Asia Chemicals Outlook Final Smaller Version

ASIA
CHEMICALS
OUTLOOK
2019
Key markets covered:

Acids Feedstocks/Intermediates Plastics/Polymers
Aromatics Fibre Chain Solvents
Base Oils Oleochemicals/Surfactants And so much more...
ASIA
CHEMICALS
OUTLOOK
2019
Contents
Key markets covered:
Acids Feedstocks/Intermediates Plastics/Polymers
Aromatics Fibre chain Polyurethane Chain
Acids Polymethyl Methacrylate (PMMA) Polybutylene Terephthalate (PBT)

Base Oils Olefins Solvents
Chloralkali Oleochemicals/Surfactants And so much more...
Acetic Acid Soda Ash and Butanediol (BDO)

Adipic Acid (ADA) Titanium Dioxide Polycarbonate
Butyl Acetate & Ethyl Acetate Vinyl Acetate Monomer (VAM) Polyethylene (PE)
Polypropylene (PP)
Alcohols Fibre Chain Polystyrene
Ethanol Acrylonitrile Polyvinyl Chloride (PVC)
Ethanolomines Butyl Glycol (BG)
Methanol Caprolactam Polyurethance Chain
Oxo-alcohols Monoethylene Glycol (MEG) Methyl Di-p-phenylene Isocyanate (MDI)
Nylon & Toluene Di-Isocyanate (TDI)
Aromatics & Derivatives Polyethylene Terephalate (PET) Polymeric Methyl Di-p-phenylene
Benzene Purified Terephalatic Acid (PTA) Isocyanate (PMDI)
Paraxylene Polyols
Styrene Olefins
Toluene Butadiene (BD) Rubber
Xylene Ethylene Acrylonitrile Butadiene Styrene (ABS)
Propylene Styrene Butadiene Rubber (SBR)
Base Oils
Base Oils Oleochemicals & Surfactants Solvents
Fatty Acids Acetone
Chlorakali Fatty Alcohols Bisphenol-A (BPA)
Caustic Soda Fatty Alcohol Ethoxylates (FAE) Glycol Ether
Linear Alkylbenzene/Sulphonate Isopropanol (IPA) and Methyl Ethyl
Feedstocks & Intermediates (LAB/ LAS) Ketone (MEK)
Epoxy Resins and Epichlorohydrin (ECH) Methyl Tertiary Butyl Ether (MTBE)
Methyl Methacrylate (MMA) Plastics/Polymers Phenol
Naphtha Plasticizers
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ACIDS
ACETIC ACID
ASIA’S ACETIC ACID POISED FOR MORE BALANCE AMIDST UNCERTAINTIES
BY HELEN LEE JANUARY 2019
Asia’s acetic acid spot prices may experience comparatively METHANOL AND ACETIC ACID IN SOUTHEAST ASIA
reduced volatility in 2019 because of a more balanced market,
although lingering uncertainties on the macroeconomic front
will continue to cloud the sentiment of suppliers.
In the near term, suppliers are of the view that the

downward correction phase - which started in October and
corresponding with the decline of crude futures values -
may prevail into January or February 2019, pending the
start of the plant turnaround season in March 2019.
This is in view of rising output in China, balanced market

conditions outside China and weak derivatives market
performances.
Source: ICIS
Furthermore, downward trending upstream methanol
values amid faltering upstream crude futures coupled
with uncertainties on the macroeconomic front, weigh on METHANOL & ACETIC ACID KOREA
the market sentiment, prompting most buyers to adopt a
cautious stance.
Asia’s acetic acid spot prices consequently concluded 2018

by correcting downwards to the low-to-mid $500s/tonne
CFR (cost and freight), their lowest levels in more than a
year, amid subdued demand and rising output in China
following the completion of plant turnarounds.
The overall operating rate of acetic acid plants increased

to 89% of capacity by mid-December 2018, following the
completion of plant maintenance shutdowns.
900
850 Source: ICIS

800
750 Feedstock spreads between methanol and acetic acid

700 across Asia are at its lowest levels in a year but are
USD/tonne
650 expected to remain healthy in 2019.

600
550 LONGER TERM BALANCED VIEW

500
In the longer term, a lack of new acetic acid plant capacities
Acetic Acid CFR NE Asia Spot 2-6 Weeks Full Market Range (Mid)
coupled with an anticipated 6% GDP growth rate in China
450
Acetic Acid CFR South Asia Spot 2-6 Weeks Full Market Range (Mid)
bolster the sentiment of producers.
400
Acetic Acid CFR SE Asia Spot 2-6 Weeks Full Market Range (Mid)
8
In India, general elections in 2019 and its impact on

01
01
Acetic Acid Ex-Tank E China Spot 2-6 Weeks Full

Source: ICIS
-2
-2
Market Range (Mid)

an
an
the country’s economy on the other hand weigh on the

-J
-J
Acetic Acid FOB China Spot 2-6 Weeks Full Market Range (Mid)
19
11
general mood.
Source: ICIS
Acetic Acid CFR NE Asia Spot 2-6 Weeks Full Market Range (Mid) : USD/tonne
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Acetic Acid CFR South Asia Spot 2-6 Weeks Full Market Range (Mid) : USD/to…
Acetic
Copyright Acid
2019 CFR
Reed SE AsiaInformation
Business Spot 2-6 Weeks Full
Ltd. ICIS is Market Range
a member (Mid)
of RBI and :isUSD/tonne
part of RELX Group plc. ICIS accepts no liability for commercial decisions based on this content.
Acetic Acid Ex-Tank E China Spot 2-6 Weeks Full Market Range (Mid) : USD/t…
DOWNSTREAM CAPACITY ADDITIONS AND EXPANSIONS SUPPLY DISRUPTION BY MONTH (KT)
Capacity
Start-up
Product Company Location (’000
time
tonnes/year)
Nanchong,
PTA Sichuan Shengda 1,000 Q4 2018
China
PTA Xinfengmin Jiaxing 2,200 Q3 2019
Hengli
PTA Dalian 2,500 Q4 2019
Petrochemical
PTA Yisheng Ningbo Ningbo 3,300 2020
PTA Formosa Chemical Ningbo 1,500 2020
Shenghong
PTA Lianyungang 2,400 2020
Petrochemical
PTA Ningbo Zhongjin Ningbo, China 2,200 2020 Source: ICIS
Ningbo Taihua
PTA Ningbo, China 1,500 2020
Phase II
Hong Kong Lianyungang,
NEW ACETIC ACID CAPACITIES
PTA 2,400 2020 New Capacity (‘000 Startup
Petrochemical China Company Location
Quanzhou, tonnes/year) Time
PTA Baihong 2,500 2020
China Hengli Dalian 350 Q3 2019
Karamay,
PTA Zhongtai Kunyu 1,200 2020 Huayi Qinzhou 500 (+700) 2020-2021
Xinjiang, China
Blue Mountain Henan Shunda Zhumadian 400 Pending
PTA Changji, China 1,200 2020
Weihe
Xintiande Shandong 500 Pending
PTA Chengxing Tianjin, China 2,200 2021
Xinnai Energy and
Mangalore, Ordos 600 Pending
PTA JBF* 1,250 2019 Chemical
India
Kingboard Hubei 1,600 Pending
Etac and
Taixing Jinjiang Taixing 500 2019-20
Btac Shandong Jiachi Shandong 300 Pending
Ethanol Henan Shunda Zhumadian 200 2018-19 Onstream
Lotte BP Chemical Ulsan, S. Korea 570 (+ 100)
May 2019
Ethanol Wison Nanjing 275 2019
IOL Chemical and
Etac Ludhiana, India 78 + 12 Nov-18
Pharmaceuticals
Ulsan, South
VAM Lotte BP Chemical 210 + 200 Oct-20
Korea
*divested to private equity firm KKR Jupiter Investors.
On the supply front, acetic acid capacity expansions in China DOWNSTREAM CAPACITY ADDITIONS
in 2018 are expected to operate in full next year, while there While a spate of unplanned plant outages have largely
are fewer acetic acid plants scheduled for turnarounds in the been responsible for the previous rounds of price spikes
first quarter compared to the same period of 2018. due to aging acetic acid plants in Asia as producers push
for optimal production on healthy margins, market players
ACETIC ACID SUPPLY DISRUPTIONS anticipate margins to remain relatively stable. “Overall
On the demand side, China continues to see the bulk of we have a lot of uncertainties as [there are] a lot of
downstream plant capacity additions, which would offset macroeconomic uncertainties but margins would still be all
new acetic acid plant capacities. right,” said a major producer.


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Copyright 2019 Reed Business Information Ltd. ICIS is a member of RBI and is part of RELX Group plc. ICIS accepts no liability for commercial decisions based on this content.
ACIDS
ADIPIC ACID (ADA)
ASIA ADA MARKET MAY STAY SOFT IN Q1 2019 ON INCREASING CAPACITY
BY JUDITH WANG JANUARY 2019 ASIA SPOT ADIPIC ACID PRICES

1,900
Asia’s adipic acid (ADA) market may remain weak in the 1,800
first quarter of 2019, as the outlook is expected to be dulled 1,700
by the twin combination of new plant capacities in China
1,600
and a paucity of healthy demand.
USD/tonne
1,500
The ADA market is expected to see a slippery slope, with 1,400
prices trending weaker going forward as uncertainties over 1,300
the impact of the US-China trade row lingers. 1,200
1,100
Meanwhile, spot ADA prices for China-origin cargoes fell
1,000
by $20-30/tonne on a weekly basis to $1,050-1,070/tonne
25 pr- 8
04 ar- 8
19 ug- 8
ep 18
09 c- 8
9
14 eb- 18
16 pr 8
06 ay- 8
27 un- 8
29 ug- 18
08 ul- 18
31 ct- 8
21 ct- 18
12 ov- 8
an 18
18 n-2 8
CFR Northeast (NE) Asia in the week ended 19 December,
1
1
01
1
1
1
1
1
1
1
-A 20
-M 20
-J 20
-A 20
-S 20
-F 20
-A 20
-M -20
-A 20
-N 20
-D 20
-J 20
-J 0
-O 20
-O 20
-J 20
-2
21 an-
10 -
according to ICIS.
e
-J
31
Adipic Acid CFR Asia NE Assessment China Origin

Spot 4-6 Weeks Full Market Range (Mid)
The ADA prices for international-origin cargoes also Adipic Acid CFR Asia NE Assessment China Origin Spot 4-6 Weeks Full Mark…
Adipic Acid CFR Asia NE Assessment International
dropped by $50/tonne at the high end to $1,350-1,400/ Origin Spot 4-6 Weeks Full Market Range (Mid)
Adipic Acid CFR Asia NE Assessment International Origin Spot 4-6 Weeks Full…
Source: ICIS
tonne CFR NE Asia over the same period, ICIS showed.


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➔
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The recent price decrease was mainly attributed to the “I think domestic prices in China may not be supported by
lower feedstock cost and prevailing sluggish demand. the pre-holiday restocking in 2019 amid the trade war. If the
local market in China were to remain soft, the Asia market
Major Asian suppliers were compelled to slash prices in a will also be affected,” a major Chinese supplier said.
bid to elicit buyers, as the downstream end-users were not
keen to build stocks during the year-end lull. On the supply side, China’s Henan Shenma Industrial is
expected to start up its new 75,000 tonne/year new line by the
“Buying interest will remain low before the Lunar New Year first quarter of 2019, which will dampen market sentiment.
holiday in early February, as downstream users are already
covered with enough stocks when prices fell in the past few Other major suppliers Huafon and Shandong Hualu-
weeks,” said a major downstream user. Hengsheng Chemical will also start up their new 200,000
tonne/year plants by the end of 2019 or early 2020.
“If there is any buying to pick up, we have to wait till March
when the peak demand season commences,” he added. “We are not rushing to build stocks for 2019 given the
increasing new supply from China,” a separate end-user said.
China and many Asian markets will be celebrating the
Lunar New Year that begins in early February, traditionally Overall, the market outlook is pessimistic, but the price
celebrated for fifteen days. downtrend will also be limited as most producers are facing
the squeezed margins, and they will cut their operating rates
Businesses are expected to be slow around half a month to deter the price decline once prices fall below their cost.
before and after the holiday.
A major Chinese producer has shut down its ADA line due
Some small downstream PU plants may close their plants to weak market sentiment and falling prices.
earlier ahead of Lunar New Year holiday , due to the
decreasing export orders of finished goods in China caused “We will reduce output if prices fall below our cost. We
by the ongoing trade war between China and the US. could not afford to lose money,” a separate Chinese
supplier said.
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ACIDS
BUTYL ACETATE & ETHYL ACETATE
ASIA ETAC TO FLUCTUATE WITH FEEDSTOCK AFTER HITTING ONE-YEAR LOW
BY LI LI CHNG JANUARY 2019
Asia spot etac prices are likely to track feedstock prices in ETAC V FEEDSTOCK ACETIC ACID SPREAD
the first quarter of 2019 as the overall market structure is
one of balanced-to-long supply over largely stable but slow
demand.
Spot prices fell steadily in the fourth quarter of 2018 to

levels last seen in November 2017.
In the week ended 22 December, etac prices were at

an average of $870-880/tonne FOB China, a $10/tonne
decrease from the previous week.
This represented a 12.9% decrease since mid-October

2018, tracking feedstock acetic acid’s trend.
Acetic acid FOB (free on board) China spot prices shed

Source: ICIS
more than 29% over the same period.




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Etac prices will largely track those of acetic acid, which are In one key Asia importing market, Japan, market players
expected to remain bearish in the near term. expected a steady 3-5% growth in etac consumption in
the coming year, as the trend switches towards more
However, with new acetic acid supply coming on stream environmentally friendly solvent to substitute solvents like
in China in 2019, and fewer outages expected in 2019 methyl ethyl ketone (MEK) and toluene.
compared with 2018, acetic acid supply and prices are
expected to see less fluctuation. Demand from downstream application of acrylic
pressure-sensitive adhesive is also expected to remain
This will provide more stability to etac prices. healthy in Japan.
Demand from the key paints and coatings downstream In terms of supply, stringent environmental measures taken by
sector will likely remain slow amid the seasonal lull, when the the Chinese authorities may curtail operation rates at plants.
building industry slows down due to winter in parts of Asia.
China’s Jiangmen Handsome Chemical Development’s
Some re-stocking activities may be expected in January as expansion at its current Taixing site in Jiangsu will likely
end users had kept their inventory low at the end of 2018. come on stream in mid-2019, delayed from 2018.
However, they are also unlikely to keep stock level high The new 500,000 tonne/year capacity will consist of
ahead of the Lunar New Year holiday that begins in early 250,000-300,000 tonnes/year ethyl acetate; 150,000
February and is widely celebrated in Asia. tonnes/year butyl acetate; 100,000 tonnes/year butyl
acrylate and 50,000 tonnes/year normal propyl acetate.
Uncertainties and slowdown in the global economy and
volatility in crude oil prices have impacted market sentiment The producer is slated to relocate its butac/etac swing plant
for most of 2018. from Jiangmen to Xinhui, in Guangdong in 2020-2021.
The uncertain outcome of the US-China trade war after the It remains to be seen if demand picks up in 2019 to absorb
90-day truce, and the expectation of a slowdown in economic the new supply.
growth in many markets, continues to weigh on sentiment.
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ALCOHOLS
ETHANOL
ASIA-PACIFIC ETHANOL MARKET TO REMAIN UNDER PRESSURE
BY IZHAM AHMAD JANUARY 2019 ASIA ETHANOL PRICES

620
The Asia-Pacific market for fuel-grade ethanol and b-grade 600
ethanol is expected to remain depressed in the early months 580

of 2019 as demand has shown little signs of improving. 560
540
USD/cbm
This is par for the course since many buyers had already 520
secured enough cargoes to meet their immediate needs. 500
480
The US-China trade tensions put a lid to demand when
460
China drastically increased import tariffs on US ethanol as
440
part of retaliatory action against the US move to hit China’s
420
exports with higher duties.
28 eb- 8
13 ay- 8
un 18
9
an 18
02 r- 18
23 ay- 18
16 c- 8
11 ar- 8
19 ov- 8
21 b- 8
ep 18
07 ct- 18
28 ov- 18
26 p- 8
15 ul- 18
05 ug- 8
25 ul-2 8
1
01
1
1
1
1
1
1
-J 01
-F 20
-M 20
-J 20
-J 20
-A 20
-M 20
-D 20
-M 20
-F 20
-S 20
-O 0
-N 20
-N 20
-J 0
-A 20
-S 20
-2
17 -2
04 -2
07 an-
Prices of fuel-grade anhydrous ethanol rose to just shy of
e
e
e
-J
17
$500/cbm (cubic metre) CFR (cost & freight) southeast Ethanol Hydrous, Min 95% Purity CFR Asia NE
Assessment Spot 3rd Month Full Market Range (Mid)
(SE) Asia in March 2018, but decreased to $431/cbm CFR Ethanol Anhydrous,
Ethanol Min 99.5%
Anhydrous, Purity Purity
Min 99.5% CFR Asia SEAsia
CFR Assessment
SE Spot 2nd Mon…
SE Asia by early-December, mainly guided by values of Assessment Spot 2nd Month Full Market Range (Mid)
Ethanol
Source: ICIS Hydrous, Min 95% Purity CFR Asia NE Assessment Spot 3rd Month Fu…
ethanol futures.



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Prices of b-grade hydrous ethanol also gained to 2018 Elsewhere, buyers in northeast briefly encountered
highs of $615/cbm CFR northeast (NE) Asia in March but difficulties securing b-grade hydrous ethanol from
then lost ground to around $570/cbm CFR NE Asia by the Brazilian suppliers due to logistical issues during a trucker
year-end, just about where they had started 2018. strike in Brazil in 2018 which was then followed by heavy
rains there.
Supply of anhydrous fuel-grade ethanol was ample from
the US during April and September, as the corn harvest in Brazil’s harvest/crush season resumed at healthy levels
the US continued at levels similar to the previous year. later in 2018 and that was supported as the northeast Asian
buyers rebuilt their stocks.
Adding to the reduced demand from China, demand in
the Philippines, the main export destination for US fuel- Toward the end of the Brazilian harvest/crush season,
grade ethanol in southeast Asia, also decreased as the demand in northeast Asia tapered off as inventories had
government there tried to raise requirements for blenders to been replenished and with some players eyeing the new
purchase locally produced ethanol. harvest in Pakistan for more competitive prices.
Philippines blenders are required to purchase certain In 2019, with the Brazil harvest essentially not yet started
volume of higher priced domestically produced ethanol and with Pakistan unlikely to have much spot material left,
under a quota system before they are allowed to import prices could remain supported as demand would likely
any material as part of efforts to support the local ethanol remain around similar levels.
industry.
There would also be some uncertainty over the ethanol
These efforts to support the domestic industry could persist volumes to be produced from the sugar industry given that
in 2019 and further affect demand for fuel ethanol imports ethanol prices have also been under pressure over the final
from the US. months of 2018.
But some relief could perhaps appear if the recent thawing Ethanol in countries like Brazil and Pakistan are produced
of the tariff row were to result in China reducing its import mainly from sugar cane but can also be produced from
tariffs on US ethanol. corn, wheat or cassava.
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ALCOHOLS PRICES OF MEA IN INDIA VS CHINA VS SEA
1,320
MEA CIF Asia SE Assessment
1,300 Drummed Spot 4-6 Weeks Full
ETHANOLOMINES 1,280
1,260
Market Range (Mid)
ASIA ETHANOLAMINES MAY STAY 1,240

1,220
USD/tonne
SOFT ON WEAK UPSTREAM, SLOW 1,200
1,180
Q1 DEMAND 1,160
1,140 MEA CIF China Assessment
Normalised Drummed Spot 4-6
BY KHENG WEE LOY JANUARY 2019 1,120 Weeks Full Market Range (Mid)
1,100 MEA CIF India Assessment Drummed
1,080
Asia’s ethanolamines markets may be weighed down by
weak upstream ethylene and ethylene oxide (EO) values,
27 n- 8
8
25 r- 8
16 r 18
06 ay- 8
12 ov- 8
ec 18
04 ar- 8
31 ct- 8
21 t- 18
14 b- 18
ep 18
21 an- 8
19 ug- 8
29 ug- 18
08 ul- 18
un 18
1
1
01
1
1
1
1
1
1
-J 20
-A 20
-A 20
-M -20
-D 20
-M 20
-O 20
-O 20
-N 20
-F 20
-S 20
-J 20
-A 20
-A 20
-J 0
-J 20
-2
18 -2
10 -
31 an-
as well as slow demand in the first quarter of 2019.
c
p
p
u
e
-J
10
Source: ICIS
Recent spot prices of monoethanolamines (MEA), MEA CIF Asia SE Assessment Drummed Spot 4-6 Weeks Full Market Range (…
diethanolamines (DEA) and triethanolamines (TEA) for
PRICES
MEA CIFOF ETHYLENE
China IN NEADrummed
Assessment Normalised VS SEA
Spot 4-6 Weeks Full Mark…
drummed cargoes have broadly been on the decline across
Asia, in step with falling feedstock costs. MEA CIF India Assessment Drummed Spot 4-6 Weeks Full Market Range (Mid…
1,400
Notably, China has finalised anti-dumping duties (ADD) 1,300

on imports of ethanolamines from the US, Saudi Arabia,
1,200
Malaysia and Thailand, the Ministry of Commerce said.
USD/tonne
1,100
The final levies were announced on 29 October, following
an investigation that lasted one year. 1,000
Ethylene CFR Asia NE Assessment Spot
900 2-6 Weeks Full Market Range (Mid)
However, the earlier preliminary ADDs in June and final Ethylene CFR Asia SE Assessment Spot
ADDs in October did not appear to bolster the domestic 800 2-6 Weeks Full Market Range (Mid)
prices, amid bearish market conditions particularly in the

second half of 2018.
08 ay- 18
29 un- 18
8
27 r- 8
18 pr 18
14 ov- 18
ec 18
06 ar- 8
16 eb- 18
12 ep- 8
02 t- 18
23 ov- 18
23 b- 8
31 ug- 18
21 ug- 18
02 an- 7
10 ul- 8
20 n-2 8
01
1
1
1
1
1
-J 01
u 1
-J 20
-D 20
-A 20
-A 20
-M -20
-M 20
-O 20
-N 20
-N 20
-F 20
-F 20
-A 20
-A 20
-S 20
-J 20
-J 20
-2
12 ec-
c
p
e
-D
15
Domestic spot prices for MEA were pegged at yuan (CNY)

Source: ICIS
9,000/tonne EXWH (ex-warehouse) in mid-December, on Ethylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range (Mid) : …
average, 17.4% lower than the CNY 10,900/tonne EXWH in
Ethylene CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (Mid) : …
January, ICIS data showed. MEA import prices in China were at $1,095/tonne CIF (cost,
insurance & freight) China on 12 December, marking a 11%
drop from the $1,230/tonne CIF China seen in January.
PRICES OF CHINA E DOMESTIC SPOT MEA, DEA AND TEA
12,500 Similarly in India, MEA import prices plunged to $1,120/
DEA Ex-Warehouse China E Assessment Domestic
12,000 Drummed Spot 0-3 Days Full Market Range (Mid) tonne CIF India in mid-December, down by 11.5%, from the
MEA Ex-Warehouse China E Assessment Domestic all-year high of $1,265/tonne CIF India at the start of 2018,
11,500 Drummed Spot 0-3 Days Full Market Range (Mid)
ICIS data showed.
11,000
CNY/tonne
10,500
In southeast Asia, spot values declined to $1,190/tonne CIF
SE (southeast) Asia, softer by 8.5% from the $1,300/tonne
10,000 CIF SE Asia over the same period, according to ICIS data.
9,500
These decreases generally tracked losses in upstream
9,000
TEA 99% Ex-Warehouse China E Assessment Domestic ethylene and ethylene oxide (EO) sectors.
8,500 Drummed Spot 0-3 Days Full Market Range (Mid)
Ethylene import prices nosedived towards the fourth

27 n- 8
8
ec 18
25 pr- 8
16 pr- 18
06 ay- 8
04 ar- 8
31 ct-2 8
21 ct- 18
12 ov- 8
14 eb- 18
ep 18
21 an- 8
19 ug- 8
29 ug- 18
08 ul- 18
un 18
1
1
01
1
1
1
-O 01
1
1
-J 20
-A 20
-A 20
-M 20
-M 20
-O 0
-N 20
-D 20
-F 20
-S 20
-J 20
-A 20
-A 20
-J 0
-J 20
-2
10 -2
18 -2
quarter to hit around $870/tonne CFR (cost & freight) NE

31 an-
u
-J
(northeast) Asia, nearly a 40% slump from those in January,

10
Source: ICIS
ICIS data showed.
DEA Ex-Warehouse China E Assessment Domestic Drummed Spot 0-3 Days F…
MEA Ex-Warehouse China E Assessment Domestic Drummed Spot 0-3 Days …

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TEA 99% Ex-Warehouse China E Assessment Domestic Drummed Spot 0-3 D…

PRICES OF ETHYLENE OXIDE IN CHINA CHINA MEA IMPORTS 2018 JAN-OCT
11,000
10,800
10,600
10,400
10,200
10,000
CNY/tonne
9,800
9,600
9,400
9,200
9,000
8,800
8,600 Ethylene oxide prices
8,400
21 1/2 8
14 2/2 8
04 3/2 8
25 4/2 8
16 4/2 8
06 5/2 8
27 6/2 8
18 6/2 8
08 7/2 8
29 8/2 8
19 8/2 8
10 9/2 8
31 0/2 8
21 0/2 8
12 1/2 8
02 2/2 8
1/ 8
19
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/1 01
/1 01
/1 01
/1 01
/0 01
20
31 1/2
/0
Local users are likely to place orders in January instead,

10
Source: ICIS
but could require smaller volumes with the upcoming Lunar
New Year holidays in early February.
Downstream EO values in China were at CNY 9,300/tonne
EXWH, the lowest since August 2017, according to data Consumers in southeast Asia and India are anticipated to
compiled by ICIS on 12 December. procure on a hand-to-mouth basis.
The near-term EO outlook is gloomy, considering the short- Regional supply is set to stay adequate, with a slight uptick
lived rebounds in key EO-derivative monoethylene glycol possible given that some glitches heard previously in
(MEG) markets lately. southeast Asia are said to have been resolved.
MEG prices have resumed on a downtrend and would Many sellers face pressure to clear stocks and adjust
potentially drag down EO, some participants said. offers, especially in China.
In Asia, buying interest for amines would remain tepid on the Domestic supply in China has been aplenty towards the year
uncertain macroeconomic outlook and feedstock weakness. end, owing to curbed demand and high production inventories.
Some downstream sectors in China are expected to be Some manufacturers may decide to keep operating rates
less active during winter and have limited restocking low or produce other EO-derivatives going ahead.
requirements.
Ethanolamines are used to make personal care and
household products, detergents and herbicides.


