes as early as end-November.

Consequently, most northeast Asian


producers reported low January inventories
and were not facing any inventory pressure
to sell remaining cargoes.

I offered cargoes to buyers in China at


$1,020/tonne CFR CMP but the buyers
didnt respond. It is likely that PA will be in
short supply in January so I am not willing
to offer cargoes lower than this, said one
northeast Asian producer.

You can rely on ICIS for all your chemicals market intelligence needs

PRICING INFORMATION NEWS INFORMATION SUPPLY AND DEMAND DATABASE

ICIS offers regional price assessments and market Be the first to find out about chemicals-related Receive an end-to-end perspective across the global
analysis for the Asian chemicals market, including breaking news and analysis across the global petrochemical supply chain, enabling you to grasp
price histories and expert commentary to help you petrochemical markets. Our market-moving news the local or regional scenario in a global context. Data
understand the key price drivers and market conditions articles cover production updates, plant capacities, includes import and export volumes, consumption,
and settle your contract prices confidently with access output and shutdowns, plus so much more. plant capacities, production and product trade flows
to time-sensitive offers, bids and price movements. for chemicals from 1978 up to 2030.

Request your free sample report Request your free trial today Enquire about the supply/demand database

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commercial decisions based on the content of this report. Content published between December 2016 to January 2017.

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