➔
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ALCOHOLS
METHANOL
ASIA’S METHANOL SENTIMENT BEARISH ON NEW CAPACITIES
BY KITE CHONG JANUARY 2019 420
400
Asia methanol market is poised to see new capacities
adding to the global pool of supply that may not allow 380
prices to rebound to high levels seen in 2018. 360
USD/tonne
340
Methanol spot prices saw large movements in 2018,
quite a few upwards, which went against predictions 320
made back in 2017 when participants expected prices to
300
swing mostly downwards. Methanol CFR China Assessment All Origins
Spot 0-10 Days Full Market Range (Mid)
280
Market players were initially bullish when average spot 260

prices in the key China market hit a high of $414/tonne
9
27 r- 8
18 pr- 18
08 y- 8
29 n- 8
an 18
ec 18
06 r- 8
16 eb- 8
02 ct- 8
23 ov- 8
14 ov- 8
ep 18
21 g- 8
31 ug- 8
10 ul- 8
u 18
a 1
u 1
01
1
1
1
1
-O 01
1
1
1
-J 01
CFR (cost & freight) China on 19 October 2018 - prices
-J 20
-A 20
-A 20
-M 20
-J 20
-D 20
-M 20
-F 20
-N 20
-N 20
-S 20
-A 20
-A 20
-J 20
-2
12 -2
20 n-2
11 -
23 b-
p
a
u
e
-F
were last around this level in January 2018 and March

02
2014, according to ICIS data. Source: ICIS
Methanol CFR China Assessment All Origins Spot 0-10 Days Full Market Rang…



➔
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However, upbeat market sentiment was reversed when 500
prices fell over the next eight weeks to $273/tonne CFR
China on 14 December, a drop of 34.1% and the lowest 450
price point since June 2017.
400
There were a few bullish factors in 2018 that helped
USD/tonne
to support prices for most of the year, namely the US 350
sanctions on Iran, delays in new plant start-ups, and to

300
some extent, the US-China trade war.
250
A string of unscheduled plant shutdowns in southeast Asia
and thriving demand from the Indonesian biodiesel industry 200
helped to boost prices too.
29 n- 8
9
an 18
27 r- 8
18 pr- 18
08 y- 8
ec 18
06 r- 8
16 eb- 8
02 ct- 8
23 ov- 8
14 ov- 8
ep 18
21 g- 8
31 ug- 8
10 ul- 8
u 18
a 1
u 1
01
1
1
1
1
-O 01
1
1
1
-J 01
-J 20
-J 20
-A 20
-A 20
-M 20
-D 20
-M 20
-F 20
-N 20
-N 20
-S 20
-A 20
-A 20
-J 20
-2
12 -2
20 n-2
11 -
23 b-
p
a
u
e
Except for the latter part of 2018, higher crude prices for
-F
02
most of 2018 also supported methanol market sentiment
Methanol CFR China Assessment All Origins Spot 0-10 Days Full
and prices. Methanol
MarketCFR China
Range Assessment All Origins Spot 0-10 Days Full Market Rang…
(Mid)
Methanol CFR India WC Assessment Spot Full Market Range (Mid)
Methanol CFR India WC Assessment Spot Full Market Range (Mid) : USD/tonne
Source: ICIS
In 2019, many market players are not expecting prices
to rebound to levels seen in 2018, and instead fluctuate
around 2017 levels. The effects would be most prominent in China and India,
which remain the two largest consumers of Iranian
There are more bearish factors expected for 2019 as well, materials for the near future.
sources said.
From late October to December 2018, ample Iranian spot
Despite the full Iran sanctions coming into effect in materials were available in both markets, leading to a sharp
November 2018, Iranian methanol producers were able to price drop.
move significant volumes to China and India.
In India, average spot prices fell from $437.50/tonne CFR
Many market players commented that they did not see WC (west coast) India on 26 October to $246.50/tonne
too much of a difference before and after the sanctions, CFR WC India on 14 December.
as regular buyers of Iranian materials did not see their
businesses affected. Domestic ex-tank India prices saw a similar trend, falling
from Indian rupee (Rs) 37.625/kg ex-tank India on 19
The situation is expected to remain unchanged in 2019. October to Rs20.75/kg ex-tank India on 14 December.
In 2018, two major methanol producers delayed their plant Demand for methanol in 2019 appears to be mixed as
start-ups, but nonetheless were able to achieve stable global economy forecast is bearish, and this is sure to
commercial operations in the year. affect many downstream buyers of methanol.
Natgasoline LLC, located in the US, with a nameplate Demand from some downstream sectors may increase
capacity of 1.75m tonnes/year, and Marjan Petrochemical though, like methanol-to-olefins (MTO) plants.
Company, located in Iran with a nameplate capacity of
1.65m tonnes/year, reached stable operations in end June A few MTO plants are expected to come on line in China
and August 2018 respectively. that should absorb some material, but new methanol
capacities would balance it out.
Another two major methanol plants, Kaveh Methanol
Company located in Iran with a nameplate capacity of 2.3m In southeast Asia, the Indonesian biodiesel industry
tonnes/year, and Caribbean Gas Chemical Ltd (CGCL) was widely expected to see the fastest demand growth
located in Trinidad with a nameplate capacity of 1.5m compared with other downstream sectors.
tonnes/year, should come on line in 2019.
In addition, a major downstream methyl tertiary-butyl ether
These plants are expected to have a prominent effect on (MTBE) plant is set to come on line in Malaysia in 2019,
the Asian market in 2019, adding significant volumes to the absorbing a large portion of methanol produced there.
supply pool, and thus, weighing on prices.
➔
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Downstream olefin prices should directly have an impact on 460
methanol via the Chinese MTO industry throughout 2019,
440
similar to what happened in the last quarter of 2018.
420
400
Ethylene prices fell from a near 2018 highs of $1,410/tonne
CFR NE (northeast) Asia on 17 August to a multi-year low 380
USD/tonne
of $870/tonne CFR NE Asia on 7 December, a price level 360
last seen in September 2015. 340
320
Similarly, propylene prices fell from a 2018 high of $1,185/ 300
tonne CFR China on 12 October to $850/tonne on 30 280
November, a level last seen in June 2017. 260
29 n- 8
9
an 18
27 r- 8
18 pr- 18
08 y- 8
ec 18
06 r- 8
16 eb- 8
02 ct- 8
23 ov- 8
14 ov- 8
ep 18
21 g- 8
31 ug- 8
10 ul- 8
u 18
a 1
u 1
01
1
1
1
1
-O 01
1
1
1
-J 01
These weighed down on the profitability of MTO plants,
-J 20
-J 20
-A 20
-A 20
-M 20
-D 20
-M 20
-F 20
-N 20
-N 20
-S 20
-A 20
-A 20
-J 20
-2
12 -2
20 n-2
11 -
23 b-
p
a
u
e
causing some plants to shut down or lower their operating
-F
02
rates, and buy olefins and sell methanol instead.
Methanol CFR Asia SE Assessment Singapore, Malaysia W, Dumai
Methanol CFR
Spot 2-9 Asia SE
Weeks Assessment
Full Singapore,
Market Range (Mid) Malaysia W, Dumai Spot 2-9 W…
The average operating rates in the Chinese MTO industry Methanol CFR China Assessment All Origins Spot 0-10 Days Full
Methanol
MarketCFR China
Range Assessment All Origins Spot 0-10 Days Full Market Rang…
(Mid)
fell from 79% during the week of 12 October, to 63% in the
Source: ICIS
week ended 14 December.
The drop in methanol consumption and the outflow of Upstream crude prices would continue to influence
methanol from the MTO industry led to a softening in methanol market sentiment.
Chinese domestic prices.
With crude outlook for 2019 bearish due to ample
Olefin prices in 2019 are expected to continue to come under production in the US and weak global economy, many
pressure from longer supply compared with previous years. methanol players do not see an opportunity for methanol
prices to undergo a significant recovery in the year.
Hence, some market players projected that the ceiling price
for Chinese methanol to be lower for 2019.
back to contents
ALCOHOLS
OXO-ALCOHOLS
ASIA OXO-ALCOHOLS TO ENJOY SOME SUPPORT IN Q1
BY JOSON NG JANUARY 2019 ASIA OXO ALCOHOLS AND DOP PRICES

1,250
Spot prices for oxo-alcohols in Asia could enjoy some 1,200
support in the first quarter of the year on restocking ahead 1,150
of the Lunar New year in the first week of February. 1,100

1,050
USD/tonne
For n-butanol (NBA), supply in northeast Asia could start 1,000
the year on the low side as Taiwan’s Formosa Plastics Corp 950
(FPC) shut its NBA unit for maintenance in end of November. 900
850
While the 250,000 tonnes/year unit restarted in December, 800
the producer was also carrying out works on the jetty, 750
meaning that exports of bulk cargoes was curtailed. The 700
producer was putting finishing touches on the works in
22 un- 18
9
20 ar- 8
11 pr 18
01 ay- 18
an 18
30 ar- 18
07 ov- 18
04 ec- 8
09 eb- 18
16 an- 8
05 ep- 8
26 t- 8
16 t- 18
24 ug- 18
14 ug- 18
03 ul- 8
13 n-2 8
01
1
1
1
1
1
-J 01
u 1
-J 20
-M 20
-A 20
-M -20
-M 20
-D 20
-J 20
-F 20
-O 20
-N 20
-J 20
-S 20
-O 20
-A 20
-A 20
-J 20
-2
early January.
26 an-
c
c
-J
05
2EH CFR Asia E Assessment Dutiable Spot 4 Weeks Full Market Range (Mid)
The run up to the Lunar New Year could also see some DOP
2EH CFRCFR
AsiaAsia E Assessment
E Assessment SpotSpot
Dutiable 4 Weeks Full Full
4 Weeks Market Range
Market (Mid)
Range (Mid) :…
traditional restocking activities in the region. IsoButanol CFR Asia E Assessment Spot 4 Weeks Full Market Range (Mid)
DOP CFR AsiaCFR
N-Butanol E Assessment Spot 4 Weeks
Asia NE Assessment SpotFull MarketFull
4 Weeks Range (Mid)Range
Market : USD/to…
(Mid)
Source: ICIS
IsoButanol CFR Asia E Assessment Spot 4 Weeks Full Market Range (Mid) : U…
Critical market data, tools & expertise N-Butanol CFR Asia NE Assessment Spot 4 Weeks Full Market Range (Mid) : …



➔
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The post-holiday market could see some uncertainties On the supply front, China will enjoy ample supply on
as major feedstock propylene spot prices have declined paper but plant-operating rates will dictate prices in the
following the week-long holiday for the last 2 years. domestic market.
On the feedstock front, spot propylene prices in Q1 could In northeast Asia, there are no turnaround plans expected
see some support in the run up to the Lunar New Year in in the first quarter. Supply is expected to be stable.
early February after ending 2018 on a dismal note.
Deep sea cargoes from the US could possibly increase
The Lunar New Year factor should still come into play amid as demand for oxo-alcohols in the country could
market uncertainties in the propylene market as Chinese decrease on weaker consumption from paint makers and
buyers do have the traditional mindset of stocking up plasticizers markets.
before they leave for their week-long holiday.
The situation in Europe is relatively harder to gauge, as
The key question is the amount of cargoes that they are there were a few variables in play.
prepared to buy.
Asia 2-ethylhexanol (2-EH) and N-butanol (NBA) spot prices
On the demand front for oxo-alcohols, Chinese downstream started and ended 2018 in roughly the same price trend.
markets could see some uncertainties due to the on-going
trade war with the US. Prices peaked in the middle part of the year and gradually
came down from October, following a swift drop in the
While tensions have somewhat eased after the US and propylene spot market.
China reach trade truce but a final outcome is awaited.
2-EH average price in east Asia was $1,040/tonne CFR
With demand from various downstream markets and (cost and freight) E (east) Asia on 5 January. It was $1,055/
plasticizers unclear, off take could mirror developments in tonne CFR E Asia in the end of December.
the upstream propylene market, where pre-Lunar New Year
restocking activities are expected but the degree of buying NBA spot price was $910/tonne CFR NE (northeast) Asia
remains unclear. in 5 January. It was $860/tonne CFR NE Asia in end of
November, according to ICIS data.
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AROMATICS & DERIVATIVES
BENZENE
ASIA’S BENZENE TO CONTINUE STRUGGLING WITH LONG SUPPLY
BY CLIVE ONG JANUARY 2019
A long supply scenario aptly describes the Asia benzene

market in 2018, a situation unlikely to change in 2019.
With limited outlet to the US and other destinations, most

of the volume produced has remained within Asia, and in
2019 ample supply is expected with new capacity across
Asia and the Middle East due to come on stream.
However, a majority of new downstream capacities of key

downstream styrene monomer (SM) are also planned to
come onstream from 2020 and beyond.
This lead and lag between benzene and SM start-ups

is expected to cause temporary imbalances between
demand-supply dynamics in 2019.




➔
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BENZENE & SM PROJECTS BENZENE/NAPHTHA SPREAD
7 1,000
Benzene Styrene
950
USD/tonne/Original Quoted Frequency

6
5 900
Million tonnes
4 850
800
3
Benzene FOB South Korea As-
750 sessment Spot Third and fourth
2 half month Closing Value (Mid)
700
1 Benzene FOB South Korea Assessment Spot Third
650 and fourth half month Closing Value (Mid)
0
2019 2020 2021+ 600
-M 18
-A 8
-M 18
1- -18
18
-F 8
M 8
-O 8
-N 18
7- -18
Au 8
-A 18
-S 8
5- -18
-J 8
-J 8
20 ar-1
16 n-1
9- b-1
26 t-1
3- l-1
14 g-1
22 n-1
13 n-1
30 ar-
11 pr-
c-
16 ct-
24 g-
ep
ay
ov
u
Oc
u
Ju
De
e
a
Benz ene S tyrene
-J
26
Based on the current start-up schedule, it appears that Source: ICIS
benzene supply in Asia and the Middle East will increase Benzene FOB South Korea Assessment Spot Third and fourth half month Clos…
by 3.6m tonnes in 2019, while the total increase for SM is
expected to be around 2.2m tonnes. After all, the pause in the trade war remains temporary with
no guarantee of resolution in the near term.
The benzene market has weakened from the third quarter
as the US-China trade war escalated. “Demand in China will continue to grow but is hampered by
the ongoing trade dispute,” said a producer in Korea.
Spot prices, which were hovering between $800 and $900
per tonne in the first half of the year, crashed to below Meanwhile, the spot east-west arbitrage window, which was
$700/tonne in the fourth quarter, ICIS data showed. not viable for most part of this year, shows little signs of
opening up next year.
The temporary truce in the trade war, emanating out of the
G-20 summit in Argentina in early December, is expected to Demand for Asia benzene from the US remained lackluster
buoy the market to some degree into the first quarter. in 2018 year with shutdowns at major SM plants.
“Firmer crude futures on the trade war pause should help the Sellers harbor hopes that the situation may change in 2019,
benzene market in the near term,” said a trader in Singapore. for if there were less SM outages next year, demand in the
US for Asia benzene could revive.
Benzene is a base chemical used to make other chemicals
like styrene, phenol and caprolactam. “Spot arbitrage opportunities to the US was limited this
year, hopefully that will change next year[2019]”, said a
However, market players remained cautious after the trader in Korea.
downside volatility seen in the fourth quarter.
➔
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AROMATICS & DERIVATES
PARAXYLENE
ASIA PX SUPPLY TO LENGTHEN ON NEW CAPACITIES
BY SAMUEL WONG JANUARY 2019
Supply of paraxylene (PX) in Asia should gradually PX-NAPHTHA

lengthen as a result of PX capacity expansion 750
growth,driven by two large production units coming on
700
stream in the key China market this year.
650
600
Hengli Group’s PX new capacity would stand at around
4.5m tonnes/year, while Zhejiang Petrochemical 550
USD/mt
Corporation will be able to produce 4m tonnes/year of PX. 500
450
PX is a feedstock for purified terephthalic acid (PTA), 400
which mainly goes into polyester fibres and polyethylene
350
terephthalate (PET).
300
250
Around 98% of PX is used for PTA or dimethyl
terephthalate (DMT) production.
1- ar- 5
16 Apr 15
4- pr 5
19 Ma 15
4- ay- 5
19 Jun 15
ec 5
5
9- ov- 5
24 Dec 15
11 Jan 15
2- eb- 5
17 Ma 15
5
23 Oct 5
9- ct- 5
24 Nov 15
6- Jul- 5
24 Aug 15
8- ug- 5
23 Sep 15
u 5
22 Jul- 5
-M r-1
-A -1
-M y-1
-D -1
-1
-F -1
-S -1
1
-O 1
-N -1
- 1
-A -1
-J -1
7- n-1
-
- -
8- ep-
-
27 Jan
9-
China is the key PX demand hub globally, with the country 2015 2016 2017 2018 2019 3-year average
being net-short and heavily reliant on imports. 2015 2016 2017 2018 2019 3-year average
Furthermore, global demand growth is mainly driven by China’s Fuhaichuang Petrochemical, formerly Dragon
China, with China’s PTA production capacity standing at Aromatics (Zhangzhou), also resumed PX production at
around 57% of total global PTA production capacity. one 800,000 tonne/year PX line on 25 December 2018.
In 2017, China imported around 14.4m tonnes of PX, Its other 800,000 tonne/year PX line is expected to restart
while imports in 2018 from January to November stood at in January 2019. Both PX lines were shut after a massive
14.3m tonnes. fire in April 2015.
China PX imports in 2019 are expected to decline from the In the last two years, PX demand has been supported by
previous year as a result of new PX capacities being added strong growth in the key Chinese downstream PTA and
within the country. polyester markets.
Aside from the two mega COTC projects, Sinopec is In both years, downstream demand saw double-digit
planning to start up a new 800,000 tonne/year PX unit in growth, compared to the more typical 6-7% annual growth.
the third quarter of 2019. The PX unit is located in Hainan,
with mixed xylenes being its main feedstock. A 10% demand growth in China implies that 2.5m-3m
tonnes/year of new PX capacity is required.
Towards the end of 2018, two idled PX capacities restarted
due to improved PX production margins. However, demand growth outlook is unlikely to see
more double-digit growth in 2019, amid a bearish
The PX and naphtha price differential has risen above the macroeconomic environment.
3-year average price since August 2018, as seen in the
chart above. PX supply in Asia will be in excess in the near term
once smooth operations have been achieved at the new
Indonesia’s Trans Pacific Petrochemical Indotama (TPPI) PX capacities.
restarted its 550,000 tonne/year PX unit in October 2018.
The unit had been shut since May 2014.
➔
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STYRENE
ASIA STYRENE TO HINGE ON DEMAND, DEEP-SEA ARB FLOW
BY TRIXIE YAP JANUARY 2019
Movements in Asia’s styrene market for the first quarter EUROPEAN ARRIVALS INTO CHINA
of 2019 are likely to hinge on the viability of deep-sea 45,000
arbitrage flows from exporters in the West and buying 40,000
appetite from several downstream sectors. 35,000
30,000
In most parts of 2018, Asian SM prices have remained
25,000
tonnes
the highest in the world – particularly so even after the
20,000
implementation of anti-dumping duties (ADDs) on cargoes
15,000
from South Korea, Taiwan and the US since June 2018.
10,000
Prices have been mostly supported by increased spot 5,000
activity and demand from Chinese importers in early part 0

of 2018 amid limited contractual requirements signed, Ju 5
Se 5
De 5
15
Ju 6
Se 6
De 6
M 6
Ju 7
Se 7
De 7
17
Ju 8
Se 8
18
-1
-1
1
-1
-1
1
n-
p-
c-
n-
p-
c-
n-
p-
c-
n-
p-
ar
ar
ar
ar
with the uncertainty of the ADD panning out and heavy
M
M
maintenances taking place.
Subsequently, the market was supported in the third quarter The mostly wide price differential between CFR China and
of the year because of limited supply of non-ADD cargoes prompt FOB Rotterdam prices was clearly in the favour of
since buyers preferred to minimise their procurement risk sellers for these arbitrage cargoes as well.
for ADD cargoes.
Volumes from Europe going into China have increased
Since the fourth quarter of 2018, however, it became exponentially from June-July 2018 in comparison to the
evident traders and sellers have started to find past three years, when cargoes are typically exported
opportunities for non-ADD supply elsewhere such as towards year-end ahead of the clearing of inventories to
Europe – which is typically balanced in terms of demand- avoid heavy tax levies.
supply – to boost spot trading liquidity.
“Traders try to swap the US cargoes out to Europe and

then bring the European cargoes here, since exports from
the US to Europe were already common and they are just EAST CHINA INVENTORIES (’000 TONNES)
adding on to the volumes,” one trader said. 180
160
140
PROMPT EUROPE - FORWARD ASIA ARBITRAGE 120
$/tonne
100
80
Qty
60
40
20
-20
1- l
22 g
12 g
31 ct
21 ct
7- b
10 p
24 n
14 n
un
ec
28 ar
18 ar
9- r
30 ay
20 y
12 v
u
p
o
Au
u
e
e
Ja
-J
-O
-O
M
-M
-A
-D
M
-M
-J
-N
-J
-F
-S
-A
5-
11
Qty
➔
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DOWNSTEARM OPERATING RATES IN CHINA STYRENE AND PS ASIA
100
90
80
70
60
50
%
40
30 EPS
20 ABS
10 PS
0
11 /18
12 18
8
8/ 18
9/ 8
9/ 18
10 /18
5/ 18
6/ 18
7/ 8
7/ 18
2/ 8
3/ 8
3/ 18
4/ 18
5/ 8
/1
/1
/1
/1
/1
6/
6/
7/
4/
/
9/
2/
/7
17
28
25
15
27
23
14
19
/2
/1
1/
Source: ICIS
EPS ABS PS
European cargoes are currently not subject to any form of are selling pressures in Taiwan and South Korea,” one
ADDs by China and this has been resulting in much higher northeast Asian buyer said.
than expected inventory levels at east China main ports,
as ICIS data continues to hit new highs since the end of The second price and market trend determinant will be the
November. consistency of demand from downstream EPS, PS and
ABS from China and outside of China.
The burning question now is whether this newly established
tradeflow will continue going forward into the first few Run rates in domestic China for these three key markets
months of 2018. are close to the highest level for 2018, with expectations
it could perhaps maintain the momentum to early 2019
Majority of the market expect at least 10,000-20,000 tonnes because of healthy downstream spreads.
of product will still be available on a monthly basis from
Europe to China, with volumes being able to hit close to This was a reversal of the situation in early 2018, when some
30,000-40,000 tonnes on some months. PS makers switched to buying PS instead of styrene because
of the better netbacks and poor PS production economics.
“Already we are seeing at least 15,000 tonnes of Europe-
origin arrivals for January and February respectively, which Imports for PS - both GPPS or HIPS - hit a high of around
means that this deep-sea arbitrage flow will continue but 108,000 tonnes in July 2018, a level unseen in the
the magnitude will still be dependent on spreads and how past three years, customs data showed. For the same
long Western supply is,” one major Chinese importer at corresponding month, SM import volumes were only at
east China said. around 220,000 tonnes.
This was amid the unexpected outage at one of Trinseo’s

Netherlands plant since 10 December, which is likely to IMPORTS TO CHINA
weigh on the number of exports available for Asia. 350
SM PS
300
Supply from other regions that provide non-ADD cargoes
is unlikely to cease in the short run, given that margins are 250
still above the 2017 average and there is still weakness in
'000 tonnes
200
the upstream benzene market expected for early 2019.
150
However, the supply flow to China from regions such as 100

southeast Asia and the Middle East has always been
50
present and may have less impact on the market.
0
“We probably need to look at Thailand as the next
Fe -17
M -17
Ap -17
M r-17
Ju -17
Ju 17
Au l-17
Se -17
Oc 17
No -17
De 17
Ja -17
Fe 18
M -18
Ap -18
M r-18
Ju -18
Ju 18
Au l-18
Se -18
Oc 18
8
t-1
n-
p-
v-
n-
n-
p-
opportunity, as some traders may swap cargoes from

g
n
b
g
ar
ar
ay
ay
Ja
Thailand/Singapore/Malaysia out for export to China if there

SM PS
➔
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STYRENE AND EPS ASIA A key reason is because the potential supply loss could
have already been factored in by market players before it
happens, as some end-users in South Korea and Taiwan
preparing much earlier beforehand for December or
January arrivals from the US.
“The maintenances were already a given since September

and October, when producers started to announce their
plans and asking end-users to prepare way in advance
since there may not be any spot cargoes available in end-
March and April from one or two majors,” one traders said.
The expected supply shortage, however, could cause

a reverse rift between CFR NE Asia and CFR China
prices during that period – given that units undergoing
turnarounds are mostly producing ADD-origin product.
Source: ICIS
As of late 2018, prices between these two regions have

However, the earlier Lunar New Year timing for 2019 may been widening as selling pressures emerge for ADD-
present as a hindrance for the stocking up of SM as end- origin product, with sellers having to offload cargoes into
users will start to taper down their activity from end-January northeast Asia because of potentially better netbacks in
as there will be limited demand for half a month in February. comparison to the Chinese import market.
“Already, there are talks of some slow sales for downstream Naturally, CFR NE Asia prices started to trend lower than
EPS because plants are running higher since end-November CFR China since Taiwanese, Hong Kong and South Korean
and supply is increasing,” one east China trader said. buyers have been receiving much more competitively-
priced offers.
Growth in demand from these downstream sectors could be
further stunted if manufacturers outside of China continue Should ADD-origin cargoes be lower in volumes, it could
to record lower costs than these PS/EPS makers in China - result in CFR NE Asia prices going on par with CFR China
since these users are able to procure SM cargoes that are or even higher, reversing the current trend of CFR China
subject to ADDs in China. prices being higher than CFR NE Asia, several market
participants said.
Separately, in northeast and southeast Asia, end-users were
facing a different predicament and better production spreads The expected supply increments in China after the
was not exactly their push factor for current spot procurement. construction of mega refineries begun, which have been a
key concern since 2017, could take a backseat as market
Buying activity for January and February parcels mostly players expect production delays to extend into end-2019
stems from the lack of confirmation for contractual cargoes and early 2020.
next year, with some term negotiations still yet to be
concluded between some domestic suppliers and end-
users as of the time of this article publication. SM PRODUCTION LOSS IN ASIA FROM MAINTENANCE
220
Furthermore, with the US-China trade war still playing out 200
for tariffs on ABS downstream home appliances market at 180
the backdrop, end-users find it tough to be bullish. 160
140
'000 tonnes
ABS producers in the northeast Asia region typically sells 120

cargoes to China to downstream end-users and these end- 100
users will sell the finished products into the US usually. 80
60
Separately, while there is market belief the heavy 40
maintenance schedule at several producers’ plants in 20
the Asia region, starting mostly from February, will lead 0
to positive impact on prices – it may not be the key Jan Feb Mar Apr May Jun Jul Aug
determining factor.
Jan Feb Mar Apr May Jun Jul Aug
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“It would be a stretch to say that the three major plants NEW START-UPS IN CHINA (2019-2020)
coming up can start up and have regular production Capacity Estimated
Company Location
towards the end of 2019, because they have a lot of other ('000 tonnes) start up timing
technical aspects to iron out first in the upstream refinery Sinopec SK-
Hubei, Wuhan 27 Jan-Feb 2019
units,” one Chinese trader said. Wuhan
CITIC
Dongying,
Zhongxin 200 Mar-Apr 2019
Despite the presence of all these demand-supply factors at Guoan
Shandong
play, there is a nagging suspicion at the back of everyone’s Zhejiang Danshan,
minds that sentiment play and traders’ position taking could 1200 H2 2019
Petrochemical Zhejiang
still result in market shifts that are beyond expectations. Hengli
Liaoning, Dalian 720 H1 2020
Petrochemical
“Ultimately, it depends on how the big traders’ sentiment Huizhou,
CNOOC-Shell 700 H1 2020
Guangdong
will evolve and how speculative the futures market will
Abel Chemical Taixing, Jiangsu 500 2020
become as SM becomes the a dominant product on the
Sinochem
Huaxi Securities Exchange after MEG gets listed on a Quanzhou
Quanzhou, Fujian 450 H2 2020
second platform - the Dalian Commodity Exchange -
subsequently,” one Chinese small end-user said.



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TOLUENE
ASIA’S TOLUENE POISED FOR HIGHER SPOT LIQUIDITY AMID VOLATILITY
BY TRIXIE YAP JANUARY 2019
Asia toluene is poised for increased spot trading liquidity It led to lower supply from South Korea as well, as several
and cargo availability, be it free-on-board (FOB) Korea integrated refineries placed more toluene for benzene
basis or cost-and-freight (CFR) China, though demand in production instead of selling it in the merchant market.
the downstream benzene market is seen slightly weaker in
the first quarter. The country remained as a net importer through the months
leading up to the third quarter of 2018.
Buying interest from key importer China will remain a wildcard.
However, starting the third quarter of 2018, there has
For the most parts of 2018, especially the first half of the been a change of fortunes with TDP production spreads
year, toluene prices have been mostly trending in line narrowing significantly and toluene prices surging past
with downstream benzene prices because of the healthy benzene prices for at least a month.
production spreads via the toluene disproportionation
(TDP) unit process. This anomaly was mostly attributed to weak benzene
fundamentals and slight prompt supply shortages at
The average spreads between benzene and toluene, as Chinese importers’ tanks.
well as between isomer xylenes and toluene, were above
the typical producer break-even level. Levels surged to Despite the resolution of prompt supply shortage after a
beyond $100/tonne on average in first-half 2018. month, benzene prices continued to trade almost flat to
toluene prices and as a result, the emergence of lesser
As a result, a large part of toluene was allocated for toluene demand from the TDP sector became more evident.
benzene production, especially in northeast Asia namely
South Korea and sometimes Taiwan, because these two There was either a cut in the percentage of toluene used
regions tend to be slightly short on supply. for benzene production, with some producers focused
on more mixed aromatics to extract isomer xylenes from
Demand was healthy from these few regions and it was the the pool, or a total reduction in average run rates for the
key market driver, even if Chinese import buying interest smaller units.
was lukewarm throughout the year.
SOUTH KOREA IMPORTS FROM CHINA (IN TONNES) SOUTH KOREA’S 2018 TOLUENE TRADE FLOW ➔
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TOLUENE-BENZENE SPREAD the operational costs and risks,” one southeast Asian
trader said.
So far, the only conclusion of 2019 contracts between

producer and trader is Taiwan’s CPC Corp and some
producers in southeast Asia such as Thailand.
All were concluded at lower premiums in comparison to 2018.
The slight increase in usage of heavier naphtha feedstock

during the first few months of the year, because of higher
costs for using lighter liquefied petroleum gas (LPG)
feedstock, is likely to add on the spot availability from
pygas-based producers.
Source: ICIS
There are however expectations that such supply will
taper off from second-half February onwards because
Such a situation is likely to extend into the first quarter of scheduled maintenances that are likely to happen at
of 2019, with the benzene-toluene spread still less than several producers’ units including LG Chemical’s Daesan
$40/tonne on average in the last few weeks of 2018, ICIS aromatics unit.
data showed.
Buying interest in the first quarter from the wildcard
This in turn could result in a potential increase of importer – China – will be the second key determinant for
spot availability for the merchant market and trading the potentially higher pace of spot trading activity.
opportunities if some producers do not have the need to
allocate it for downstream units. This is despite the rising inventory levels at main east
China public shore tanks since December 2018.
Furthermore, because of squeezed trading margins this
year for buyers who took FOB Korea contracts, there were “Importers are still there for various reasons, be it to
no firm willing parties who wanted to renew their term average out their earlier costs from November or to get
contracts with producers. wider credit terms from procuring CFR cargoes or to take
position because of expectations that the market is close to
Some producers as a result have been in the market for the bottom,” one Chinese trader said.
January-loading parcels since there were no contractual
requirements needed to be fulfilled. Furthermore, a lack of signed contracts for CFR China
cargoes for 2019 – a situation that mirrored that in the FOB
“The spot cargoes would have to be sold either ways, by
traders or by producers themselves, but most of the time EXPECTED 2019 PRODUCTION LOSS
the producers will sell FOB since they do not want to bear FROM MAINTENANCE
TOLUENE CFR CHINA VS CFR NE ASIA VS CFR SE ASIA
Source: ICIS
➔
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EAST CHINA TOLUENE SHORETANK INVENTORIES NEW START-UPS IN CHINA (2019)
Capacity ('000 Estimated start
Company Location
tonnes) up timing
Petrochina Renqiu,
300 Q1 2019
Huabei Hebei
Sinopec Hainan
Hainan 150 Q1 2019
Refinery No2
Yinzhou,
Ningxia Baota 250 H2 2019
Ningxia
There is also a fear of additional spot supply from domestic

producers, following the implementation of GBVI gasoline
from 2019 in most provinces in China, because of the lower
aromatics content required for the blending pool.
Already, exports from China have emerged because some

major refineries are looking to seek out new opportunities
and open trade routes, should there be limited usage from
their integrated system for gasoline blending.
The key destination for China exports is still South Korea

for the time being because of the freight convenience and
Korea market – meant that buyers must emerge in the spot logistical costs.
market if they had buying requirements.
In contrast, southeast Asia and Indian import demand is
Hopes for end-users entering the market after the Lunar unlikely to reflect any large changes since downstream
New Year to replenish stocks led market players to believe buyers are mostly in the solvent industry, where the growth
that import demand could improve as well. rate per year is expected only at 1-2%.
However, rising domestic supply due to new capacity “Ultimately, it is the same old situation every year but
expansions could still cap overall CFR China demand, even this time China buying behaviour will be less predictable
if these increments are no longer as large as the plants than before owing to their lower dependency on imported
which started between 2016 and 2018. product,” one trader said.


➔
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XYLENE
ASIA IX DEMAND SEEN ROBUST ON NEW DOWNSTREAM PX CAPACITY
BY YAW MIN JIE JANUARY 2019
Asia’s isomer-grade xylenes (IX) market sentiment is likely IX PX

1,400 SPREAD 450
to stay positive in the coming months on increased demand 1,200

400
from the planned startups of downstream capacities in the 350
region. 1,000
300
USD/tonne
800 250
A few substantial downstream paraxylene (PX) plants are
Spread
expected to start up in 2019, increasing the appetite for 600 200
feedstock isomer-grade xylene. 150
400
100
In comparison, the capacities of fresh feedstock IX
200
capacities planned to come online in 2019 are lesser than 50
that of downstream PX . 0 0
31 e c - 18
e c 18
22 t- 8
12 t- 18
03 ov - 18
8
20 J ul- 18
10 ug- 18
01 ep- 8
30 ul- 2 8
18 a y - 8
un 18
16 a r - 8
07 pr 18
28 a y 18
26 a r - 18
05 b- 18
12 a n- 8
01
1
- J 01
1
1
1
One thousand tonnes of IX produces around the same
- O 20
- N 20
- D 20
- D 20
- O 20
0
- A 20
- S 20
- J 20
- M 20
- A 20
- M - 20
- M - 20
- M 20
- F 20
- J 20
-2
09 - 2
22 a n-
c
c
e
quantity of PX.
-J
-
01
PX PX Spread
Source: ICIS C FR C hina As s es s ment Main Ports S pot 2nd, 3rd and 4th half-mo…
A 500,000 tonne/year reformer/disproportionation unit in Paraxylene
Japan will be permanently shut down from end-March
Xylenes Is omer Grade C FR As ia NE As s es s ment S pot 4-10 Weeks Full Marke…
2019, according to a company’s source. “PX is definitely the main driver of IX price movements
compared with benzene next year,” a trader said. “Benzene
IX prices were driven higher by positive margins with is so weak [in 2018], and more capacities are coming up
downstream PX this year, a trend likely to continue as more [for 2019].”
PX capacities on stream later.
Isomer-grade xylene is produced alongside benzene and
The Asia IX and PX spread has been above $400/tonne toluene, and producers tend to look at margins of the three
since end-August on the back of firm PX values, according products as a whole rather than focus on just one.
to ICIS data.
In 2017 aromatics producers were usually driven by
The spread was at $466/tonne on 3 September, which is benzene margins but that changed in 2018.
the highest levels since March 2011.
The break even for regional end-users was $120-140/tonne. BENZENE/NAPHTHA SPREAD
Market participants attributed the spread to overall firmer

PX prices, supported by regional turnarounds and buoyant
downstream futures.
IX AND PX NEW CAPACITIES IN 2019

Est. IX capacity PX capacity
Plant Name
start up (‘000 tonne/year) (‘000 tonne/year)
Hainan Refinery Q3 2019 240 1,000
Zhejiang
Q3 2019 Not disclosed 4,000
Petrochemical
Fuhaichuang
(Dragon Q1 2019 1,360 1,600
aromatics)
Hengli
Q3 2019 3,800 4,500
Petrochemical Source: ICIS
➔
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This was because margins between naphtha and benzene A southeast Asian seller sold at a discount of $10/tonne on
fell steadily with the spread falling to between $133-227.50/ FOB Korea basis which is $5/tonne higher compared with
tonne so far from August 2018. 2018’s term contract prices.
Due to increased PX demand, market participants expect A northeast Asian seller was in talks for 2019 term contract
the spread between IX and feedstock naphtha to remain prices at $3-5/tonne premium to the FOB Korea price,
positive and the US arbitrage to open up. which is higher compared with flat prices in 2018.
Spread between FOB (free on board) Korea IX and CFR China is likely to remain intermittent importer of IX
(cost & freight) Japan naphtha has been above $180/tonne cargoes, as the usage of IX in gasoline blending remains
since July 2018, hitting an intra-year peak at $293/tonne on unattractive amid gasoline supply glut.
9 November.
While wider IX/Toluene spread in 2018 rendered IX
“IX has been the most profitable compared with the other unfavorable as a gasoline blendstock, the situation is
aromatics also because supply of IX in Asia is snug due expected to continue for 2019 while toluene remains
to light feed at certain crackers,” a regional producer well supplied. Furthermore, China will implement a
commented. National VI emission standard from January 2019, setting
a lower maximum aromatic content of 35 percent from 40
Lighter feedstock in certain crackers produces lesser IX percent in the earlier National V standard.
and solvent-grade xylenes.
The country’s environmental protection agency requires lesser
Term contracts for 2019 have so far been concluded at emission from vehicles by adapting fuel specifications.
higher levels compared to 2018, an indicator of a stronger
market ahead.
In Taiwan, state-owned CPC Corp, for one, has committed

close to 20,000 tonnes/month in total to its term buyers at
a discount of between $5-7/tonne on a FOB Korea basis,
sources said. Its 2018 term cargoes were sold at a discount
of $11-13/tonne to FOB Korea prices.
Northeast Asian traders have sold the term cargoes to

Taiwan’s largest buyer Formosa Chemical and Fibre
Corporation at discounts of around $9/tonne on a CFR
Taiwan basis, a narrower discount than 2018 contract prices
of around CFR Taiwan minus $12/tonne, sources said.


➔
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BASE OILS
BASE OILS
ASIA BASE OILS TO REMAIN SLUGGISH ON OVERSUPPLY, FALLING CRUDE
BY MATTHEW CHONG JANUARY 2019
Asia’s spot import prices for Group II low viscosity 150N as BASE OILS GROUP II PRICE HISTORY
well as high viscosity 500/600N base oils are expected to 840
820
come under further pressure in the first quarter of 2019 as
800
a result of long supply.
780
760
Group II spot supply from northeast Asia is set to rise as 740
USD/tonne
refiners in this region have switched back to producing 720
more base oils instead of gas oil following the plunge in 700
680
crude and gas oil prices since early October.
660
640 Base Oils Group II N150 FOB Asia NE Assessment
Declines in gas oil prices slumped to an 18-month low on 2 620 Spot 2-6 Weeks Full Market Range (Mid)
January, tumbling 36% to $455/tonne FOB (free on board) 600 Base Oils Group II N500 FOB Asia NE Assessment
Singapore from its 2018-high of $709.5/tonne FOB Singapore 580
recorded on 12 October 2018, according to ICIS data.

16 an- 8
01 ay- 8
22 n- 8
9
an 18
20 ar- 8
11 r- 18
30 ar- 18
07 ov- 8
04 c- 8
09 eb- 18
26 ct-2 8
16 ct- 18
05 p-2 8
24 ug- 18
14 ug- 8
03 ul- 18
un 18
1
1
1
01
1
1
1
-O 01
e 1
1
-J 20
-J 20
-J 20
-M 20
-A 20
-M 20
-M 20
-F 20
-O 0
-N 20
-D 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
13 -2
26 an-
e
u
-J
Taiwan’s Formosa Petrochemical Corp (FPCC) and most

05
Source: ICIS
South Korean refiners – the main spot exporters of Group
Base Oils Group II N150 FOB Asia NE Assessment Spot 2-6 Weeks Full Marke…
II cargoes – have resumed full base oils production after
having cut their base oils output by around 10-20% in especially hard-hit
Base Oils Group as
II N500 Asian
FOB Asia NEsuppliers
Assessmentwill have
Spot 2-6 to Full
Weeks face stiff
Marke…
October and November 2018 to switch to produce more competition from the Middle East- and US-origin material.
gas oil, which was generating better margins at that time.
The same could also be said for Group III base oils
In South Korea, three of the four refiners in the country whereby lower-priced Middle Eastern cargoes is set to
have recovered their base oils production to full capacity gradually expand their market share in Asia including India.
in mid-November, while the other refiner has resumed its
normal operating rate at around 80% capacity. Besides South Korea being the main Group III export
nation in Asia, Malaysia’s Petronas and Indonesia’s
The expected increase in Group II supply going forward Pertamina also produce Group III base oils.
will continue to weigh on prices, with the India market
South Korea’s S-Oil will shut its 880,000 tonne/year Onsan
GAS OIL AND 150N ASIA Group III unit in March 2019 for scheduled maintenance
which will likely result in lesser spot availability from the
refiner in the first quarter. SK Lubricants is the other Group
III refiner in South Korea.
Upcoming capacity expansions in Asia such as China’s

Hengli Petrochemical’s (Dalian) 540,000 tonne/year Group
II and III base oils units, slated to come on stream in Q1
2019, will aggravate the oversupply situation even further,
albeit new start-ups may not run at high rates amid long
supply and poor market sentiment.
For Group I, SN500 and brightstock prices are expected to

track the broader movements of Group II prices although
the overall supply of Group I material is relatively tighter
Source: ICIS
than that of Group II.
➔
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Japan’s JX Nippon & Energy, a major exporter of Group I BASE OILS GROUP 1 PRICE HISTORY
cargoes, will be taking several of its Group I base oils units 950
in turns for maintenance in Q2 and Q3 2019, including

900
its 180,000 tonne/year Mizushima A, 300,000 tonne/year
Mizushima B and 200,000 tonne/year Kainan units. 850
800
USD/tonne
The refiner has another 240,000 tonne/year Negishi Group
I unit which is not scheduled for a turnaround in 2019. 750
Iran Group I cargoes is also expected to be less prevalent 700
in the India market due to uncertainties following the 650

renewed US sanctions on Iran in early November 2018,
which will likely result in Indian buyers sourcing more of 600
their imports from Asia.
16 an- 8
22 n- 8
9
20 ar- 8
11 r- 18
01 ay- 8
an 18
30 ar- 18
07 ov- 8
04 c- 8
09 eb- 18
26 ct-2 8
16 ct- 18
05 p-2 8
24 ug- 18
14 ug- 8
03 ul- 18
un 18
1
1
1
01
1
1
1
-O 01
e 1
1
-J 20
-J 20
-M 20
-A 20
-M 20
-J 20
-D 20
-M 20
-F 20
-O 0
-N 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
13 -2
26 an-
e
u
-J
General demand in Asia including India is expected to
05
Base Oils Group I Paraffinic SN150 FOB Asia Assessment Export
remain sluggish in January as global economic concerns in Spot 2-6 Weeks Full Market Range (Mid)
Base Oils Group I Paraffinic SN150 FOB Asia Assessment Export Spot 2-6 We…
2019 will likely weigh on market sentiment. Base Oils Group I Paraffinic SN500 FOB Asia Assessment Export
Base Oils Group I Paraffinic SN500 FOB Asia Assessment Export Spot 2-6 We…
Base Oils Group I Paraffinic Brightstock FOB Asia Assessment
Demand is unlikely to see any significant improvement until Export Spot 2-6 Weeks Full Market Range (Mid)
Base Oils Group I Paraffinic Brightstock FOB Asia Assessment Export Spot 2-…
Source: ICIS
the second half of February at the earliest after the Lunar
New Year in early February, as downstream plants in China
and Taiwan especially, will be closed for at least one to two
weeks from late January.



➔
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2019 Conferences Calendar
ICIS organises a range of conferences around the world which offer you the
chance to hear from key industry leaders, learn about the latest innovations
and developments and network with your industry colleagues.
The 7th Asian The 23rd ICIS World The ICIS World
Oleochemicals Conference Chlor-alkali Conference Oleochemicals Conference
15 - 16 January 2019, Kuala Lumpur 20 - 21 June 2019, Singapore 24 - 25 October 2019, Barcelona
www.icisevents.com/asianoleo www.icisevents.com/worldchloralkali www.icisevents.com/worldoleochemicals
The 23rd World Base The 13th ICIS Asian Base Oils The 8th ICIS African Base Oils
Oils Conference & Lubricants Conference & Lubricants Conference
20 - 22 February 2019, London June 2019, Singapore October 2019, East Africa
www.icisevents.com/worldbaseoils www.icisevents.com/asianbaseoils www.icisevents.com/africanbaseoils
The 14th ICIS World The 12th ICIS World Chemical The 18th ICIS World Aromatics
Olefins Conference Purchasing Conference & Derivatives Conference
06 March 2019, Monaco September 2019, Boston November 2019, Amsterdam
www.icisevents.com/worldolefins www.icisevents.com/worldchemicalpurchasing www.icisevents.com/worldaromatics
ICIS PET Value The 8th ICIS European Butadiene The 9th ICIS Asian
Chain Conference & Derivatives Conference Surfactants Conference
12 - 13 March 2019, Amsterdam September 2019, Europe November 2019, Singapore
www.icisevents.com/petvaluechain www.icisevents.com/europeanbutadiene www.icisevents.com/asiansurfactants
The 8th ICIS World The 4th North American Industrial The 2nd Asian Industrial
Polyolefins Conference Lubricants Congress Lubricants Conference
April 2019, Europe September 2019, Chicago November 2019, Singapore
www.icisevents.com/worldpolyolefins www.icisevents.com/uslubricants www.icisevents.com/asianlubricants
The 7th ICIS Indian Base Oils & The 8th ICIS European The 7th ICIS Asian
Lubricants Conference Surfactants Conference Polyolefins Conference
9 - 10 April 2019, Mumbai September 2019, Amsterdam November 2019, Bangkok
www.icisevents.com/indianbaseoils www.icisevents.com/europeansurfactants www.icisevents.com/asianpolyolefins
The 9th ICIS World The 3rd ICIS Indian The 15th ICIS Pan American Base
Surfactants Conference Surfactants Conference Oils & Lubricants Conference
15 - 16 May 2019, Jersey City October 2019, Mumbai 04 - 06 December 2019, Jersey City
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CHLORALKALI
CAUSTIC SODA
AMPLE SUPPLY IN ASIA MAY WEIGH ON CAUSTIC SODA GOING INTO Q1
BY JONATHAN CHOU JANUARY 2019 ASIA ARBITRAGE TO US WEST COAST

800
Downward pressure on caustic soda prices in Asia is likely 700
to remain in the first quarter of 2019 due to ample supply
600
from northeast Asia.
500
Indian authorities have required caustic soda imports to have 400
USD/dmt
certification from the Bureau of Indian Standards (BIS) since 300
April, although this was not enforced until October.
200
100
This prompted producers, mainly from Japan, to put
contract volumes bound for the south Asian country on hold 0
while they to gathered the required documents in order to -100
submit their applications.
8
11 a y - 8
02 n- 2 8
23 ul- 2 8
ul 8
30 pr - 8
21 pr - 18
09 r - 8
26 b- 8
19 eb- 8
05 n- 7
e c 17
27 ov - 7
18 ov - 7
06 c t- 7
e p 17
25 ep- 7
- J 01
- J 01
01
1
u 1
1
1
e 1
1
a 1
1
1
- O 01
1
- M 20
- J 20
- A 20
- A 20
- M 20
- F 20
- F 20
- J 20
- D 20
- N 20
- N 20
- S 20
- S 20
-2
16 - 2
15 -
04 ug-
a
India is a major buyer of caustic soda, importing 411,033
-A
14
liquid tonnes of the material in the financial year ending Caustic Soda Liquid FOB USG Assessment Export Spot 4-6 Weeks
Full Market Range (Mid)
March 2018, according to data from the country’s C aus tic S oda
Caustic Liquid
Soda FOB FOB
Liquid US G Asia
As s es
NEs ment Export SSpot
Assessment pot 4-6
4-6Weeks
WeeksFull Marke…
Full
Market Range (Mid)
Department of Commerce. Japan is one of the major C ausCaustic
tic S odaSoda
Liquid FOB FOB
Liquid As ia USG
NE AsAssessment
s es s ment S pot 4-6 Weeks
Export Full
Spot 4-6 Market Ra…
Weeks
Asian exporters of caustic soda, and counts India as its Full Market Range - Caustic Soda Liquid FOB Asia NE Assessment
Spot
C aus tic S4-6
odaWeeks Full Market
Liquid FOB US G AsRange (Mid)
s es s ment Export S pot 4-6 Weeks Full Marke…
second-biggest export market after Australia. Source: ICIS
The south Asian country took up 34% of Japan’s total Downstream alumina refineries located in east India
caustic soda exports in 2017, according to data from typically use cargoes imported from northeast Asia.
Japan’s Ministry of Finance. Indian authorities met in Domestic trade with caustic soda producers located in west
end-November to discuss the BIS issue, but proposed India is therefore infrequent due to logistical hurdles.
exemptions by northeast Asian producers were not
successful, according to market sources. Nonetheless, domestic trade in caustic soda has seen
an uptick, largely spurred on by lowered inventory levels
All caustic soda exports into India will therefore require caused by the halted imports. Mounting inventory concerns
accompanying BIS certification. The BIS certification takes remain if producers do not find any outlets for the excess
three to six months to process, and a number of northeast volumes in early 2019, and supply in the region is expected
Asian producers are expected to submit their applications to remain long moving into the first quarter of next year.
by end-December, market sources said.
In the meantime, they are negotiating earlier contract
JAPAN’S TOTAL LIQUID CAUSTIC SODA EXPORTS (2017) shipments to other regions such as the US West Coast
or Australia, according to a market source. The analytical
widget below shows the threshold for Asia-to-US caustic
25%
soda arbitrage. The present situation does not affect
producers in China and South Korea as much, said market
41%
sources.
Australia
India
While China is a net exporter of caustic soda, stable
Other Regions
domestic demand and lower spot prices in Asia have led to
scant export volumes since mid-2018 as producers focus
34% on the more lucrative domestic market. Chinese domestic
demand for caustic soda is driven by various industries,
such as alumina refiners, rayon, and water treatment.
Source: Ministry of Finance, Japan
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Alumina producers in China have seen less winter CAUSTIC SODA ASIA PRICE TREND
production cuts in 2018 as the country seeks to maintain 700
its economic growth amid the US-China trade war, and the 650
trend may continue next year amid the uncertain global
600
political landscape.
550
An alumina refinery in Dubai that came online in end-2018 500
USD/dmt
will consume an additional 130,000 tonnes of caustic soda 450
annually, and may continue to source for spot volumes from 400
northeast Asia, said market sources.
350
Other regional alumina factories are located in India, 300
Indonesia, Vietnam, the Philippines and Australia. 250
13 r- 8
04 pr- 18
23 ar- 8
25 ay- 18
15 y- 8
un 18
28 p- 8
19 p-2 8
09 ct- 8
21 v- 8
ec 18
an 18
9
07 ug- 8
30 ov- 8
17 ul- 8
8
1
1
a 1
e 1
-O 01
01
1
1
-J 01
-J 01
-M 20
-A 20
-M 20
-M 20
-M 20
-J 20
-S 20
-S 20
-D 20
-J 20
-A 20
-N 20
-N 20
-2
27 l-2
06 -2
Downstream expansions in South Korea from the epoxy
02 eb-
18 -
u
a
o
e
-F
resin, super absorbent polymers, semiconductor and oil
09
Caustic Soda Liquid CFR Asia SE Assessment Spot 4-6 Weeks Full
and gas sectors is expected to come on line in the first half Market Range (Mid)
Caustic Soda Liquid CFR Asia SE Assessment Spot 4-6 Weeks Full Market Ra…
of 2019, and domestic consumption is expected to increase Caustic Soda Liquid FOB Asia NE Assessment Spot 4-6 Weeks Full
Market Range (Mid)
by around 120,000 dmt/year (dry metric tonne), according Caustic Soda
Caustic Liquid
Soda FOBFOB
Liquid AsiaChina
NE Assessment Spot
Assessment 4-6 Weeks
Export Full
Cargoes Market Ra…
Spot
4-6 Weeks Full Market Range (Mid)
to market sources. Caustic Soda Liquid FOB China Assessment Export Cargoes Spot 4-6 Weeks …
Source: ICIS
A South Korean caustic soda producer’s capacity

expansion of 150,000 dmt/year is planned to come on In spite of the above factors, caustic soda supply in Asia
line only in November 2019. In the meantime, less export is expected to remain long until exports to India resume,
volume is expected to come from the country next year simply due to the large volumes being displaced at the
amid an expected shortfall in domestic supply. moment.



➔
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FEEDSTOCKS & INTERMEDIATES
EPOXY RESINS AND EPICHLOROHYDRIN (ECH)
WEAK DEMAND FOR EPOXY RESINS TO WEIGH ON CHINA ECH PRICES
BY AMY TAN JANUARY 2019
China’s epichlorohydrin (ECH) prices are likely to face EPOXY RESIN – ECH SPREAD
downward pressure from weak downstream epoxy resins
demand in 2019 even as domestic ECH supply remains
tight.
Prices of ECH in the China domestic market plunged to

year-lows on 11 December at yuan (CNY)9,000-10,000/
tonne amid weak demand from downstream epoxy resins.
This price translates to $1,248-1,387/tonne on an import
parity basis.
On 26 October 2018, key domestic producer Shandong

Haili shut its 320,000 tonne/year ECH plant in Zibo,
Shandong. The plant has four lines with equal capacity.
A company source said the plant may restart by end-2018

Source: ICIS
and run at a lower operating rate. However, no scheduled
restart date was provided.
The latter is used as adhesives on metals and construction
Despite tight supply, buyers are cautious in their materials, as well as in coatings and automobiles.
procurement as demand for downstream epoxy resins has
been sluggish even after the typical seasonal lull from June Demand for both ECH and epoxy resins is usually subdued
to August. at the end of the year due to a slowdown in construction
and manufacturing activities. Consequently, domestic
“It is likely that demand for both ECH and epoxy resins prices of epoxy resins have been declining in December.
remains tepid in the first quarter of 2019 as Lunar New
Year is in February and most buyers are still well-stocked On 18 December, prices were at CNY17,000-17,500/tonne
with inventories,” said one epoxy resins market participant compared with CNY18,000-18,500/tonne on 11 December.
in Mandarin.
The slide in epoxy resins prices in the China domestic
ECH is mainly used to produce epoxy resins. market has led some suppliers to allocate cargoes into
southeast Asia.
While buyers in the region typically procure cargoes from

Korea, Japan and Taiwan, some market participants
observed that buyers may switch to China-origin epoxy
resins if prices are lower.
“The market situation in 2018 is very similar to 2016

whereby spot enquiries from southeast Asia, Europe and
US remained rather sporadic even when it wasn’t the
seasonal lull. It is likely that this would extend into 2019,”
explained one epoxy resins producer.
On 18 December, epoxy resins prices were at $2,500-

2,700/tonne FOB (free on board) NE (northeast) Asia.
➔
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Against this backdrop, market participants observed that ECH “The buy-sell gap in the CFR CMP market will continue.
makers may see their margins squeezed in the near-term. China has become self-sufficient and even with current
tight supply, there is no way anyone would import given
One northeast Asian producer placed minimum selling weak demand for epoxy resins. At the same time, we will
indication at $1,550/tonne CFR (cost and freight) CMP (China be making a loss if we offer cargoes at $1,200/tonne CFR
Main Ports) but conceded that it would take a selling indication CMP,” said one northeast Asian ECH producer.
of $1,200/tonne CFR CMP to draw buyers’ attention.
On 18 December, ECH prices were at $1,450-1,550/tonne
CFR CMP, according to ICIS data.
ECH, EPOXY RESIN AND PROPYLENE PRICE HISTORY ECH – PROPYLENE SPREAD
Source: ICIS Source: ICIS




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METHYL METHACRYLATE (MMA)
ASIA MMA MARKETS MAY TUMBLE ON AMPLE SUPPLY, WEAK CONFIDENCE IN Q1
BY KHENG WEE LOY JANUARY 2019
Buying momentum is poised to stay subdued, owing to

3,100
sustained losses in the Chinese domestic markets and prior
3,000 fluctuations in Asian spot markets. Users are more inclined
2,900 to keep low stocks and take time to consider the various
2,800
supply options.
USD/tonne
2,700
Market uncertainty in Asia could persist due to the
2,600 ongoing US-China trade war and devaluation of Asian
2,500 currencies. Spot buyers have remained unenthusiastic
2,400 despite the US-China trade war truce, citing the poor
MMA < 500mt CFR Asia SE Assessment Spot
macroeconomic conditions.
2,300
2,200 MMA >= 500mt CFR Asia SE Assessment Spot
2-6 Weeks Full Market Range (Mid) (Mid) Meanwhile, import prices have slipped from record highs
in September 2018, snapping a two-year uptrend. This
ec 18
8
12 ep- 8
02 ct- 18
23 ov- 18
14 ov- 18
31 ug- 18
21 ug- 18
10 ul- 8
20 n-2 8
08 ay- 8
29 un- 8
27 pr- 8
18 pr 18
06 ar- 8
16 eb- 18
23 b- 8
02 an- 7
01
1
-J 01
u 1
1
1
1
1
1
1
-N 20
-D 20
-O 20
-N 20
-A 20
-A 20
-S 20
-J 20
-J 20
-A 20
-A 20
-M -20
-M 20
-F 20
-F 20
-J 20
-2
12 ec-
reversal is seen as a major turning point for the industry.

e
-D
15
Source: ICIS
MMA < 500mt CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (…
Regional MMA prices had been on an upward trajectory
from the first half of 2016 and had hiked by 103-115% up to
MMA >= 500mt CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (…
Asia’s methyl methacrylate (MMA) spot markets could June 2018. The price gains in Asia occurred more slowly in
tumble on the back of ample supply and sluggish buying 2018.
momentum in the first quarter of 2019, industry players
said. Spot values rose across 2018 by around 9-11% for small
cargoes and bulk cargoes, before reaching peak levels
The overall outlook for the year is seen dim despite between June and August.
extended turnarounds and unplanned shutdowns, as
the market will be awash with cargoes from China and The market prices for small cargoes of 20-300 tonnes
imported Middle East material. were assessed at $2,465/tonne CFR (cost and freight) SE
The relatively weak China markets and sharp depreciation

25,000
of Chinese yuan could weigh further on trading sentiment
24,000
and compel players to continue exporting volumes towards
23,000
the rest of Asia. Saudi cargoes would also be re-shipped to
other areas, raising availability outside China. 22,000
21,000
CNY/tonne
“China could become a growing source of MMA, in view 20,000

of the domestic supply and Middle East cargoes that often 19,000
head towards major ports in the country. Conversely, 18,000
China’s anti-dumping duties on some origins would serve 17,000
MMA DEL China S Assessment Spot 0-7
as a deterrence for imports,” a market player said. 16,000 Days Full Market Range (Mid)
MMA Ex-Tank China E Assessment Spot
15,000 0-7 Days Full Market Range (Mid)
Certain manufacturers are under pressure to reduce stocks
-M y-2 8
-J -2 8
02 un- 018
8
-2 8
- -2 8
- - 8
-M r-2 8
-D -2 8
-M r-2 8
- - 8
- - 8
- - 8
- - 8
-N t-2 8
-N - 8
- -2 7
-S -2 8
- - 8
- l- 8
-A - 8
18 Jul- 018
and attract orders while others prefer to adjust operating

28 a 01
13 ay 01
01
ec 01
04 ar 01
23 Apr 01
10 Ap 201
21 Dec 201
19 Ma 201
19 ov 01
05 ov 201
01 Feb 201
08 Jan 01
16 ep 01
01 Oc 201
23 Jan 01
25 Sep 201
03 -Ju 201
21 Aug 201
06 ug 201
- -2
- 2
05 ec
rates slightly. New players with Middle East goods are

-D
19
anticipated to actively sell their cargoes and compete for

Source: ICIS
more market share. MMA DEL China S Assessment Spot 0-7 Days Full Market Range (Mid) : CNY/…
MMA Ex-Tank China E Assessment Spot 0-7 Days Full Market Range (Mid) : …
➔
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SUPPLY DISRUPTION BY MONTH (KT)
3,300
3,200
3,100
3,000
USD/tonne
2,900
2,800
2,700
2,600
2,500
2,400
(southeast) Asia on average in early December, 16% lower
8
13 ar 018
-M r- 8
-M -2 8
07 ay 018
22 un 018
-D -2 8
-2 8
-M -2 8
-M -2 8
-N t-2 8
-N -2 8
22 eb 018
02 an 017
-S -2 8
05 ep 018
25 ct 018
-A l-2 8
-A -2 8
27 ul- 18
12 un- 18
03 Ap 201
18 ay 201
14 ov 01
ec 01
01
29 ar 01
09 Feb 01
09 Oc 01
29 ov 01
20 ug 01
16 -Ju 01
31 ug 01
from in late August, according to ICIS data.
-J 20
0
-J -2
- -2
-O -2
- -2
-F -2
-J -2
2
-J -2
- -
18 ec
-D
22
Spot prices for bulk cargoes of 500 tonnes or more were
MMA < 500mt CFR Asia SE Assessment Spot 2-6 Weeks Full
assessed at $2,365/tonne CFR SE Asia on average, marking MMAMarket
< 500mtRange
CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (…
(Mid)
a 14% decline over the same period, ICIS data showed. PMMA General Purpose CFR Asia SE Assessment Container
PMMASpot
General Purpose
2-6 Weeks CFR
Full Asia Range
Market SE Assessment
(Mid) Container Spot 2-6 Weeks …
PMMA General Purpose CFR China Assessment Container
PMMA General
Spot Purpose
2-6 Weeks CFR
Full ChinaRange
Market Assessment
(Mid) Container Spot 2-6 Weeks F…
Some users opted to cut their high inventories at the end
Source: ICIS
of the fiscal year for accounting purposes or focus on their
contract discussions. Other consumers were open to obtain
cargoes at low price points and engaged in some spot deals. The near-term outlook will hinge on downstream
performance and cost competitiveness for end-users, on
Downstream polymethyl methacrylate (PMMA) prices top of any macroeconomic changes, many players noted.
persisted on a downtrend in the second half of 2018 amid
dwindling demand. Contract discussions for 2019 are underway.
Differences in MMA costs between China and the rest of MMA is used in the manufacture of polymethyl methacrylate
Asia would be a key factor. Some users of cast sheets (PMMA), acrylic sheets, surface coatings, emulsion
had recently turned to cheaper exports from China, and as polymers and adhesives.
such, placed fewer orders with their regular suppliers.


➔
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NAPHTHA
ASIA NAPHTHA TO DRAW SUPPORT FROM STABLE PETCHEM DEMAND
BY MELANIE WEE JANUARY 2019
Asia’s naphtha market is envisaged to draw support from “Demand is still there and we are managing [olefins]
healthy regional demand for petrochemical production, margins okay,” said a northeast Asia-based market source.
which might outpace supply despite expectations of ample
western arbitrage cargo flows. In northeast Asia, naphtha-based ethylene margins were at
$315/tonne as of 7 December, up from $178/tonne a month
A ship being loaded at a port in Tokyo. ago. Margins were, however, well below $612/tonne levels
seen a year ago.
Spot naphtha prices have been on a rollercoaster,
fluctuating heavily in the fourth quarter of the year due to LPG-based margins in the northeast Asia region rose to
volatility in upstream global crude oil futures markets. $258/tonne on 7 December from week-earlier levels at
$204/tonne, according to ICIS’ weekly margin report.
Naphtha prices in Asia have plummeted to historical lows
of below $500/tonne CFR (cost and freight) Japan, in The market took comfort from expectations of limited
part dragged down by substantial falls in crude oil futures availability of cheap alternative feedstock liquefied
combined with a supply overhang situation. petroleum gas (LPG), which might help sustain reliance on
naphtha in the near term, according to industry sources.
But consistent end-user demand for downstream
petrochemical production has helped to soak up regional An estimated 1.7m tonnes of western arbitrage naphtha
supply, alleviating some of the bearish sentiment. cargoes, possibly more, are expected to reach Asia in
December. Volumes are on par with the previous month,
The naphtha market was mostly in a contango, where but well above monthly volumes averaging at around 1.2-
prompt-month prices are weaker than the forward month. 1.3m tonnes.
A contango market structure underlines weak market
fundamentals. Steady demand, at the very least, is helping to counter
the heavy deep-sea cargo flows from Europe and the
In contrast, the market was at a backwardation this time in Mediterranean.
the preceding year.
As of 14 December, Asia’s naphtha crack spread to prompt-

month February ICE Brent crude futures stood at $53.18/
tonne, significantly weaker than levels at $121/tonne during
the same period in 2017.
Crude oil markets were pressured down on concerns over

China and the global economy. The downward slide was
limited by expectations that supply will tighten in 2019,
following the agreement between OPEC and its allies to
lower production.
On the flip side, most downstream cracking facilities in Asia

Pacific continue to run at optimum or full capacity, thanks to
steady ethylene demand.
Source: ICIS
➔
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Meanwhile, commodities trader Trafigura observed a A PMI reading of 50 or higher indicates an expansion, while
challenging trading environment for the year, according to a number below that denotes a contraction.
its 2018 annual report.
LPG-based margins in the northeast Asia region rose to
“Trading conditions in naphtha were robust throughout $258/tonne on 7 December from week-earlier levels at
the year, with strong petrochemical and gasoline blending $204/tonne, according to ICIS’ weekly margin report.
margins supporting demand growth,” it stated in the report.
The market took comfort from expectations of limited
“Looking forward to 2019 … we are closely watching availability of cheap alternative feedstock liquefied
refinery margins and the price relationship between petroleum gas (LPG), which might help sustain reliance on
gasoline and other clean products,” it said. naphtha in the near term, according to industry sources.
In China, consumption of naphtha was healthy even as the An estimated 1.7m tonnes of western arbitrage naphtha
country’s trade war with the US has weighed on its economy. cargoes, possibly more, are expected to reach Asia in
December. Volumes are on par with the previous month,
China imported 516,985 tonnes of naphtha in October, but well above monthly volumes averaging at around 1.2-
rising by 11% from the same period a year earlier, latest 1.3m tonnes.
Customs data showed.
Steady demand, at the very least, is helping to counter
According to Chinese private media group Caixin, China the heavy deep-sea cargo flows from Europe and the
posted a General Purchasing Managers’ Index (PMI), which Mediterranean.
is a measure of manufacturing activity, stood at 50.2 in
November, hovering just above the 50 level – the threshold
for expansion. Its October PMI reading for China was 50.1.




➔
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Meanwhile, commodities trader Trafigura observed a 1,400
challenging trading environment for the year, according to
its 2018 annual report. 1,200
1,000
“Trading conditions in naphtha were robust throughout
USD/tonne
the year, with strong petrochemical and gasoline blending 800
margins supporting demand growth,” it stated in the report.
600
“Looking forward to 2019 … we are closely watching
400
refinery margins and the price relationship between 325 Typically healthy spread
gasoline and other clean products,” it said. Typically unhealthy spread
200
26 ov - 18
17 ov - 8
e c 18
8
e p 18
05 c t- 18
24 - 8
03 ug- 8
13 ul- 18
23 ul- 2 8
02 n- 2 8
30 pr - 8
21 pr - 18
11 a y - 8
09 a r - 8
19 b- 18
26 eb- 8
In China, consumption of naphtha was healthy even as the
01
1
1
- J 01
1
u 1
1
1
1
- D 20
- S 20
- O 20
- N 20
- N 20
- S 20
- A 20
-J 0
- J 20
- A 20
- A 20
- M 20
- M 20
- F 20
- F 20
-2
15 -
05 a n-
p
country’s trade war with the US has weighed on its economy.
e
e
-J
15
Ethylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range (Mid)
China imported 516,985 tonnes of naphtha in October, Ethylene C FR
Naphtha As iaJapan
CFR NE AsAssessment
s es s ment S Spot
pot 2-6 Weeks
Half Full
Month Market Range
3 Closing ( Mid) : …
Value (Mid)
rising by 11% from the same period a year earlier, latest Ethylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range -
Naphtha
NaphthaC FR J apan
CFR As sAssessment
Japan es s ment S pot HalfHalf
Spot Month 3 C3losClosing
Month ing V alue ( Mid)
Value : US …
(Mid)
Customs data showed.
Source: ICISC FR As ia NE As s es s ment S pot 2-6 Weeks Full Market Range - Napht…
Ethylene
According to Chinese private media group Caixin, China

posted a General Purchasing Managers’ Index (PMI), which
is a measure of manufacturing activity, stood at 50.2 in
November, hovering just above the 50 level – the threshold
for expansion. Its October PMI reading for China was 50.1.
A PMI reading of 50 or higher indicates an expansion, while

a number below that denotes a contraction.
back to contents
POLYMETHYL METHACRYLATE (PMMA)
ASIA PMMA MAY EXTEND LOSSES ON POOR DEMAND, HIGH STOCKS IN Q1
BY KHENG WEE LOY JANUARY 2019
Asia’s polymethyl methacrylate (PMMA) import markets have played a huge role in pushing PMMA discussions
may extend losses due to dwindling demand and high down swiftly.
inventories in the first quarter of 2019.
A 40,000 tonne/year integrated facility in Saudi Arabia,
PMMA spot prices in southeast Asia and China have fallen belonging to Saudi Methacrylates Company (SAMAC), has
over the past six months, shedding around 14-20% across started commercial operations in April 2018. It is a joint
the period, reversing from a peak that occurred in June. venture between Mitsubishi Chemical and SABIC.
For the week ended 13 December, regional PMMA prices Separately, a 50,000 tonne/year unit in Saudi Arabia,
were assessed stable at $2,725/tonne CFR (cost & freight) operated by Petro Rabigh, has commenced PMMA
SE (southeast) Asia and stable to soft at $2,550/tonne CFR production by early 2018.
China on average, according to ICIS data.
The project is shared between Sumitomo Chemical and
In the middle of June, spot prices for general purpose (GP)- Saudi Aramco.
grade goods were pegged at $3,175/tonne CFR SE Asia
and $3,200/tonne CFR China, ICIS data showed. In China, domestic manufacturers are able to provide
more competitive PMMA products on the back of cheaper
Spot supply is expected to be fairly abundant in early feedstock methyl methacrylate (MMA) costs locally, as
2019, considering high inventories and restricted run rates compared to the rest of Asia.
among producers.
This has placed intense downward pressure on the China
Manufacturers and traders actively sought to clear some import markets.
stocks towards the year end, boosting volumes available on
the market. “It is very difficult to compete with the local makers in China
right now, so [we] may have to cut operating rates further,”
New Middle East suppliers are also projected to aggressively a regional producer said.
push cargoes further in order to gain market share.
Moreover, fresh PMMA volumes are expected from
These new supplies, coupled with highly attractive prices, China’s Wanhua Chemical soon, in light of recent talks of
3,300 25,000
24,000
3,200
23,000
3,100
22,000
3,000
21,000
CNY/tonne
USD/tonne
2,900 20,000
19,000
2,800
18,000
2,700
17,000
PMMA General Purpose CFR Asia SE Assessment MMA DEL China S Assessment Spot 0-7 Days
2,600 Full Market Range (Mid)
Container Spot 2-6 Weeks Full Market Range (Mid) 16,000
2,500 PMMA General Purpose CFR China Assessment 15,000 MMA Ex-Tank China E Assessment Spot 0-7
Container Spot 2-6 Weeks Full Market Range (Mid) Days Full Market Range (Mid)
28 n- 8
-J -2 8
02 un- 018
8
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26 r- 8
17 pr 18
07 ay- 8
13 ov- 8
05 ar- 8
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- - 8
-M r-2 8
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15 eb- 18
01 ct- 18
22 ov- 18
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22 eb- 8
ep 18
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- - 8
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20 ug- 8
- - 8
- - 8
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30 ug- 18
- -2 7
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09 ul- 18
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- - 8
18 Jul- 018
1
1
01
28 a 01
13 ay 01
01
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1
1
1
04 ar 01
23 Apr 01
10 Ap 201
21 Dec 201
19 Ma 201
19 ov 01
05 ov 201
1
01 Feb 201
1
08 Jan 01
16 ep 01
01 Oc 201
23 Jan 01
25 Sep 201
03 -Ju 201
21 Aug 201
06 ug 201
-J 20
-D 20
-A 20
-A 20
-M -20
-M 20
-F 20
-O 20
-N 20
-N 20
-F 20
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-A 20
-J 0
-J 20
-2
- -2
19 -2
- 2
11 -
01 an-
05 ec
p
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11
19

PMMA General Purpose CFR Asia SE Assessment Container Spot 2-6 Weeks … MMA DEL China S Assessment Spot 0-7 Days Full Market Range (Mid) : CNY/…
PMMA General Purpose CFR China Assessment Container Spot 2-6 Weeks F… MMA Ex-Tank China E Assessment Spot 0-7 Days Full Market Range (Mid) : …
➔
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on-spec output from its new MMA unit in early December, Re-stocking activity may occur after the year-end lull, given
sources said. At the same time, integrated manufacturers that buyers have reduced their stocks and are operating on
in Asia could switch accordingly and raise MMA production a need-to basis.
instead, depending on the profitability for PMMA.
However, the upcoming Lunar New Year holiday in
From a feedstock perspective, the spread between PMMA February 2019 could curtail near-term appetite in China to
and MMA remains narrow, and it will take time for any price some extent, players said.
change in MMA to take effect on the PMMA production
front, sources said. Future price movements for polycarbonate (PC) are likely
to sway spot sentiment for PMMA, sources said in view of
Regional demand is anticipated to be slow. Consumers are the drastic PC falloffs.
in a wait-and-see mode due to weak downstream offtake and
economic uncertainty amid the US-China trade war truce. PC can be used as substitutes in some applications and is
Recent steep declines in spot prices have also affected traditionally more expensive.
market confidence.
With PC “unusually cheaper” than PMMA, PMMA markets
may not recover immediately even if PC values inch
3,300
up, according to some sources. PMMA is used in the
3,200
manufacture of automotive, household and electronic
3,100
products, and is the largest downstream market of MMA.
3,000
2,900
PMMA VS PC CHINA
USD/tonne
2,800
2,700
2,600
2,500
2,400
2,300
2,200
13 ar 018
-M r-2 8
-M -2 8
07 ay 018
22 un 018
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-2 8
8
-M -2 8
-M -2 8
-N t-2 8
-N -2 8
22 eb 018
05 ep 018
25 ct 018
02 an 017
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27 l- 18
12 un- 18
01
03 Ap 201
18 ay 01
29 ar 01
09 Feb 01
09 Oc 01
29 ov 01
14 ov 01
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20 ug 01
16 -Ju 01
31 ug 01
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0
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- -2
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2
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18 ec
u
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22
MMA < 500mt CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (Mid)
MMA < 500mt CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (…
MMA >= 500mt CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (Mid)
MMA >= 500mt
PMMA GeneralCFR Asia SE
Purpose CFRAssessment Spot 2-6Container
Asia SE Assessment Weeks Full Market
Spot RangeFull
2-6 Weeks (…
Market Range (Mid)
PMMA
PMMAGeneral
GeneralPurpose
PurposeCFR
CFRAsia SEAssessment
China Assessment Container
Container Spot
Spot 2-6 2-6 Weeks
Weeks Full …
Market Range (Mid)
PMMA
Source: ICISGeneral Purpose CFR China Assessment Container Spot 2-6 Weeks F… Source: ICIS


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SODA ASH
ASIA’S SODA ASH PRICES TO STAY SUPPORTED DESPITE TURKISH SUPPLY
BY HELEN LEE JANUARY 2019 330

320
The perennial year end soda ash price spikes in Asia 310
due to tightened supply from China may prevail albeit 300
at a moderated manner as new supply from Turkey was 290
USD/tonne
insufficient to meet demand. 280
270
China’s soda ash supply took a hit from idled capacities 260
in 2018 due partly to environmental protection measures, 250
prompting the majority of producers to prioritise their output 240
on the more lucrative domestic market. 230
220
The majority of southeast Asia-based buyers saw no 8
Soda Ash Dense, 99% Purity CFR NE Asia Spot 4-6
9
01
01
Weeks Full Market Range (Mid)
justification in paying close to $300/tonne cost and freight
-2
-2
Soda Ash Dense, 99% Purity CFR SE Asia Spot 4-6
an
an
-J
-J
(CFR) SE Asia for dense grade soda ash from China as
17
16
Soda Ash Dense, 99% Purity FOB East China Bulk Spot
prices were higher than their contractual volumes, but 4-6 Weeks Full Market Range (Mid)
Soda Ash Dense,
Soda99%
AshPurity
LightCFR NE FOB
Grade Asia East
Spot China
4-6 Weeks
Bulk Full
SpotMarket
4-6 Range (…
supplies from other sources such as Russia and Africa Weeks Full Market Range (Mid)
Source: ICIS
were likewise insufficient to meet demand in Asia. Soda Ash Dense, 99% Purity CFR SE Asia Spot 4-6 Weeks Full Market Range (…
Soda Ash Dense, 99% Purity FOB East China Bulk Spot 4-6 Weeks Full Market …

Soda Ash Light Grade FOB East China Bulk Spot 4-6 Weeks Full Market Range…

ICIS offers a unique combination of • Maintain a competitive advantage Available for selected commodities,
analytics tools, pricing data and market and negotiate better prices with other our forecast service gives a robust 12
information for over 180 commodities, market players month price forecast, trade balances and
across all key regions, designed to help in-depth analysis on where the markets
you navigate and optimise opportunities in Analytics tools for the petrochemical are heading- providing a valuable tool to
an ever-changing market, making complex market include: support your short-to medium-term plans.
analytics simple for you to: ✓ Live Disruptions Tracker: Supply
•S pot opportunities, minimise risk and ✓ Price Drivers Analytics
pre-empt competition ✓ Price Optimisation Analytics


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IDLED SODA ASH PLANTS IN CHINA SODA ASH PLANT SHUTDOWN SCHEDULE 2019/NEW
Capacity Operating rates/ CAPACITY UPDATES
Company Capacity Operating rates/
(tonnes/year) Turnaround Company Location
Shut since 20 (tonnes/year) Turnaround
Gansu Jinchang 250,000 Lianyungang To shut in April or
January 2018* Lianyungang
Shut since 3 March Alkali 1.3m May 2019 for two
Huainan Debang 600,000 city, Jiangsu
2018* Industry Co. to three days.
Zhongyan Debang Shut since March To shut each line
300,000 Weifang,
Chemical 2018.* Sandong 3m in turns for two
Shandong,
Haihua (1.8m + 1.2m) weeks in May or
Shut since 14 May China
Hunan Xiangtan 300,000 June 2019.
2018*
Awaiting statutory
Shut since 25 July
Sichuan Zigong Fuyuan 120,000 approval for
2018* Tata 900,000 Mithapur,
capacity addition.
*according to sources close to the company. No updates on restart dates. Chemicals (+ 250,000) Gujarat, India
Target onstream
2020/2021.
Togyzkent
As for Turkish supplies, Kazan Soda Elektrik’s new 2.5m village, Sarysu To start
tonne/year soda ash plant in Ankara, Turkey finally in Yildirim
400,000 district, construction in
Holding
September ramped up its fifth and final new line after Zhambyl, late 2019
several delays since December 2017. Kazakhstan
A company official confirmed that the majority of newly

produced Turkish soda ash is headed for export markets India’s domestic soda ash capacities remained fully
rather than the European market. committed for domestic customers, with capacity additions
scheduled in 2020 or 2021.
NEAR TERM OUTLOOK
Prices may continue to find support after China’s Lunar For prevailing shipments from Kenya and Botswana, import
New Year holidays in early February 2019, due to overall prices were bolstered at $260/tonne CFR (cost & freight)
low inventories in China amid reduced output. India for customers with bi-annual contracts.
Shandong Haihua Group since around 1 December 2018 Fresh offers for January deliveries are heard firmer at
cut output at its 3m tonne/year soda ash plant to 70% of $280-285/tonne CFR India.
capacity from 100% previously, as mandated by Chinese
authorities for environmental protection. New soda ash capacities are not due until 2020/2021.
The output cut was expected to last into the first quarter ELSEWHERE IN ASIA
of 2019. Demand for the light grade material from the downstream
detergent sector is stable in Indonesia and Vietnam, but in
INDIAN MARKET developed countries, the popularity of liquid versus powder
Prices of the dense grade material were likewise detergent continues to curb demand growth.
supported by good demand from major segments while the
depreciation of the Indian Rupee versus the US dollar has Soda ash is used in the manufacturing of glass, detergents,
exerted upward pressure on the cost of imports. chemicals and other industrial products.
➔
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TITANIUM DIOXIDE
ASIA TIO2 MARKET FACES A BEARISH START TO THE YEAR
ON WEAK CHINESE DEMAND
BY LEANNE TAN JANUARY 2019
Asia’s titanium dioxide (TiO2) market looks set to start The sharp depreciation of the Chinese yuan amid
the year on a bearish note for the first time in two years escalating trade tensions in the second half of the year
on weak demand from China and volatile global trade further incentivized Chinese producers to target the export
conditions. market, where margins were more attractive.
Quarterly contract prices were on a consecutive rise Spot prices came under pressure for the rest of 2018, as
since early 2016, rising by more than 57% over 10 US demand for Chinese TiO2 exports waned in light of the
consecutive quarters. Reduced operating rates in US-China trade war.
China amid the government’s implementation of stricter
environmental protection measures and unexpected As Chinese suppliers sought alternative outlets for their
turnarounds elsewhere in the world tightened global supply exports, some compromise on price levels were necessary
of the pigment. in order to offload volumes.
However, TiO2 contract prices peaked in the second Spot prices for Chinese origin TiO2 were last assessed
quarter of 2018, amid growing availability of competitively- at $2,200-2,400/tonne FOB (free on board) China on 21
priced Chinese export cargoes. December 2018, according to ICIS data.



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3,200
Chinese export volumes are likely to continue to increase
year-on-year, as Chinese producers continue to push their
3,100
export agenda.
3,000
2,900
“Demand in China may stagnant soon and there is little
2,800 room for any substantial growth in the domestic market in
USD/tonne
2,700 the longer run. Hence, many producers are seeking to grow
2,600 their export market share,” a Chinese producer said.
2,500
2,400 Some market players are hoping for an up-tick in demand
2,300
in the second quarter of the year, amid the start-up of some
2,200
major downstream paint and coatings manufacturing units
in China.
01 ay- 18
22 un- 18
9
an 18
20 pr- 18
11 pr 18
11 ec- 18
01 ar- 18
14 ov- 18
16 eb- 18
12 ep- 18
02 ct- 18
23 ov- 18
28 ep- 18
17 Jul- 18
07 g- 18
27 ul-2 8
06 n-2 8
01
-J 01
u 1
-J 20
-J 20
-A 20
-A 20
-M -20
-D 20
-M 20
-F 20
-N 20
-N 20
-S 20
-O 20
0
-A 20
-S 20
-J 20
-2
23 eb-
There is unlikely to be any significant downstream

-F
-
02
manufacturing expansions of small-to-medium sized

Titanium Dioxide CFR Asia Contract Price Assessment Contract 4-6
Titanium
WeeksDioxide CFR Asia
Full Market Contract
Range (Mid) Price Assessment Contract 4-6 Weeks F… businesses in China, as such start-ups have become more
Titanium Dioxide FOB China Assessment Spot 4-6 Weeks Full
Titanium Dioxide
challenging to set up in view of the clampdown on polluters
Market RangeFOB China Assessment Spot 4-6 Weeks Full Market Range (…
(Mid)
in the country.
Source: ICIS
However, larger international players do have the means

The outlook for the first quarter remains pessimistic. and financial ability to adhere to the more stringent
environmental requirements in place and still reap profits
The gap between Chinese export spot prices and quarterly from economies of scale; and these are the players who
contract prices of other international TiO2 producers are expected to start up more downstream manufacturing
remains persistently wide, propagating concerns that facilities in China.
international contract prices had room to fall further.
On the TiO2 supply front, capacity expansions in China are
“International producers would need to make some expected to be limited in 2019.
downward adjustments in order to remain competitive
against Chinese exports, so it’s unlikely that prices in While future expansions are expected to be focused on
the first quarter would find much support,” a Chinese chloride-based TiO2 productions, market players were
supplier said. quick to dismiss ideas that sulphate-based TiO2 capacities
would be rendered redundant as a result.
Chinese domestic demand is likely to remain tepid, as the
seasonal lull for pigments from the downstream paints and “Downstream applications for sulphate-based TiO2
coatings sector in winter continues. pigments do exist for which chloride-based pigments
cannot be a perfect substitute for. Hence, there is still a
Hence, Chinese suppliers are likely to push more place for sulphate-based TiO2 production capacities in the
volumes to the export market in order to capitalize on market,” a Chinese producer pointed out.
better margins there.
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VINYL ACETATE MONOMER (VAM)
ASIA’S VAM TO THRIVE ON EUROPEAN DEMAND, PLANT SHUTDOWNS
BY HELEN LEE JANUARY 2019
Asia’s vinyl acetate monomer (VAM) prices in the first 14-20% VA CONTENT EVA AND LDPE FILM - CHINA
quarter may be underpinned on expectations of demand 1,550
from Europe and a supply curtailment owing to regional 1,500
plant shutdowns. 1,450

1,400
1,350
Spot prices in most parts of Asia had fallen since June
1,300
USD/tonne
2018 to below $1,000/tonne CFR SE Asia/South Asia,
1,250
tracking the feedstocks direction and slow seasonal 1,200
demand, as well as increased import costs following the 1,150
depreciation of key Asian currencies versus the US dollar 1,100
amid the US-China trade tensions. 1,050
1,000
The prices had bottomed out, although recent declines 950
stemming from weakened upstream energy values, EVA VA Content 14-20% CFR China Assessment
8
9
01
01
Main Ports Spot 2-4 Weeks Full Market Range (Mid)
impacted the buying sentiment while macroeconomic
-2
-2
an
an
PE LDPE Film CFR China Assessment All Origins
-J
-J
indicators remain pessimistic.
16
15
Source: ICIS
EV A V A C ontent 14-20% C FR C hina As s es s ment Main Ports S pot 2-4 Weeks …
China’s official manufacturing purchasing managers’ index
(PMI) fell to 49.4 in December, the first contraction in two and MIXED DEMAND
PE LDPE Film C FR C hina As s es s ment All Origins S pot 0-8 Weeks Full Market …
a half years, according to National Bureau of Statistics (NBS). While expectations of improved demand in Europe by mid-
January ahead of the anticipated duty-free quota in 2019
PMI is a barometer of an economy’s manufacturing activity, contributed to the optimistic sentiment of producers in Asia,
in which a reading above 50 means expansion and below there is a view that supply in Europe may become even
50 as contraction. more plentiful in 2019.
Also, there is little doubt around about the impending

1,500
suspension of import duty into the EU.
1,400
Both of these factors suggest that further correction of
1,300
contract prices in Europe will occur.
USD/tonne
1,200
Most importers in Asia are opting to pare down inventories.
1,100
Nevertheless, the first quarter typically sees weak demand

1,000
from the downstream adhesives sector in the key south
900 Asia market of India as well as in northeast Asia.
800
The VAM consumption from the downstream ethylene
8
vinyl acetate (EVA) sector on the other hand, is likely to be

01
01
VAM Ethylene-based VAM CFR NE Asia Spot 2-6

-2
-2

an
an
boosted this year.

-J
-J
VAM Ethylene-based VAM CFR South Asia Spot

19
11

VAM
V AM Ethylene-bas ed VEthylene-based VAM
AM C FR NE As ia S potCFR
2-6 SE AsiaFull
Weeks Spot 2-6 Range ( …
Market An unstable outlook in the co-product low density polyethylene
VAM Non ethylene-based VAM CFR South Asia (LDPE) sector may prompt certain swing EVA/LDPE
V AM Ethylene-basSpot
ed V2-6
AMWeeks
C FR S outh
Full As ia S pot
Market 2-6 Weeks
Range (Mid) Full Market Range…
producers in Asia to focus on EVA production instead.
VAM Non ethylene-based VAM CFR SE Asia Spot
V AM Ethylene-bas
2-6edWeeks
V AM CFull
FR SMarket
E As ia Range
S pot 2-6 Weeks Full Market Range ( …
(Mid)
VAM Non ethylene-based VAM FOB China Spot
V AM Non ethylene-bas ed V AM
2-6 Weeks FullCMarket
FR S outh As ia S(Mid)
Range pot 2-6 Weeks Full Market R…
In China, where domestic VAM prices were supported at
Source: ICIS
above yuan (CNY) 8,000/tonne ex-tank since November by
V AM Non ethylene-bas ed V AM C FR S E As ia S pot 2-6 Weeks Full Market Ran…
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V AM Non ethylene-bas ed V AM FOB C hina S pot 2-6 Weeks Full Market Range … back to contents
curtailed domestic output, demand is set to decline ahead “Overall I feel [there is hope] in January due to plant
of the Lunar New Year holidays in early February. shutdowns and as destocking finishes and if there are no
‘accidents’ on the crude values front, there will be upward
SHORT TERM SUPPLY CURBS pressure on margins and inventory levels although this
Meanwhile, the impact of ongoing VAM plant shutdowns depends on macroeconomic support factors,” said a
due to reduced upstream gas feeds at Sinopec Sichuan major producer.
Vinylon’s 500,000 tonne/year VAM plant since around mid
November during peak winter heating season, as well as SHUTDOWN SCHEDULE 2019
the maintenance shutdown at Celanese’s Nanjing VAM Company
Capacity
Location Shutdown schedule
plant in December, were deemed to have been factored (tonnes/year)
into prevailing prices. Sinopec Shut til early
200,000 + Chongqing,
Sichuan February for
300,000 China
Vinylon maintenance.
While these factors kept the sentiment of suppliers Nippon Mizushima, Shutting in Q1 for
180,000
upbeat, uncertainties on the macroeconomic front remain Gohsei Okayama, Japan 45-60 days.
a key concern. Shut on 5 January
to 27/28 January on
Jurong island, equipment issues.
ACETIC ACID, ETHYLENE & VAM IN SOUTHEAST ASIA - Celanese 210,000
Singapore
VOLATILE SINCE SEPTEMBER 2018 Shutting March/April
for 15 days.
500
Shutting 11 March
450 300,000 Mailiao, Taiwan 2019 til end March/
Dairen
400 Chemical early April.
350
Corp Shutting 15 February
2019 for one month.
300
USD/tonne
Dashe,
250 250 Typically healthy spread 120,000 Kaohshiung,
Typically unhealthy spread Taiwan
200
Shutting 6 April 2019
150
for around 25-26
100 days.
50
Ulsan, South To start building new
Lotte BP 210,000 200,000 tonne/year
0 Korea
plant in October
2019, slated for
8
8
01
01
-2
-2
VAM Ethylene-based VAM CFR SE Asia Spot 2-6 start-up in October

an
ec
Weeks Full Market Range - SE Asia VAM feedstock

-D
-J
2020.
01
31
cost [Acetic acid: Mid]*0.73+[Ethylene: Mid]*0.37 (Mid)

Source: ICIS *according to sources close to the company.
V AM Ethylene-bas ed V AM C FR S E As ia S pot 2-6 Weeks Full Market Range - …


➔
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January - July 2019
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FIBRE CHAIN
ACRYLONITRILE
ASIA ACN PRICES TO FOLLOW COST TREND ON NEW SUPPLY, LESS TURNAROUNDS
BY JUDITH WANG JANUARY 2019
Asia’s acrylonitrile (ACN) price trend may take a cue from

feedstock propylene in 2019 as ACN plants are expected
to run in full throttle given a lower rate of turnarounds next
year, and Chinese and South Korean supply is expected to
increase as such.
The ACN prices may not show a similar trend in 2018,

when razor-thin supply bolstered prices and led to
eight rounds of price hikes in a single year. After all, the
prospects of supply tightness will ease next year since
there will be new capacities coming onstream.
In 2019, China’s Jiangsu Sailboat Petrochemical plans to

start up its second ACN unit with a capacity of 260,000
Source: ICIS
tonnes/year in the second quarter of 2019.



➔
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Another major producer South Korea’s Tongsuh The issue of adequate supply comes with pros and cons.
Petrochemical plans to debottleneck its No 4 plant with a For buyers, they may easily get cargoes but it is not a good
capacity of 245,000 tonnes/year by 10% in October 2019. thing for producers as this may weigh on the prices.
“There will be a supply increase in 2019, which means However, major producers indicated that they will consider
prices may have little chance to surge like 2018,” a regional output rationing if the prices fall below the cost.
trader said.
“We will cut operation if the prices were to fall below the
On the other hand, heavy global turnarounds in 2018 pushed cost, like we used to do,” a major Asian producer said.
up Asian ACN prices to a record-high at $2,250/tonne at the
end of August, the strongest since late April 2012. However, “I think the prices levels seen this year will not appear again
such a price may not be replicated next year in light of a in 2019 and the ACN prices will track closely the feedstock
lower load of maintenance works on schedule. price trend in 2019,” a downstream user said.
“The ACN prices will return to basics. They will be cost-

driven instead, given relatively ample supply in 2019,” a
regional trader said.
2019 ASIA ACN TURNAROUND SCHEDULE

Company Location Capacity (tonnes/yr) Comment
Asahi Kasei Mizushima, Japan 200,000 May-early July, 45 days
Tongsuh Petrochemical Ulsan, Korea 245,000 No 4 October, one month
China Petrochemical Development Corp (CPDC) Kaohsiung, Taiwan 240,000 One week in May, two weeks in November
Taekwang Industrial Co Ltd Ulsan, South Korea 290,000 September-October, 25 days
Formosa Plastics Corp Mailiao, Taiwan 280,000 Mid-February, 25-26 days
PTT Asahi Chemical Map Ta Phut,Thailand 200,000 Mid-May, one month
back to contents
FIBRE CHAIN
BUTYL GLYCOL (BG)
ASIA’S BG CONTINUES TO FACE AMPLE SUPPLY, WEAK CHINESE DEMAND
Butyl glycol spot prices in Asia may continue a trend of CHINA BG IMPORTS (TONNES)
decline going into the first quarter of 2019, as the market
would be inundated with Middle East flows and growing
exports from other Asian producers.
Demand wise, weakness would persist as China, a key

buyer, faces shrinking economic growth.
Signs of weakness were already apparent in the last three

months of this year when fundamentals were bearish, and
the outlook for next year is little changed.
In the week ended 19 December, spot BG prices in China

on zero antidumping duty (ADD) but subject to import duty
basis, were assessed stable at an average of $930/tonne
CFR (cost & freight), according to ICIS data.
The levels were the lowest since September 2016.
Spot BG prices in southeast Asia were assessed at $1,010/

tonne CFR southeast Asia, down by $10/tonne week on January to October 2018, while the total imports in 2017
week; prices declined to their weakest level since July 2017. were 156,141 tonnes. (please see interactive below)
While supply from producers of various origins were readily The market has gone through a phase of change in trade
available, demand from the downstream sectors was flow since China imposed an increase in antidumping
lukewarm and would remain unchanged going forward. duties for cargoes of deep-sea origin earlier in the year.
A CHANGING SUPPLY LANDSCAPE On 12 April 2018, BG/BDG originating from the US is subject
China is the biggest import market in Asia, importing to 37.5-75.5% ADD rates, up from 10.6-14.1% previously.
151,403 tonnes of BG/butyl dy-glycol (BDG) between
Cargoes from the EU is subject to ADDs of 10.8-43.5%, up
from 9.3-18.8% previously.
There was also an increase in supply in 2018.
For origins not subjected to China’s ADD, the BG/BDG

plant of Taiwan’s Oriental Union Chemical Corp (OUCC) --
with a combined annual capacity of 30,000-40,000 tonnes
-- started commercial operations in early 2018.
In addition, volumes from Sadara Chemical Company,

which is a joint venture (JV) between US Dow Chemical
and Saudi Aramco, became stable and cargoes are
regularly exported to Asia from early 2018.
Sadara’s BG/BDG plant with a capacity of 200,000 tonnes/

Source: ICIS
year, started commercial runs in mid-2017.
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As the hefty hike in ADDs of US and EU cargoes China’s industrial firms reported 1.8% decrease in profits to
hampered the sales of deep-sea material to China, Middle CNY594.8bn ($86bn) in November comparing with one-
Eastern and other Asian producers became the key year ago, the first contraction since May 2015, data from
suppliers for China. the National Bureau of Statistics (NBS) showed.
Some of these deep-sea cargoes were then diverted to the Slowing growth in sales and factory prices, combined with
wider Asia region where there is no ADD concern. rising cost, led to the profits decline last month, the NBS said.
Together with the increased capacity, Asia is awash with The November’s figure also marked the seventh
ample supple and intense competition from suppliers of consecutive drop.
various origins.
Downstream demand had been hit amid dismal business
This situation would persist in 2019 and some market conditions largely attributed to the US-China trade war and
consolidation could happen. China’s stringent environmental protection measures that
affected downstream plant operation.
South Korea’s Lotte Chemical has been running on
reduced operation rate at above 50% from November Moving forward, the outlook remains uncertain.
2018 amid slow market conditions with no certainty when
operation will resume to normalcy. Even as market players take a breather during the 90-Day
trade truce between US and China, existing tariffs continue
While Sadara plans to undergo a turnaround in end to be in place.
January for around three weeks, it is unlikely to result in
any supply tightness as the turnaround coincides with the Market players are largely uncertain if any concrete and
Lunar New Year period. positive outcome could be reached after the 90-Day truce.
China and many Asian markets will be celebrating the In the near team, demand from downstream paint and
Lunar New Year that begins in early February, traditionally coating sectors would likely remain in a lull, amid a
celebrated for fifteen days. slowdown of the building industry during winter.
Businesses are expected to be slow around half a month Feedstock n-butanol and higher upstream ethylene have
before and after the holiday. been largely on a downtrend in the fourth quarter of 2018
and may provide limited support to BG prices in January.
WEAK SENTIMENT, SLOW DEMAND
The market has been plagued with weak sentiment and BG, derived from ethylene oxide (EO) and n-butanol (NBA),
slow demand for most part of 2018. is also known as ethylene glycol ethers (EGE).


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FIBRE CHAIN
CAPROLACTAM
ASIA’S CAPROLACTUM SEES BURGEONING SUPPLY ON HIGH RUNS
BY ZHI XUAN HO JANUARY 2019

2,600
2,500
Asia’s caprolactam prices are expected to see more
2,400
weakness in 2019, pressured by rising supply amid high
2,300
runs and upcoming plant expansions in China. 2,200
USD/tonne
2,100
The production output is expected to see an increase in 2,000
China, as new capacities are expected to come onstream 1,900
in 2019. 1,800
1,700
This is expected to drive down prices, especially if facilities 1,600
in China were to run at full capacity. 1,500
13 ay- 8
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9
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23 ay 18
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11 ar- 8
16 c- 8
21 eb- 18
19 ov- 8
17 p- 8
07 ct- 18
28 ov- 18
26 ep- 8
05 ug- 8
15 ul- 18
25 ul-2 8
1
01
1
1
The caprolactum prices had declined in mid-November
1
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1
1
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-J 20
-A 20
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-M -20
-J 20
-M 20
-D 20
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-2
04 -2
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2018 amid poor sales caused by weak demand for finished
-F
07
nylon products, mainly cold-weather apparel. Caprolactam CFR China Assessment Spot 4 Weeks Full Market Range (Mid)
Nylon Chips
Caprolactam Textile
CFR ChinaGrade CFR China
Assessment SpotAssessment
4 Weeks FullSpot 0-4 Range
Market Weeks(Mid)
Full : …
Market Range (Mid)
Source:
NylonICIS
Chips Textile Grade CFR China Assessment Spot 0-4 Weeks Full Marke…



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The trade war saw declining caprolactam imports in China, Taiwan, which relies heavily on caprolactam imports for nylon
as buyers increasingly favoured domestic suppliers, production, was short on the material for most of the year.
prompting local makers to increase run rates amid a shift in
buying preference. In addition, Chinese caprolactam producers are looking at
the possibility of exporting to Taiwan, with some producers
However, an unexpectedly warm winter hindered announcing flaking facilities to produce caprolactam flakes
downstream nylon sales during the traditional peak for export.
months in the fourth quarter, which in turn affected
caprolactam sales. However, whether export plans materialize remains to
be seen.
The producers in domestic China struggled to offload their
high inventories, which led to week-on-week lower offers, The Chinese caprolactum market is entirely domestic at the
starting from mid-November. moment, with producers selling the product locally as high
taxes make it difficult for them to export their material.
The poor demand prompted some producers to shut units
in November and December, but attempts to revive spot China’s environmental policies are also a factor as some
caprolactam sales fell through as buyers were unwilling to cyclohexanone plants remain unable to operate at full
commit to purchases amid high inventories. capacity due to strict emissions control.
Meanwhile, buyers in China are increasingly looking to the A limited supply of the intermediate could support
domestic market to fulfill inventory needs in view of the caprolactum prices nonetheless.
fluctuating US dollar-Chinese yuan exchange rates.
In the downstream sector, nylon demand is expected to
This could mean more spot availability for major importers remain weak for the rest of the winter months as the warm
in Taiwan from other producers in Asia. weather has dampened replenishing for winter apparel.
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FIBRE CHAIN
MONOETHYLENE GLYCOL (MEG)
ASIA MEG UNDER PRESSURE FROM CHINA ECONOMIC SLOWDOWN
BY ERIC SU JANUARY 2019
Asia’s monoethylene glycol (MEG) prices are expected

to be weighed down in the first half by an economic
slowdown in key China market, along with slower growth in
downstream polyester sectors.
Unfavourable macroeconomic conditions will likely lead to

weakness in downstream demand growth.
Polyester demand posted double-digit growths in 2017

and 2018 as the industry expanded, but the exceptional
increase in the past two years may not be sustained in the
long run.
The US-China trade tensions have weighed on the Chinese

economy in the fourth quarter of last year, and is expected
Source: ICIS
to dampen sentiment early in 2019.



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Any significant uptick in exports of polyester-made end- MEG CHINA IMPORT (2016-2018)
products such as clothing, upholstery and shoes, among 1,000
other, may not happen without a clear resolution to the US- 900
China trade spat. 800
700
Volume in tonnes
The Chinese yuan (CNY) may weaken further against the
600
US dollar amid the slowdown of the world’s second-biggest
500
economy and hit China’s MEG imports.
400
300
A weaker currency makes US dollar-denominated imports
more expensive. 200
100
Stocking up activities, meanwhile, will be curtailed by the 0
week-long Lunar New Year holiday in China in early February. J an Feb Mar Apr May J un J ul Aug S ep Oct Nov Dec
2016 2017 2018
2016 2017 2018
The Lunar New Year, which is celebrated in most parts of
southeast and northeast Asia, is on 5 February 2019.
Overall production from the coal-based plants will also
GLOBAL MEG CAPACITY TO GROW depend on whether or not China will continue easing down
Global MEG supply in 2019 is expected to increase further, on its environmental checks in the year.
particularly from the second half of 2019, when huge
additions are due to come on stream. Nonetheless, imports will remain as China’s dominant
source of supply this year.
In China, mega refineries with large MEG capacities are
scheduled to start up during the period. In 2018, 58% of the country’s MEG requirements were
covered by imports, down from 58.8% in the previous year.
Zhejiang Petrochemical will begin operations at its
700,000 tonne/year MEG line in Q3-Q4, along with Hengli New plants are also expected to start up in the US and
Petrochemical’s 900,000 tonne/year line. Malaysia, augmenting the supply available to Asia in 2019.
The two companies operate downstream polyester plants, In the US, Lotte Chemical’s 700,000 tonne/year and Sasol’s
and the start-ups of the MEG lines will mean reduced 250,000 tonne/year MEG plants are expected to come on
dependence on raw material imports. line in the first quarter.
Meanwhile, production rates at coal-based MEG plants in In Malaysia, PETRONAS new 740,000 tonne/year MEG
China, though comparatively lower than ethylene-based plant in Malaysia is estimated to start-up by the second
MEG have increased in 2017 to around 45% and 2018 quarter of 2019.
to around 55%, from below 40% in 2016, as margins
remained healthy.
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FIBRE CHAIN
NYLON
ASIA’S NYLON PRICES TO STAY SOFT ON WEAK DEMAND, RISING SUPPLY
BY ZHI XUAN HO JANUARY 2019 2,600

2,500
Asia’s nylon prices are to stay soft in the first quarter, as 2,400
demand is expected to stay weak while supply is seen 2,300
increasing further in the year owing to feedstock plant 2,200
USD/tonne
expansions in China. 2,100
2,000
The market is not expected to improve in the near term, 1,900
given the ensuing US-China trade row and upcoming Lunar 1,800
New Year holidays in early February. 1,700

1,600
Players typically strive to maintain lean inventories ahead 1,500
of the major holiday, so spot trading is likely to remain thin
13 ay- 8
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9
02 r 18
23 ay 18
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11 ar- 8
16 c- 8
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05 ug- 8
15 ul- 18
25 ul-2 8
1
01
1
1
1
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1
1
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-N 20
-N 20
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04 -2
until the holidays are over.
28 eb-
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-F
07
Caprolactam CFR China Assessment Spot 4 Weeks Full Market Range (Mid)
In addition, producers tend to adjust production levels lower Nylon Chips Textile Grade CFR China Assessment Spot 0-4 Weeks Full
Caprolactam CFR (Mid)
Market Range China Assessment Spot 4 Weeks Full Market Range (Mid) : …
in order to avoid an oversupply of stock.
Source:
NylonICIS
Chips Textile Grade CFR China Assessment Spot 0-4 Weeks Full Marke…



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This could give a succor to the market already beset by spinning nylon chips, they will face pressure if the price
slow demand. gap between the high-speed and conventional grade chips
widens too much.
Players are likely to remain cautious amid the ongoing
trade war, so the buying interest would be little changed This will affect Taiwanese producers as Chinese buyers
after the holidays. make up the bulk of their export sales.
It is par for the course for buyers to make purchases on Meanwhile, commitments to larger parcels are unlikely to
a need-to basis, with a majority of the Chinese buyers materialize in the near future, with purchases expected to
looking to domestic suppliers on better payment terms remain on an as-needed basis, especially if demand for
and faster delivery, in view of the fluctuating USD-CNY finished products were to remain weak.
exchange rates.
The Asian nylon market has been bearish since the end of
The nylon producers continue to strive to maintain healthy last year because of falling demand and a mild winter.
margin levels between caprolactum and nylon, adjusting
nylon offers in line with movements in feedstock values. The clement temperatures had led to reduced demand
for finished nylon products, contributing to the current
However, there are some concerns about upcoming downtrend in values.
caprolactum plant capacities in domestic China.
In addition, the US-China trade wars have been weighing on
Already, the region is experiencing an oversupply of the market sentiment in the region, with main buyers in China
feedstock, and at one point, domestic Chinese prices for reducing order quantities from major suppliers in Taiwan.
caprolactum and conventional grade nylon chips were at
almost parity. The poor US dollar-CNY exchange rate has also resulted
in an increasing number of buyers turning to the domestic
While this should not affect the supply of high-speed market to fulfill inventory needs.
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FIBRE CHAIN
POLYETHYLENE TEREPHALATE (PET)
ASIA’S PET SEES SUPPLY-DEMAND BALANCE, MARKET CALMNESS
BY HAZEL GOH JANUARY 2019
Asia’s polyethylene terephthalate (PET) market is expecting With semi-term cargoes secured, panic buying that
to be balanced in supply and demand next year, and happened in 2018 is not expected to repeat itself.
margins are likely to be within range following a tumultuous
2018. Seasonal peak demand will rise at the end of March. During
this period, downstream pre-form converters start to prepare
Some buyers have already approached Chinese sellers for the next summer peak bottled beverages consumption.
for cargoes slated for delivery in the first half of 2019, with
some transactions done. PET suppliers tend to run their plants at full throttle, leading
up to the peak demand season.
PRICES OF PET AND ITS FEEDSTOCK
1,400
400
PTA, MEG AND PET CHINA
1,300
350
1,200
300
1,100
USD/tonne
250
USD/tonne
1,000
200
900
150
800 120 Typically healthy spread
100 Typically unhealthy spread
700
50
600
0
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9
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24 ug- 18
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MEG CFR China Assessment Main Ports Spot 0-8 Weeks Close-weighted Range (Mid)
01
PET Bottle Grade FOB China Assessment Spot Close-weighted Range (Mid) Assessment Spot Close-weighted Range - PTA CFR Chinax0.86
MEG CFR China Assessment Main Ports Spot 0-8 Weeks Close-weighted Ran…
PTA CFR China Assessment Main Ports Spot 2-6 Weeks Weighted Average (Mid) + MEG CFR Chinax0.34 [PTA: Mid]*0.86+[MEG: Mid]*0.34 (Mid)
PET Bottle Grade FOB C hina As s es s ment S pot C los e-weighted Range - PTA C …
Source: ICIS Grade FOB China Assessment Spot Close-weighted Range (Mid) : …
PET Bottle Source: ICIS
PTA CFR China Assessment Main Ports Spot 2-6 Weeks Weighted Average (…


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Supply is not seen an issue as most plants would have PRICES OF PET AND ITS FEEDSTOCK
wrapped up maintenance works by the end of 2018 or 1,200
January 2019. 1,150 PTA CFR China Assessment
Main Ports Spot 2-6 Weeks
1,100 Close-weighted Range (Mid)
China Resources Packaging has an ongoing plant 1,050 USD equivalent of yuan-PTA
maintenance affecting 600,000 tonnes/year of its production. 1,000
[yuan PTA: Mid]/1.16
USD/tonne
950
During the turnaround, the plant will undergo a change in
900
its energy source from coal to gas and the maintenance is
850
expected to complete in end-January.
800
A Taiwanese producer has planned maintenance from mid- 750
December 2018 to mid-January 2019. 700
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0
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- -2
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- -2
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- 2
Oman’s Octal Holding will be having a three-week
30 an
-J
turnaround in January at one of its four lines, with a
12
Source: ICIS
combined capacity of 850,000 tonnes/year.
PTA CFR China Assessment Main Ports Spot 2-6 Weeks Close-weighted Ran…
In Asia, there are a few new plants coming onstream by was the increase in oftax
USD equivalent rebate
yuan-PTA of PTA:
[yuan China PETUSD/tonne
Mid]/1.16: exports.
Yisheng Petrochemical and Zhejiang Wankai New Materials
in 2019-2020. Chinese PET producers have the flexibility of basing
their prices on local feedstock cost and not import
Only one 600,000 tonnes/year capacity is slated to start up valuation, after factoring in export rebate from the use of
in mid-2019, while others plan to start up in late 2019 and domestic feedstock.
2020. Hence supply is seen stable.
Meanwhile, in China, with recent rebounds in feedstock
The PET prices will stick to tracking production cost in 2019 purified terephthalic acid (PTA), the price gap between the
after the market stabilized in the fourth quarter. local PTA after rebate and PTA import narrowed.
In April this year, PET prices had detracted from following Similarly, the price spread between China and other Asian
feedstock price trends. Then PET producers saw good PET offers was narrower. Such price relationships will be
margins, broadly driven by tight global supply. keenly monitored going forward.
There were several outages in the US, Europe and Asia The market also awaits the outcome after the US
that coincided with the peak demand season. PET producers’ appealed to the International Trade
Commission’s (ITC).
The PET spread subsequently narrowed sharply in August-
September, as plants restarted and demand slowed. The anti-dumping investigation on PET resin imports from
Brazil, Indonesia, Korea, Pakistan and Taiwan may curb US
One recent change that impacted PET FOB China prices buying interest.
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FIBRE CHAIN
PURIFIED TEREPHALATIC ACID (PTA)
ASIA PTA SUPPLY BALANCED TO TIGHT AMID GROWING DEMAND
BY SAMUEL WONG JANUARY 2019
Asia’s purified terephthalic acid (PTA) supply is likely to PX AND PTA CHINA
remain largely balanced to tight in 2019 as a result of
limited capacity expansion, while demand is expected to
continue growing.
China will remain the key demand growth driver for Asia,
followed by India.
The expected demand growth for China is at around 6-7%,

tracking the country’s expected GDP growth, representing a
slowdown from the double-digit growths posted in the past
two years.
Uncertainties in the global macroeconomic environment,

generated by the ongoing US-China trade war, could cap
Source: ICIS
PTA demand growth. China’s PTA consumption increased
by 2.4m-2.8m tonnes in 2018 to around 40m tonnes.
In 2018, the PX and PTA spread for US-dollar denominated
Within Asia, supply of PTA is expected to be tighter in 2019 cargoes stood at around an average of $158/tonne, while
amid increasing demand, as majority of new capacities will the spread for China yuan (CNY) cargoes stood at an
only come on stream toward the end of the year. average of $134/tonne.
Majority of upcoming PTA expansions are in China, with the With the expectation of a healthy market fundamentals
bulk of effective capacities coming on line in 2020. this year, the PX and PTA spread for both US-dollar
denominated cargoes and CNY cargoes are expected to be
There are new PTA capacities being added this year amid within the range of $140-160/tonne, much higher than the
expansions in the feedstock paraxylene (PX) sector. No breakeven level of around $85/tonne.
new PTA capacity came stream in Asia in 2018.
PTA inventories in key China begin the year at a low, with
PTA margins should remain relatively healthy for the year, the China PTA futures warehouse receipted cargoes at the
spurred by balanced to tight PTA supply demand, on the lowest level compared to the last two years.
backdrop of ample feedstock availability.
Company Country Location

Capacity Expected CHINA PTA FURURES WAREHOUSE RECEIPTS (TONNES)
('000 tonnes) start-up
Sichuan
China Sichuan 1,000 Q1 '19
Shengda
JBF India Mangalore 1,250 2019
Xinfengming China Jiaxing 2,200 End-19
Hengli
China Changxing 2,500 Q4 '19
Petrochemical
Zhongtai
China Karamay 1,200 2020
Kunyu
Zhongjin
China Ningbo 3,300 2020
Petrochemical
Formosa China Ningbo 1,500 2020
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Majority of market players are keeping their inventories CHINA ROLYESTER O/R (%)
low, wary of incurring losses amid the global
macroeconomic uncertainties.
China’s polyester average operating rates in 2018 stood

at around 82%, compared to 79.4% in the previous year,
according to ICIS data.
Going into 2019, Chinese polyester average operating rates

are expected to be maintained within the 80-85% range.
PTA operating rates in Asia are likely to be very margin

sensitive, especially in the key China market.
CHINA PTA OPERATING RATES
Historically, producers tend to shut their plants when
margins are negative for a sustained period of at least two
to three months.
In 2018, the average operating rates of PTA facilities in

the key China market stood at around 78%, up from an
average of 65.8% in the previous year.
Yuan-denominated PTA cargoes are likely to continue to

closely track price movement in the futures market, which is
sensitive to global macroeconomic trends, as well as fiscal
and monetary policies in China.



➔
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OLEFINS
BUTADIENE (BD)
ASIA BD MAY RISE AHEAD OF LUNAR NEW YEAR HOLIDAYS
BY HELEN YAN JANUARY 2019
Asia butadiene (BD) prices may rise in January ahead of Lunar New Year falls on 5 February in 2019 and is
the Lunar New Year holidays on re-stocking although the celebrated in several countries in Asia including the
price uptrend may fizzle out unless US-China trade war key Chinese market, South Korea, Taiwan, Indonesia,
tensions ease or there is positive news during this period. Singapore, Malaysia and Vietnam.
Equities and commodities markets have roiled since the 2019 may, however, see a departure from this seasonal
90-day truce was announced on 1 December to pause the demand trend if traders and the downstream synthetic
spike in tariffs from 10% to 25 % in January 2019 on all rubber producers, the major consumers of BD, adopt a
Chinese imports into the US. cautious stance and curb their spot appetite.
Market players stayed on the sidelines in light of the Nonetheless, BD spot prices are expected to rise in
uncertainty amid the US-China trade war. January ahead of the Lunar New Year holidays, although
gains may not be sustainable as demand is expected to be
However, trading usually picks up momentum prior to the subdued in February and March, given a slowing Chinese
Lunar New Year as buyers or traders re-stock inventories economy, the world’s largest automotive market.
ahead of the festive holidays.




➔
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BD is the feedstock for synthetic rubber such as styrene
butadiene rubber (SBR) and polybutadiene rubber (PBR)
which are used to make tyres for the automotive industry.
BD spot prices showed modest gains on heightened

Chinese spot interest for BD imports in early December
as local product in China was more expensive than
import cargoes.
However, if there is positive development in the US-

China trade talks, or if BD supply is disrupted by sudden
unplanned cracker or plant outages, spot appetite will pick
up momentum and spur end-users’ support for a price
uptrend in the first quarter of 2019.
Source: ICIS
The BD price uptrend may, however, be likely to be
moderate and tempered by the subdued downstream
synthetic rubber market, which had been weighed down by
the continued weakness in the natural rubber (NR) price.
Natural rubber and synthetic rubber are feedstock substitutes

in the production of tyres for the automotive industry and
their price movements tend to impact each other.
Natural supply is long into 2019 and the NR price is likely to

remain soft in the first quarter of 2019.
Meanwhile a slowing global economy is likely to see softer

growth in the automotive sector – which will ultimately
weigh on demand for synthetic rubber - and cap any
significant upside in the BD price.
back to contents
OLEFINS
ETHYLENE
ASIA ETHYLENE BALANCE LIKELY TO LENGTHEN IN 2019
BY YEOW PEI LIN JANUARY 2019
Asia ethylene is expected to be more ample in 2019, on The country’s 2019 exports will likely recover to around
the back of fewer cracker turnarounds in Japan, regional 700,000 tonnes, similar to levels seen in 2017, in line with
capacity expansions and possible downstream output cuts. higher production.
The outlook for deep-sea supply is mixed, with European Capacity losses from annual maintenance shutdowns
exports likely to be curtailed by a slew of cracker are expected to fall by around 64% from 2018 to around
maintenance shutdowns, while shipments from the US may 183,000 tonnes.
be lifted by a new export facility in the fourth quarter.
Producers in South Korea and Malaysia will also increase
Spot ethylene prices in northeast Asia ended 2018 on a shipments to regional markets in 2019, amid a slew of
weak note. capacity expansions.
Deals were at below $1,000/tonne CFR (vost & freight) NE Five projects with a combined capacity of 2.24m tonnes/
(northeast) Asia in the fourth quarter, lower compared with year are coming on-stream between the third quarter of
prices in the low $1,200s/tonne to low $1,400s/tonne CFR 2018 and mid-2019.
NE Asia during January-September.
Up to 27-28% of that supply, or 610,000-630,000 tonnes/
The market was undermined by ample supply from the year, are potentially available for merchant sale – for
Middle East and southeast Asia, owing to strong cracker companies that are not owned or affiliated with the producer
run-rates, weak polyethylene (PE) sales and planned and - with suppliers targeting mainly the key China market.
unplanned downstream outages.
South Korea’s Hanwha Total Petrochemical will become
The abundant supply in the fourth quarter may continue a net seller temporarily when its additional capacity is on-
in 2019. stream in mid-2019.
Japan – the second largest exporter after South Korea It will return to a net short position towards the end of
-- shipped out 455,742 tonnes of ethylene during January- the year once its new 400,000 tonne/year high density
October of 2018, down 24.5% from the period a year earlier polyethylene (HDPE)/linear low density polyethylene
due to a heavy cracker turnaround schedule. (LLDPE) plant starts up.
1,450 The impact of the higher domestic ethylene supply will

1,400 be moderated by a reduction in Yeochun NCC’s (YNCC)
1,350 exports and capacity losses from multiple cracker
1,300
turnarounds in the first half of 2019.
1,250
1,200
USD/tonne
YNCC will allocate more ethylene to its own styrene

1,150
1,100
monomer (SM) unit and downstream plants of its
1,050 shareholder Hanwha Chemical, to support several
1,000 debottlenecking projects.
950 Ethylene CFR Asia NE Assessment Spot
900 In addition, four plants in South Korea will shut for
850 maintenance in the first half of the year, with capacity
losses of around 387,000 tonnes.
15 ay- 8
un 18
8
ec 18
13 ar- 8
04 r 18
25 ay 18
21 ov- 8
23 ar- 18
02 eb- 18
ep 18
09 ct- 18
30 ov- 18
28 ep- 8
07 ug- 8
17 ul- 18
27 ul-2 8
1
01
1
1
1
1
-J 01
-M -20
-M -20
-J 20
-D 20
-M 20
-A 20
-M 20
-N 20
-N 20
-F 20
-S 20
-O 20
-S 20
-A 20
-J 0
-2
06 -2
09 an-
19 -
p
-J
19
Source: ICIS
Ethylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range (Mid) : …
➔
back to contents
The Petronas-Saudi Aramco joint venture plant in Malaysia On a more upbeat note for suppliers, ethylene import
will help mitigate production losses from a series of cracker demand in China will continue to draw support from
turnarounds in southeast Asia in the second half of 2019. downstream capacity expansions.
Major southeast Asian suppliers such as Petronas Four non-integrated plants that are scheduled to start up
Chemicals Olefins, Chandra Asri and Shell will take their between the third quarter of 2018 and 2019 could boost
facilities down, contributing to scheduled capacity losses consumption of ethylene by up to over 480,000 tonnes/year.
of around 522,000 tonnes, which are higher compared to
270,000 tonnes in 2018. Some of the increases in import requirements in 2019
may be offset by new domestic supply from SP Chemicals’
THE DEMAND OUTLOOK IS MIXED cracker, China’s first project that uses a combination of
Production activity in some downstream sectors in ethane and propane feed, as well as Nanjing Chengzhi
Asia may weaken, under pressure from rapid capacity New Energy’s methanol-to-olefins (MTO) plant.
expansions in the US and Asia as well as the ongoing US-
China trade war. PE supply glut could worsen if shipments The plant is due to come on-stream in the second half
from the US increase as producers there resolve their of 2019, although some market players expect possible
logistics issues progressively. delays to 2020.
The US polymer capacity will continue to climb in 2019, When operational, SP Chemicals, which currently relies on
with another 2.37m tonnes/year slated to come on- imports of ethylene for its vinyl chloride monomer (VCM)
stream, adding to expansions totalling 4.115m tonnes/year and styrene monomer (SM) plants, will turn into a net seller.
completed in the country since 2017. Competition in the
monoethylene (MEG) and styrene monomer (SM) markets It currently requires up to around 320,000 tonnes/year of
is set to intensify. ethylene imports when its plants are operating fully.
Over 4m tonnes/year of additional MEG capacity is Separately, Nanjing Chengzhi, which does not have any
scheduled to be operational in China, Malaysia and the US ethylene downstream facilities will have a second MTO unit
between late 2018 and 2019. with 240,000 tonnes/year of ethylene capacity.
Suppliers in the US, which will turn into a net exporter, are Shipments to China have continued to grow strongly in
likely to go around to circumvent the tariff on their imports 2018, even after the sterling 30% year-on-year increase in
into China - the leading polyester market - through internal import volumes in 2017.
swaps with their facilities in other locations.
Imports in the first 10 months of the year totalled 2.09m
Chinese SM makers may see lower margins when Zhejiang tonnes, an increase of 17.9% over the same period a
Petrochemical enters the fray. The company will have a year ago.
massive 1.2m tonnes/year SM plant in 2019.


➔
back to contents
By the end of December, imports are likely to cross above WEST-EAST ARBITRAGE OUTLOOK IS MIXED
the 2.5m tonnes mark, which will represent a growth of US exports will increase towards the end of the year if
more than 15% from the previous year’s 2.16m tonnes. Enterprise Products Partners and Navigator Holdings’ new
export terminal with a capacity of 1m tonnes/year starts up
Indonesia’s import demand will likely increase from the in the fourth quarter of 2019.
second half of 2019 due to a structural tightening in the
domestic balance. The terminal, however, will not be able to operate at full
capacity until its refrigerated storage facility is ready in 2020.
The country’s sole domestic producer Chandra Asri plans
to start up a 400,000 tonne/year PE unit in late 2019, after Shipments from Europe could be crimped by a heavy
its cracker completes an expansion during a turnaround in cracker turnaround schedule in spring of 2019.
the third quarter.
The affected units include a cracker that belongs to Italy’s
Its net ethylene surplus will shrink to 60,000 tonnes/year, Versalis, which is a key exporter to Asia.
from close to 420,000 tonnes/year currently.
CHINA DOWNSTREAM PROJECTS

Company Location Product Capacity (KTA) Start-up schedule C2 consumption (KTA)
Anhui Haoyuan Chemical Anhui SM 260 Aug-18 78
Jiangsu Jurong Chemical Jiangsu EO 200 Dec 2018-early 2019 160
CITIC Guoan Chemical Shandong SM 200 2019 60
Hebei Jinniu Chemical Industry Hebei VCM/PVC/EDC 400/400/300 2019 185
Total 483
SOUTH KOREA DOWNSTREAM PROJECTS

Company Location Product Capacity (KTA) Start-up schedule
Polyolefin elasto-
LG Chem Daesan 200 Nov-18
mer
YNCC Yeosu SM +80 to 370 Mid-2019
Hanwha Chemical Yeosu VCM +150 to 535 2019
Hanwha Chemical Yeosu LDPE, LLDPE +50 to 732 Q1 2019
Hanwha Total Petrochemical Daesan HDPE/LLDPE 400 End 2019
ASIA ETHYLENE PROJECTS

Company Location Facility C2 capacity (KTA) Start-up schedule
S-Oil Onsan, South Korea Ethylene recovery unit 200 End Aug/early Sept 2018
Lotte Chemical Yeosu, South Korea Steam cracker +200 to 1,200 Dec 2018
LG Chem Daesan, South Korea Steam cracker +230 to 1,270 Apr 2019
Hanwha Total Petrochemical Daesan, South Korea Steam cracker +310 to 1,400 May 2019
Pengerang Refining Johor, Malaysia Steam cracker 1,300 Late Q1/early Q2 2019
SP Chemicals Jiangsu, China Steam cracker 650 H2 2019-2020
Nanjing Chengzhi Clean
Nanjing, China MTO 240 Apr 2019
Energy
Total net C2 surplus* 1,180-1,200
Chandra Asri** Cilegon, Indonesia Steam cracker +40 to 900 H2 2019
Zhejiang Petrochemical*** Zhejiang, China Steam cracker 1,400 2019
*Figure is based on Hanwha Total Petrochemical’s balance before it starts up its PE plant in end 2019
**Chandra’s ethylene balance will tighten when its PE plant starts up in end 2019
***Structurally balance
➔
back to contents
OLEFINS
PROPYLENE
SOME SUPPORT EXPECTED FOR C3 IN Q1 ON RESTOCKING ACTIVITIES
BY JOSON NG JANUARY 2019
Spot propylene prices in the first quarter 2019 could see While the traditional pre-Lunar New Year restocking activity
some support in the run up to the Lunar New Year in early is one reason, the lack of buying in the last six weeks of
February after ending 2018 on a dismal note. 2018 suggests that buyers in northeast Asia were relying
on their inventory and even as consumption might have
Though downstream demand from key markets are been arguably slow, buyers would have to return to the spot
difficult to gauge with market uncertainties permeating market eventually.
most petrochemical sectors, the Lunar New Year factor
should still come into play as Chinese buyers do have the On the supply front, there are no major turnaround plans
traditional mindset of stocking up before they leave for their in the first two and a half months of 2019 for propylene
week-long holiday. production units in northeast Asia (outside of China).
The key question is the amount of cargoes that they are As such, price movements could well be demand-driven
prepared to buy. and on upstream performance.



➔
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Beyond the Lunar New Year, demand could possibly slide The prices were never below $1,000/tonne CFR (cost and
as downstream units could take up to 15 days to get up freight) NE (northeast) Asia.
to speed following the holidays in China, resulting in a
sluggish post-holiday market. Spot supply were tight due to significant production losses
as it was a heavy turnaround year for crackers in south
It had been the case for the last two years and 2019 could Korea and Japan.
well trend in a similar vein.
Things started to unravel in the last two and a half months
Towards the end of the first quarter, things may start to of the year and prices fell significantly, reaching mid-$800s/
pick up from the sellers’ point of view as downstream tonne CFR NE Asia in end November, as weak demand
run rates should resume to pre-holiday levels by end of and poor crude oil prices combined to dull sentiments.
February in China.
The average spot price was $925/tonne CFR NE Asia on
In addition, from end of March, some producers in northeast 14 December.
Asia are expected to start their turnaround season.
In South Korea, Hanwha Total plans to shut its cracker in 1,200
Daesan sometime in end of March for maintenance works.

1,150
The cracker, which has a propylene capacity of about 640,000 1,100

tonnes/year, is expected to restart in the first half of May.
1,050
USD/tonne
The company will also shut its olefin conversion unit (OCU) 1,000
situated in Daesan during the same period. The unit has a
capacity of 220,000 tonnes/year. 950
Propylene CFR Asia NE Assessment
900 Spot 2-6 Weeks Full Market Range (Mid)
LG Chem will shut its Daesan cracker in early March for
about 1 month. The propylene capacity is about 600,000 850
tonnes/year.
9
20 ar- 8
11 pr 18
01 ay- 18
22 un- 18
30 ar- 18
07 ov- 18
04 ec- 8
an 18
09 b- 18
16 an- 8
26 ct- 8
16 ct- 18
24 ug- 18
14 ug- 18
05 ep- 8
03 ul- 8
13 n-2 8
01
1
1
1
1
1
-J 01
u 1
-M 20
-A 20
-M -20
-J 20
-J 20
-M 20
-F 20
-O 20
-N 20
-D 20
-J 20
-S 20
-O 20
-A 20
-A 20
-J 20
-2
26 an-
e
-J
Spot prices in Asia were trending in a fairly narrow range

05
Source: ICIS
for the first 10 months of 2018.
Propylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range (Mid)…
back to contents
OLEOCHEMICALS & SURFACTANTS
FATTY ACIDS
ASIA FATTY ACIDS TO CONTINUE TRACKING PALM OIL MOVEMENTS
BY JACKIE WONG JANUARY 2019 MALAYSIA’S OLEOCHEMICAL EXPORTS

0.30
Spot prices of fatty acids in Asia will continue tracking 2014 2015 2016 2017 2018
feedstock palm oil prices closely in 2019 as they did in 2018. 0.25
Following aggressive expansion plans that were mostly 0.20
Million tonnes
finalized in 2015-2016, the natural fatty acids market
faces a chronic overcapacity issue for at least the next five 0.15
years with demand growth lagging the capacity increase.

0.10
Throughout 2018, fatty acids prices followed feedstock
price movements closely.
0.05
Instead of dragging themselves into a price war, producers 0

in southeast Asia have been seeking a balance point where J an Feb Mar Apr May J un J ul Aug S ep Oct Nov Dec
they can protect the margins of their fatty acids products
while running their plants at reduced rates. 2014 2015 2016 2017 2018
regain the premium that it enjoys over C12 lauric acids.
This resulted in tightness in C14 myristic acids supply in C14 myristic acid is a by-product of C12 lauric acids that is
the first half of 2018 which allowed C14 myristic acids to produced at a 1:3 ratio.



➔
back to contents
MID- AND LONG CHAIN ACIDS PRICES 2018 C12 AND C14 PRICES 2018
2,000
2,500
2,000
1,500
USD/tonne
USD/tonne
1,500
1,000
1,000
500
500
2018-Jan 2018-Dec
C12 Lauric Acid FOB Asia SE Assessment Container Spot Full Market Range (…
2013-Jan 2018-Dec
C12 Lauric Acid FOB Asia SE C12C12
Lauric Acid FOB
Lauric AcidAsia
FOBSEAsia
Assessment
SE Container Spot Full Market Range (…
C14C14 Myristic
Myristic AcidAsia
Acid FOB FOBSEAsia SE
Assessment Container Spot Full Market Rang…
C14 Myristic Acid FOB Asia SE
C16 Palmitic Acid FOB Asia SE C14 Myristic Acid FOB Asia SE Assessment Container Spot Full Market Rang…
Source: ICIS
C16C18
Palmitic
OleicAcid FOBFOB
Acid AsiaAsia
SE Assessment
SE Container Spot Full Market Rang…
C18 Stearic Acid Rubber Grade FOB Asia SE
C18 Oleic Acid FOB Asia SE Assessment Drummed Spot Full Market Range (…
C18 Stearic Acid Triple Pressed FOB Asia SE the local economy until at least the second half of 2019.
Source:
C18 ICIS Acid Rubber Grade FOB Asia SE Assessment Container Spot Full …
Stearic
C18 Stearic Acid Triple Pressed FOB Asia SE Assessment Container Hybrid S… Trade activities in first quarter 2019 are expected to
Historically, C14 myristic acids have always commanded a remain slow with Chinese buyers not keen to carry excess
premium over C12 lauric acids, until oversupply and a lack stock over the Lunar New Year period in the first week of
of demand closed the gap between the prices of these two February when a number of plants would be shut down for
cuts in 2015-2017. the holiday.
The demand for fatty acids in 2018 remained relatively In addition, feedstock palm oil price movements have
sluggish compared to the heyday of 2011-2012, with an been erratic in the second half of 2018, resulting in a more
uncertain economic outlook amid the trade war between prudent attitude among both buyers and sellers.
the US and China affected buying appetite.
Typically, palm oil prices would see downward pressure
Even with the truce between the US and China and a from increased production during the peak palm harvest
possible resolution in 2019, market participants expect any season from July to October, before receiving upward
effects to be felt only a few months later. support from lower output from November to February.
Overall, the sentiment in China remains bearish with a

number of players not expecting any significant recovery in MALAYSIA’S CPO VS PKO VS PALM STEARIN PRICES
2,000
MALAYSIA’S CPO AND PKO STOCKS
CPO Total PKO 1,800
2M 400K
1,600
CPO Total PKO
1,400
1. 5M 300K
USD/tonne
1,200
thous and tonnes
1,000
mitonne
1M 200K 800
600
0. 5M 100K 400
200
2015-6-1 2018-12-1
1
2-
0 0
-1
PKO ($/tonne) Palm Stearin ($/tonne) CPO ($/tonne)

18
2014-Jan 2018-Oct
20
ct
-O
18
20
PKO ($/tonne) Palm Stearin ($/tonne) CPO ($/tonne)

➔
C PO back to contents
However, palm oil prices declined from September to the Official data from Malaysia and Indonesia showed relatively
first half of December in 2018, before rebounding upward. high oil stocks in both countries, which may cap the upside
potential of palm oil prices.
Market participants remain skeptical whether the latest
uptrend in palm oil prices would last. There is little indication at the moment to suggest that
palm oil exports would increase significantly to relieve
the stock pressure.
MALAYSIA’S CPO EXPORT MALAYSIA’S TOTAL PKO EXPORTS
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
600K 120K
500K 100K
400K 80K
milliontonnes
million tonnes
300K 60K
200K 40K
100K 20K
0 0
J an Feb Mar Apr May J un J ul Aug S ep Oct Nov Dec J an Feb Mar Apr May J un J ul Aug S ep Oct Nov Dec
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
PKO EXPORT TO CHINA PALM OIL EXPORT TO CHINA

40K 400K
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
35K 350K
30K 300K
milliontonnes
milliontonnes
25K 250K
20K 200K
15K 150K
10K 100K
5K 50K
0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
PALM OIL EXPORT TO INDIA PKO EXPORT TO INDIA

500K 2014 2015 2016 2017 2018
24K
450K 2014 2015 2016 2017 2018
22K
400K 20K
18K
350K
thous and tonnes
16K
milliontonnes
300K
14K
250K 12K
200K 10K
8K
150K
6K
100K
4K
50K 2K
0 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
➔
back to contents
FATTY ALCOHOLS
ASIA FATTY ALCOHOLS MAY SEE SUPPORT FROM SUPPLY TIGHTNESS
BY JACKIE WONG JANUARY 2019
Asia’s fatty alcohols prices may continue to receive upward FATTY ALCOHOLS PRICES 2018
support from supply tightness in 2019 as a result of some 3,000
shutdowns in Asia. 2,800
2,600
Overall, the natural fatty alcohols market faces a chronic 2,400
capacity issue for at least the next five years following 2,200
USD/tonne
2,000
aggressive expansion plans in southeast Asia which were
1,800
mostly finalised in 2015-2016.
1,600
1,400
Supply abundance plagued fatty alcohols prices from 1,200
2015-2017, but forced shutdowns in China and changes in 1,000
India’s import tax structure for vegetable oils brought some
-N - 7
-2 8
8
-D -2 8
- - 6
- 6
-M n-2 6
- - 7
-S -2 8
-M -2 5
06 ar- 015
- - 7
- - 7
- - 5
- - 5
- - 4
-N - 4
- - 4
- - 3
-A r-2 4
- - 3
-J -2 3
15 Aug 201
ec 01
01
03 -Ja 201
09 ay 01
19 ep 01
12 Jul 01
25 Oct 201
12 Jun 201
06 Feb 201
30 Dec 201
28 ov 201
16 Sep 201
09 Jun 201
03 Feb 201
12 ug 01
25 ov 201
30 an 01
06 Ap 201
02 Jun 01
22 Oct 201
balance to the market.
- 2
- -2
26 ar
-M
20
In addition, fatty alcohols producers in southeast Asia also Fatty Alcohols C12-14 Alcohol FOB Asia SE Assessment Spot
protected the margins of their products by running at lower Fatty2-6
Alcohols
WeeksC12-14 Alcohol
Full Market FOB Asia
Range SE :Assessment
(Mid) USD/tonne Spot 2-6 Weeks Full …
Fatty Alcohols C16 Alcohol FOB Asia SE Assessment Spot 2-6
plant operating rate. FattyWeeks
Alcohols
FullC16 Alcohol
Market FOB Asia
Range (Mid)SE: USD/tonne
Assessment Spot 2-6 Weeks Full Ma…
Fatty Alcohols C16-18 Alcohol FOB Asia SE Assessment Spot

Fatty Alcohols C16-18 Alcohol FOB Asia SE Assessment Spot 2-6 Weeks Full …
As China stepped up its efforts in enforcing strict 2-6 Weeks Full Market Range (Mid) : USD/tonne
environmental regulations, production of some fatty FattyFatty Alcohols
Alcohols C18 Alcohol
C18 Alcohol FOB
FOB Asia SEAsia SE Assessment
Assessment Spot 2-6
Spot 2-6 Weeks Full Ma…
Weeks Full Market Range (Mid) : USD/tonne
alcohols plants was affected.
Source: ICIS
Smaller Chinese producers were force to shutdown their

plants until investments are made to improve the waste This is unlikely to boost fatty alcohols exports from India
treatment facilities. and local producers would mostly likely remain focused on
the domestic market.
Production of some major Chinese fatty alcohols plants
were also affected. Southeast Asian fatty alcohols producers also saw greater
demand from Europe following the force majeure of a
As a result, some Chinese buyers had to turn to import synthetic alcohols plant in Europe, which would likely
cargoes to fulfil their requirements in 2018. remain in place until the fourth quarter of 2019.
Besides capacity losses in China, fatty alcohols producers In the near term, fatty alcohols supply in Asia is expected to
also became less competitive on the export front with the remain tight and that together with an uptrend in feedstock
Indian government increasing the import tax on crude and palm oil prices since the second half of December 2018
refined palm oil in March 2018. would provide some upward pricing support.
The India government announced import duties cuts for On the demand side, softer crude oil prices may make
crude and refined palm oil from southeast Asian countries synthetic alcohols more competitive, especially if palm oil
at the start of 2019 with the tax on crude palm oil lowered prices continue to rise.
from 44% to 40%, while the tax on refined palm oil was cut
from 54% to 45% for imports from Malaysia and 50% for In the second half of 2018, some alcohols buyers were
purchases from Indonesia and other ASEAN countries. interested in switching from synthetic to natural alcohols
when palm oil prices were soft.
➔
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The growing gap between crude oil and palm oil prices are Critical market data, tools & expertise
likely to deter alcohols buyers from making the switch.
PRICING AND ANALYTICS SOLUTIONS
Uncertain economic outlook also affected buying appetite, ICIS offers a unique combination of analytics tools, pricing
particularly in India and China. data and market information for over 180 commodities, across
all key regions, designed to help you navigate and optimise
opportunities in an ever-changing market, making complex
Depreciation in the Indian rupees against the US dollar in analytics simple for you to:
September 2018 increased the cost significantly for India
palm oil and alcohols buyers. •S
pot opportunities, minimise risk and pre-empt competition
•S
hape future strategies and expand your opportunities
In China, buying sentiment remains relatively bearish even •M
aintain a competitive advantage and negotiate better prices
with the truce between the US and China and a possible with other market players
resolution of the trade war in 2019 with a number of players
Analytics tools for the petrochemical market include:
not expecting any significant recovery in the local economy
until at least the second half of 2019. ✓ Live Disruptions Tracker: Supply
✓ Price Drivers Analytics
Trade activities in Q1 2019 are expected to remain slow ✓ Price Optimisation Analytics
with Chinese buyers not keen to carry excess stock over ✓ Margin Analytics
the Lunar New Year period in the first week of February ✓ Supply & Demand Outlooks
when a number of plants would be shut down for the
holiday. Request a demo
In addition, feedstock palm oil price movements have FORECAST REPORTS

been erratic in the second half of 2018, resulting in a more The ICIS Price Forecast Reports include a rolling 12-month
prudent attitude among both buyers and sellers. price forecast, current and historical prices for key commodities
with information on upstream markets and major industry
drivers that affect the prices and margins of the commodities
you are tracking. Our reports also enable you with a bigger
picture of macroeconomic factors that are shaping the chemical
markets, with an economic outlook, alternative scenarios and
MALAYSIA’S CPO VS PKO VS PALM STEARIN PRICES projections to help you plan for the future.
2,000 1,375
1,800 1,264
Find out more
1,600 1,153
INDUSTRY NEWS
P alm Stearin ($/tonne)
1,400 1,042
PKO &CPO $/tonne
1,200 931
Our extensive global network of local experts report breaking
news stories, covering chemical markets and events
1,000 819
influencing commodity prices and affecting your daily business
800 708 decisions. Stay fully informed and support your planning with:
600 597
• Real-time, round-the-clock news
400 486 •M arket analysis and the likely impact on your markets
200 375 • Production and force majeure news
2015-6-1 2018-12-1
43 72
43 28
43 96
43 53
43 11
43 90
43 47
43 05
5
42 74
42 36
42 98
42 58
42 16
42 64
42 20
42 84
42 42
42 08
42 69
42 28
42 02
46
0
1
1
2
2
3
4
7
8
8
9
9
6
6
4
5
5
2
2
3
4
42
PKO ($/tonne) Palm Stearin ($/tonne) CPO ($/tonne) Request a trial
PKO C PO
SUPPLY & DEMAND DATABASE
MALAYSIA’S CPO AND PKO STOCKS
Receive end-to-end perspectives across the global
petrochemical supply chain for over 100 petrochemical
commodities, across 160 countries, with historical and
projections from 1978 to 2040. The database enables you to:
•P
support your planning
•V
Find out more

➔
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Typically, palm oil prices would see downward pressure Market participants remain skeptical whether the latest
from increased production during the peak palm harvest uptrend in palm oil prices would last.
season from July to October, before receiving upward
support from lower output from November to February. Official data from Malaysia and Indonesia showed relatively
high oil stocks in both countries, which may cap the upside
However, palm oil prices declined from September to potential of palm oil prices. There is little indication at the
the first half of December in 2018, before rebounding moment to suggest that palm oil exports would increase
upward. significantly to relieve the stock pressure.
MALAYSIA’S CPO EXPORT MALAYSIA’S TOTAL PKO EXPORTS
600,000 120,000
500,000 100,000
Million tonnes
400,000 80,000
Million
tonnes
300,000 60,000
tonnes
200,000 40,000
100,000 20,000
0 0
st
ch
r il
st
ch
ne
r il
Oc r
No ber
De ber
r
y
ry
ay
ly
ne
Oc r
No ber
De ber
r
y
ay
ly
be
be
be
be
ar
ar
r
Ju
Ju
Ap
gu
Ap
gu
ua
ua
Ju
Ju
M
ar
M
ar
nu
to
em
nu
to
em
m
Au
Au
M
br
M
br
ve
ce
ve
ce
Ja
Ja
pt
pt
Fe
Fe
Se
Se
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
PALM OIL EXPORT TO CHINA PKO EXPORT TO CHINA

400,000 40,000
350,000 35,000
300,000 30,000
Million tonnes
Million tonnes
250,000 25,000
200,000 20,000
tonnes
tonnes
150,000 15,000
100,000 10,000
50,000 5,000
0 0
st
ch
r il
ne
Oc r
No ber
De ber
r
y
ay
ly
ch
st
r il
ne
y
ay
Oc r
No ber
ly
r
be
be
ar
Ju
be
be
be
Ap
gu
ar
r
ua
Ju
Ju
M
ar
Ap
gu
ua
Ju
nu
M
to
ar
em
nu
to
em
m
Au
M
br
Au
ve
ce
M
br
Ja
ve
ce
pt
Ja
Fe
pt
Fe
Se
De
Se
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
PALM OIL EXPORT TO INDIA PKO EXPORT TO INDIA

500,000 24,000
450,000
20,000
400,000
350,000 16,000
Million tonnes
Million tonnes
300,000
250,000 12,000
tonnes
tonnes
200,000
8,000
150,000
100,000
4,000
50,000
0 0
ch
st
r il
st
ne
ch
r il
ay
Oc r
No ber
ly
r
ne
Oc r
No ber
De ber
r
y
ay
ly
be
be
be
be
be
ar
r
ar
Ju
Ap
Ju
gu
Ap
gu
ua
ua
Ju
M
Ju
ar
M
ar
nu
to
em
m
nu
to
em
Au
Au
M
br
M
br
ve
ce
ve
ce
Ja
Ja
pt
pt
Fe
Fe
De
Se
Se
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
➔
back to contents
FATTY ALCOHOL ETHOXYLATES (FAE)
ASIA FAE COULD GAIN STEAM IN Q1 ON SOME UPSTREAM REBOUNDS
BY KHENG WEE LOY JANUARY 2019 1,850

1,800
Fatty alcohol ethoxylates (FAE) import markets in Asia 1,750

1,700
could gain steam on some upstream rebounds and steady
1,650
demand in the first quarter of 2019.
USD/tonne
1,600
1,550
The expected start-up of a new plant in China could temper
1,500
trading sentiment slightly.
1,450
1,400
Regional prices for FAE have been mainly on a downtrend
1,350
for the past year, tracing the spot volatility in feedstock 1,300
markets to reach all-year lows.
20 ay- 18
11 n-2 8
9
18 ar- 8
09 pr 18
30 ay 18
02 ec- 8
an 18
28 ar- 18
14 t- 18
05 ov- 18
07 b- 18
14 an- 8
22 ug- 18
12 ug- 18
03 ep- 8
24 ct- 8
01 Jul- 18
u 1
01
1
1
1
1
1
-J 20
-M 20
-A 20
-M -20
-M -20
-N 20
-D 20
-J 20
-M 20
-F 20
-O 20
-O 20
-J 20
-A 20
-A 20
-S 20
0
-2
24 an-
c
e
For the week ended 2 January, import prices for FAE-7,9
-J
-
03
were assessed steady at $1,340/tonne CIF (cost, insurance FAE EO moles 7 and 9 CIF Asia SE Assessment
Drummed Spot 2-4 Weeks Full Market Range (Mid)
& freight) China on average, having slumped by 24.3% FAE EO moles 7 and 9 CIF Asia SE Assessment Drummed Spot 2-4 Weeks Full…
FAE EO moles 7 and 9 CIF China Assessment
Source: ICIS Drummed Spot 2-4 Weeks Full Market Range (Mid)
from the start of 2018, according to ICIS data. FAE EO moles 7 and 9 CIF China Assessment Drummed Spot 2-4 Weeks Full …



➔
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Likewise in southeast Asia, drummed spot prices were at
1,400
$1,435/tonne CIF SE (southeast) Asia on average, reflecting
a 20.3% drop over the same period, ICIS data indicated. 1,300
1,200
Upstream fluctuations would remain as key concerns for
USD/tonne
market participants. 1,100
The co-feedstocks required for FAE production are 1,000

Ethylene CFR Asia NE Assessment Spot
ethylene oxide (EO) and C12-14 fatty alcohols. 900 2-6 Weeks Full Market Range (Mid)
Ethylene CFR Asia SE Assessment Spot
Recent uplifts in these two sectors could point to some 800 2-6 Weeks Full Market Range (Mid)
upward pressure for FAE values in the short term, some

players said.
8
ec 18
30 ov- 18
21 ov- 8
ep 18
09 ct- 18
28 ep- 8
07 ug- 8
17 ul- 18
27 ul-2 8
un 18
25 ay- 18
15 ay- 8
13 ar- 8
04 r- 18
23 ar- 18
02 eb- 18
01
1
1
1
-J 01
1
1
-D 20
-N 20
-S 20
-O 20
-N 20
-S 20
-A 20
-J 0
-J 20
-M 20
-M 20
-A 20
-M 20
-M 20
-F 20
-2
06 -2
19 -
09 an-
p
-J
19
Weekly prices for C12-14 fatty alcohols appeared to halt its
Source: ICIS
downtrend in the second half of December 2018 and hiked Ethylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range (Mid) : …
up by $50/tonne, amid a sharp increase in feedstock palm
Ethylene CFR Asia SE Assessment Spot 2-6 Weeks Full Market Range (Mid) : …
oil prices and limited supply. Regional availability is projected to be slightly mixed.
Palm kernel oil (PKO) price movements may remain erratic Certain manufacturers would likely choose to allocate more
in the near future. volumes for their local markets to reap higher margins or
produce on a make-to-order basis.
Regional PKO in south Malaysia were transacted higher
in the $760s/tonne DEL (delivered) on 31 December, Export discussions typically take place for excess goods in
according to data collected by ICIS. such cases.
Ethylene import prices freshly rebounded to around $925/ On the other hand, some producers may prefer to export
tonne CFR (cost & freight) NE (northeast) Asia in mid- cargoes actively to achieve sales volumes, especially with
December, after nosediving within the fourth quarter to the increased selling interest observed towards the end of
touch a multi-year low, ICIS data showed. the fiscal year for accounting purposes.
Domestic EO values in China declined to yuan (CNY) Separately, a new 150,000 tonne/year alkoxylation facility,
8,500/tonne EXWH (ex-warehouse), the lowest since July managed by Sasol Limited, is slated to start operations in
2016, based on data compiled by ICIS on 2 January. 2019. The unit is located in China’s Jiangsu province.
2,100 It may take time for the product volumes to emerge and
2,000 then for participants to gain clarity and respond accordingly,
1,900 some market participants said.
1,800
Consumer demand is set to be steady. Buying appetite
1,700
USD/tonne
could strengthen on the back of restocking activities in

1,600
January, following the December lull for some downstream
1,500
sectors towards the year-end holidays and winter season in
1,400 northeast Asia.
1,300
1,200 Local players in China might be more inclined to obtain

1,100 domestic cargoes as opposed to imports, given the
unstable upstream conditions.
20 ay- 18
11 n-2 8
9
18 ar- 8
09 pr 18
30 ay 18
28 ar- 18
05 ov- 18
02 ec- 8
an 18
07 eb- 18
14 an- 8
24 ct- 8
14 ct- 18
22 ug- 18
12 ug- 18
03 ep- 8
01 Jul- 18
u 1
01
1
1
1
1
1
-M -20
-J 20
-M 20
-A 20
-M -20
-J 20
-M 20
-F 20
-O 20
-N 20
-D 20
-J 20
-S 20
-O 20
-A 20
-A 20
0
-2
24 an-
-J
Import discussions typically come with additional risks

03
Fatty Alcohols C12-14 Alcohol FOB Asia SE

Assessment Spot 2-6 Weeks Full Market Range (Mid) associated with currency rates and longer delivery periods,
FattyICIS
Source: Alcohols C12-14 Alcohol FOB Asia SE Assessment Spot 2-6 Weeks Full …
sources said.
➔
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Traders and buyers would stay marginally cautious in their In the meantime, most industry participants will have
purchasing activities amid the uncertain macroeconomic their eyes on the feedstock markets before making any
situation and US-China trade war truce. firm decisions.
A slight pause in trading momentum may occur during FAE is a non-ionic surfactant often used in the manufacture
early February, in light of the Lunar New Year celebrations of personal care and industrial cleaning products.
observed in some areas.
14,000 11,000
FAE EO moles 7 and 9 Ex-Warehouse 10,800

13,500 China E Assessment Drummed Spot 0-3 10,600
Days Full Market Range (Mid)
10,400
13,000
10,200
10,000
12,500
CNY/tonne
CNY/tonne
9,800
12,000 9,600
9,400
11,500 9,200 Ethylene oxide prices
9,000
11,000 8,800
8,600
10,500
8,400
20 ay- 18
11 n-2 8
9
18 ar- 18
09 pr 18
30 ay 18
an 18
28 ar- 18
02 ec- 18
07 eb- 18
14 an- 18
24 ct- 18
14 ct- 18
05 ov- 18
03 ep- 18
22 ug- 18
12 ug- 18
01 Jul- 18
u 1
01
21 1/2 8
14 2/2 8
04 3/2 8
25 4/2 8
16 4/2 8
06 5/2 8
27 6/2 8
18 6/2 8
08 7/2 8
29 8/2 8
19 8/2 8
10 9/2 8
31 0/2 8
21 0/2 8
12 1/2 8
02 2/2 8
1/ 8
19
-M -20
-M -20
-J 20
-M 20
-A 20
-J 20
-M 20
-N 20
-D 20
-F 20
-J 20
-O 20
-O 20
-S 20
-A 20
-A 20
0
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/0 01
/1 01
/1 01
/1 01
/1 01
/0 01
-2
20
24 an-
31 1/2
-J
/0
03
10

FAE EO moles 7 and 9 Ex-Warehouse China E Assessment Drummed Spot 0-3…
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LINEAR ALKYLBENZENE/SULPHONATE (LAB/LAS)
ASIA LAB MARKET MIXED IN THE NEAR TERM ON UNCERTAIN UPSTREAM
BY YUANLIN KOH JANUARY 2019
The Asia/Middle East linear alkylbenzene (LAB) market is Values fell 24.4% from $862.50/tonne FOB (free on board)
likely to be mixed in the near term on uncertain upstream Korea on 28 September, to $652/tonne FOB Korea on 23
crude and benzene values. November, closely tracking crude prices.
Key feedstock Brent crude oil prices had lost about 27% There is particular concern about the long supply issue that
of its value since early October to $62.60/bbl as of 23 has been plaguing the benzene market since 2017.
November 2018, ICIS data showed.
With new supplies slated to come on stream in China,
Crude prices are expected to remain under pressure due southeast Asia and the Middle East in 2019, sentiment
to the expected global economic slowdown in 2019 as the among benzene participants remains weak.
trade war between the world’s two biggest economies - the
US and China - escalates. At the same time, the benzene market has entered the
year-end lull and demand appeared unlikely to improve
Another key upstream, benzene, has also been posting until after the Lunar New Year holidays in early February
losses since late September 2018. of 2019.



➔
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1,400 90
Currently, majority of the downstream LAB market players 1,380 85
are on the sidelines, waiting for further and a clearer
1,360
direction of its feedstocks. 80
1,340
75
USD/tonne
Sentiment is mostly bearish in the market in the near term, 1,320
USD/bbl
70
as production costs fell. 1,300
65
1,280
ICIS data showed LAB prices in southeast (SE) Asia 60
1,260
plunged to a six-month low on 21 November 2018, at
55
$1,315/tonne CFR (cost & freight) SE Asia last seen on 2 1,240
May and down 3.7% from 20 June. 1,220 50
9
-D -2 8
-J -2 8
-2 8
2 4 Oc t 0 1 8
- N t- 2 8
-N -2 8
08 e p 018
-S -2 8
-A -2 8
- -2 8
- l- 8
16 un- 018
-J -2 8
-M -2 8
- -2 8
- - 8
- M r- 2 8
- -2 8
-M -2 8
- - 8
- -2 8
a n 01
01
0 9 Oc 2 0 1
27 ov 01
13 ov 01
07 e c 01
20 S e p 01
17 A ug 201
04 ug 01
01 - J u 201
28 J un 01
20 A pr 01
08 A p 201
24 a y 01
12 a y 01
04 a r 01
16 F e b 201
28 F e b 01
12 J a n 01
LAB prices reached a peak of $1,365/tonne CFR SE Asia
- -2
- -2
- -
25 a n
-J
on 20 June 2018, according to ICIS data.
09
Crude BFOE FOB UK / Norway Assessment
Spot Month +1 Closing Value (Mid)
Following that, the market generally saw a downtrend, LAB CFR Asia SE Assessment Spot 2-4
before hitting a six-month low on 21 November 2018.
Source: ICIS
The market generally sees a slight uptick in demand before

the Lunar New Year holidays which most of northeast and
southeast Asia celebrates.
However, it seems with the volatility of feedstock values,

demand may be softer than usual.
Market sentiment traditionally improves after the Lunar New

Year holidays, when the market would restock inventories.
“Regardless of the US-China trade war, buyers would have

to restock inventories after the Lunar New Year holidays
[in 2019], as they haven’t really bought in months,” said a
northeast Asia producer.
However, with the simmering US-China trade war

continuing, it is hard to predict if the market will follow its
Source: ICIS
traditional recovery after Lunar New Year holiday in 2019.
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PLASTICS & POLYMERS
PLASTICIZERS
ASIA PLASTICIZERS SPOT PRICES TO BE SUPPORTED IN Q1
BY JOSON NG JANUARY 2019
Asia spot prices for plasticizers could some see support in And with the traditional pre-Lunar New Year restocking
the first quarter of 2019 on restocking ahead of the Lunar activities, demand for plasticizers could possibly improve.
New year in the first week of February, and slight thaw in
trade tensions between the US and key Asian market of On the feedstock front, 2-ethylhexanol (2-EH) could enjoy
China. some support in the first quarter of the year. The run up
to the Lunar New Year could also see some traditional
The US and China managed to agree on a 90-day truce restocking activities in the region.
to deescalate trade tensions during the G20 meeting in
December and that may be good news for the plasticizers The post-holiday market could see some uncertainties
market for the first quarter of the year. as major feedstock propylene spot prices have declined
following the week-long holiday for the last 2 years.
While uncertainties remain, producers or end users alike
would in theory be able to plan their run rates safe in the On the propylene front, spot prices in Q1 could see some
knowledge that the trade war would not get worse in the support in the run up to the Lunar New Year (in early
near term. February) after ending 2018 on a dismal note.



➔
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Supply of diisononyl phthalate (DINP) in northeast Asian could ASIA PLASTICIZERS PRICES
start the year on the tight side as one feedstock isononanol 1,450
(INA) unit is only set to resume production in February. 1,400
1,350
As such, supply of DINP could be limited. 1,300
1,250
USD/tonne
In Europe, there are some uncertainties on demand for 1,200
Asian cargoes as inventories are set to end the year 2018
1,150
on a low.
1,100
1,050
Some European buyers are not very optimistic with current
economic climate and that could be a dampener for demand. 1,000
950
In the US, there too are some uncertainties for Asian
25 ay 18
15 ay- 8
un 18
8
ec 18
13 ar- 8
04 r 18
23 ar- 18
30 ov- 18
21 ov- 8
02 eb- 18
ep 18
09 ct- 18
28 ep- 8
07 ug- 8
17 ul- 18
27 ul-2 8
1
01
1
1
1
1
-J 01
-M -20
-M -20
-J 20
-D 20
-M 20
-A 20
-N 20
-M 20
-F 20
-S 20
-O 20
-N 20
-S 20
-A 20
-J 0
-2
06 -2
cargoes as 2019 supply and demand may depend on the
09 an-
19 -
p
-J
production of the auto industry.
19
PE HDPE Film CFR Asia SE Assessment Dutiable
PE HDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full Market …
Margins for dioctyl phthalate (DOP) have been healthy for PE LDPE Film CFR Asia SE Assessment Dutiable
most of 2018, according to ICIS data. PE LDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full Market …
PE LLDPE Film CFR Asia SE Assessment Dutiable
PE LLDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full Market …
Source: ICIS
Dioctyl terephthalate (DOTP) was trending largely in a
similar vein, with margins in the positive territory in the final
quarter of 2018.
Spot prices for DOTP were trending up overall in 2018.
Spot prices were at $1,210/tonne CFR (cost and freight)

China on 5 January and was at $1,240/tonne CFR China in
end of December.
DOP on the other hand was slightly lower. It started the

year at $1,130/tonne CFR east Asia and was at $1,080/
tonne CFR east Asia in end December.
back to contents
PLASTICS & POLYMERS
POLYBUTYLENE TEREPHTHALATE (PBT)
AND BUTANEDIOL (BDO)
ASIA BDO SEEN WEAK IN Q1; CHINESE OUTPUT CUTS TO CUSHION PBT DECLINES
BY MATTHEW CHONG JANUARY 2019
Asia spot prices of 1,4-butanediol (BDO) and its Suffice to say, Chinese BDO import volumes will most likely
downstream polybutylene terephthalate (PBT) are expected remain subdued in 2019, and Chinese producers will count
to continue their downward trend in the first quarter of on the export market.
2019, and the prospects for recovery are seen weak for the
rest of the year. In the Chinese import market, both BDO and PBT prices
are expected to track the price movements in the key
The BDO prices in China will face mounting pressure from China market to some extent, although there has been
reduced PBT demand, though production cuts in China will a noticeably widening price gap between Chinese BDO
cushion the fall in the PBT price downside. imports and domestic cargoes.
Chinese BDO supply is expected to remain ample as Poor local Chinese demand will persist in the early weeks
government restrictions on industrial energy usage in winter of the new year. Consumption in China had dwindled in
will be less prominent than last year, prompting producers the past months with the approach of the year-end lull as
to run at higher rate in the absence of stringent rules on buyers were hesitant to stock up on cargoes because they
hopes of exporting more material for better net-backs. prefer to keep their inventory levels lean.



➔
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Demand will likely pick up only from the second half of BDO CFR CHINA V DEL CHINA
February onwards as downstream plants in China are 1,900 12,000
expected to shut for two weeks ahead of the Lunar New 1,850
11,800
Year holiday in early February. 11,600
1,800
11,400
Upstream-wise, the prices of various feedstock used 1,750
11,200
CNY/tonne
USD/tonne
by different BDO producers outside China - including 1,700 11,000
butadiene (BD), propylene, propylene oxide (PO) and
10,800
maleic anhydride (MA) - are not expected to increase 1,650
10,600
significantly in the first quarter 2019, amid declining crude 1,600
10,400
oil values and overall poor market sentiment.
1,550
10,200
The other main feedstock used in PBT production besides 1,500 10,000
BDO – purified terephthalic acid (PTA) – may see price
8
-2 8
27 ov 018
18 ov 018
0 6 Oc t 0 1 8
16 ep- 018
14 J ul 018
04 ug 018
25 e p 018
12 a y 018
03 un- 18
24 ul- 18
-M -2 8
-M -2 8
10 a r 018
20 F e b 018
27 e b 018
06 a n 017
01
ec 1
01 A pr 01
22 a y 01
- D - 20
- J - 20
- J 20
-N -2
-N -2
- 2
-S -2
-S -2
- 2
-A -2
- -2
-M -2
- -2
-F -2
-J -2
gains. The price upside in PTA, however, may be limited in
16 e c
-D
early 2019 after China import prices plunged by 25% from
19
Butanediol CFR China Assessment Main Ports Bulk Spot 2-6
its peak in mid-September 2018 before bottoming out in Weeks Full Market Range (Mid)
Butanediol C FR C hina As s es s ment Main Ports Bulk S pot 2-6 Weeks …
end-November. There are limited scheduled maintenance Butanediol DEL China Assessment Spot 0-10 Days Full Market Range (Mid)
Source: ICIS
at PTA facilities in the near term, and the current tight
supply may gradually ease going forward.
PBT CIF NE ASIA V CIF INDIA
Meanwhile, the average operating rate of PBT plants in 840
820
China dropped to around 70% of capacity in early December,
800
from 80% in the second half of November, following the
780
tumble in PBT domestic prices in late-November. 760
740
PBT domestic prices had slumped to a low of Chinese 720
USD/kg
yuan (CNY) 9,500/tonne ($1,381/tonne) DEL (delivered) 700

680
China at one point before recovering to CNY11,000/tonne
660
DEL China within a couple of weeks after the output cuts, 640
according to market sources. 620
600
Low-priced China PBT exports will likely vanish after the 580
rebound in China domestic prices since early December.

16 an- 8
22 n- 8
9
an 18
20 ar- 8
11 r- 18
01 ay- 8
30 ar- 18
07 ov- 8
04 c- 8
09 eb- 18
26 ct-2 8
16 ct- 18
05 p-2 8
24 ug- 18
14 ug- 8
03 ul- 18
un 18
1
1
1
01
1
1
1
-O 01
e 1
1
-J 20
-M 20
-J 20
-J 20
-M 20
-A 20
-D 20
-M 20
-F 20
-O 0
-N 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
13 -2
26 an-
e
u
-J
As for BDO, China domestic prices have been on a steady

05
PBT Natural Grade CIF Asia NE Assessment Spot Current Month

downtrend trend, with average prices hovering at slightly Full Market Range (Mid)
Base Oils Group II N150 FOB Asia NE Assessment Spot 2-6 Weeks Full Marke…
above the CNY10,000/tonne DEL China mark as of 11 PBT Natural Grade CIF India Assessment Spot Current Month Full
Market Range (Mid)
December, down from its 2018 peak of CNY11,700/tonne Base Oils Group II N500 FOB Asia NE Assessment Spot 2-6 Weeks Full Marke…
Source: ICIS
DEL China in April.
➔
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PLASTICS & POLYMERS
POLYCARBONATE
ASIA’S POLYCARBONATE MAY SEE LIMITED UPSURGE POTENTIAL
Asia’s polycarbonate (PC) prices are expected to take on

a soft trend in the first quarter at least, with ample supply
expected to keep a lid on any potential upsurge, market
sources said.
Spot prices of PC are poised to take cues from movements

in upstream raw material bisphenol A (BPA) markets,
particularly in China. A persistently weak Chinese Yuan
currency to the US dollar, compounded with the ongoing
US-China trade tensions, has depressed sentiment, making
imports uneconomical.
Meanwhile, substantial falls in BPA prices in China have

generated downward pressure on most PC grades, along
with prices of other engineering plastics over the last three Source: ICIS
months. BPA is used in the production of PC resins.



➔
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Spot prices for most grades of PC spiralled downwards 4,000
through most of the fourth quarter. 3,800
3,600
The spread between PC and BPA narrowed to around 3,400
$800/tonne levels towards the end of the fourth quarter, 3,200
USD/tonne
from the low $1,000s/tonne in the third quarter of 2018.
3,000
2,800
This consequently forced PC producers in parts of northeast
2,600
Asia to trim production to mitigate squeezed margins.
2,400
In the week ended 12 December, spot prices of GP 2,200
moulding-grade PC or the injection grade averaged at 2,000

$2,200/tonne CIF (cost, insurance and freight) China,
27 n- 8
9
an 18
25 r- 8
16 r 18
06 ay- 8
09 c- 8
04 ar- 8
12 ov- 8
14 eb- 18
31 ct- 8
21 ct- 18
10 p- 8
19 ug- 8
29 ug- 18
08 ul- 18
un 18
1
1
01
1
1
1
1
1
e 1
1
-J 20
-J 20
-A 20
-A 20
-M -20
-M 20
-F 20
-O 20
-O 20
-N 20
-D 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
18 -2
marking a hefty decline of 35% compared to the same
21 an-
p
p
e
u
-J
period in 2017, according to ICIS data.
31
PC GP Moulding CIF China Assessment Spot 15-30 Days Close-weighted Range (Mid)
PCPC
GP Moulding
Optical CIF
Grade CIFChina
ChinaAssessment Spot15-30
Assessment Spot 15-30 Days
Days Close-weighted
Close-weighted Ran…
Range (Mid)
The bearish sentiment may persist from January to March,
amid a slowdown prior to the Chinese Lunar New Year Source: ICIS Grade CIF China Assessment Spot 15-30 Days Close-weighted Ra…
PC Optical
festival that takes place on 5 February 2019.
“February [markets] should be quiet because of the Lunar
“Prices [of optical-grade PC] are likely to hold stable at best New Year holiday,” a separate northeast Asia-based market
just before the Lunar New Year in February,” a northeast source said.
Asia-based market source said.
Depending on [the outcome] of the US-China trade
In addition, the market is expected face ample supply, talks and crude oil’s price direction, spot PC prices
given China’s Luxi Chemical’s newly-added 65,000 tonne/ are unlikely to see much of a rebound,” a China-based
year PC unit to its plant located in Shandong province. market source said.
This brings the PC capacity of Luxi to 130,000 tonne/year China’s official manufacturing purchasing managers’ index
with the current 65,000 tonne/year included. (PMI) fell to 49.4 in December, the first contraction in two and
a half years, according to National Bureau of Statistics (NBS).
Meanwhile, a third PC line, of a similar capacity, is on a
trial run. PMI is a barometer of an economy’s manufacturing activity,
in which a reading above 50 means expansion and below
On the other hand, demand already rattled by the impact 50 as contraction.
and uncertainty from the trade tensions as well as a
slowing Chinese economy, may be bleak going forward.
➔
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PLASTICS & POLYMERS
POLYETHYLENE (PE)
SE ASIA PE MARKET FACES FURTHER DOWNWARD PRESSURE ON OVERSUPPLY
BY FELITA WIDJAJA JANUARY 2019
Southeast Asia polyethylene (PE) market is likely to US import PE cargoes in China had rendered US cargoes
face some downward pressure in 2019 on oversupply unappealing to Chinese buyers, effectively closing the
as demand could not catch up with the large capacity prime import destination to US producers.
additions.
As a large chunk of export volume from the new US PE
Import PE supply is expected to swell amid another round plants that came online in 2017 and 2018 were initially
of new PE plants start-ups, creating more options for meant for China, US suppliers need to find many other
converters while suppressing prices in return, industry markets to sell to, to bridge the gap.
sources said.
In order to gain foothold and market share in Asia,
The first wave of shale gas projects in the US and PE US suppliers were inclined to offer competitive prices,
expansions in India had added around 6m tonnes of particularly for LLDPE grade, should the US-China trade
PE capacity from 2017 to 2018 with linear low density tension continues throughout 2019.
polyethylene (LLDPE) being the most volume added,
followed by high density polyethylene (HDPE) and low Offers for US LLDPE cargoes were readily available below
density polyethylene (LDPE) grades. $1,000/tonne CFR SEA, largely at $950-980/tonne CFR
SEA, around $50/tonne lower than other offers available
In the first half of 2018, both domestic and import prices from regular Saudi and Middle East suppliers.
saw some gains across all PE grades, with dutiable HDPE
prices surging above $1,400/tonne CFR SE Asia on The supply glut looks set to intensify in 2019 as more PE
average in March, a price level last seen in 2015. producers are on track to start up their plants, adding close
to 7m tonnes of additional PE supply globally.
Prices were supported by tight supply situation amid limited
production and commercial shutdowns, stemming from GLOBAL PE CAPACITY EXPANSION 2019
much higher feedstock ethylene price and robust demand Company
Capacity Grade,
Location
Start-
(kt/year) breakdown Up
in PE pipe market. Regional PE producers with integrated Formosa HDPE (400), Point Comfort, H1
plants switch to selling their ethylene when prices are high 800
Plastics LDPE (400) Texas 2019
for better netback, lowering their PE production. Sasol 420 LDPE
Lake Charles,
2019
Louisiana
Q4
The surge in demand for HDPE pipe, amid growth in the LyondellBasell 500 HDPE La Porte, Texas
2019
construction sector in Asia, has given more incentive for ExxonMobil
650 PE (unspecified) Beaumont, Texas 2019
Chemical
HDPE producers to switch their production to pipe instead LLDPE/HDPE
of film grade, tightening the latter supply in the process. Q4
Sibur 1,500 (400*2), HDPE Toblosk, Russia
2019
(350*2)
HDPE (400), Q4
In the second half of the year, PE prices moved away from Petronas 750
LLDPE (350)
Johor, Malaysia
2019
their respective peaks and steadily declined month-on- Cilegon, Q4
Chandra Asri 400 LLDPE/HDPE
month, with LLDPE film grade performing the worst. Indonesia 2019
Inner Mongolia, Jul
Jiutai Energy 250 LLDPE/HDPE
North China 2019
Dutiable LLDPE prices reached a 9-year low at $1,000/ Zhong’an Lianhe Anhui, East H2
350 LLDPE/HDPE
tonne CFR SE Asia on average, as of mid-December 2018, Coal Chemical China 2019
Qinghai, Q3
amid mounting supply pressure. Qinghai Damei 300 LLDPE/HDPE
Northwest China 2019
Zhejiang LLDPE/HDPE
750
India is exporting heavily to southeast Asia after it turned Petrochemical (300),
HDPE (450)
into a net exporter in 2018, with the region making close to
Zhejiang, East
20% of its total export volumes in 2018. China
Q3 2019
Ningxia, H2
Baofeng Energy 300 LLDPE/HDPE
An additional 25% tariffs, imposed on 23 August, for most Northwest China 2019
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There is relatively limited supply pressure for non-dutiable On 21 December, dutiable LLDPE film prices were
ASEAN (Association of Southeast Asian Nations) cargoes assessed at $1,100-1,020/tonne CFR SE Asia, up $20/
as the bulk of additional supply were for dutiable cargoes. tonne from the week before amid a lack of competitively-
priced offers, according to ICIS data.
This might act as a catalyst to widen the price gap between
dutiable and non-dutiable cargoes further in 2019. Dutiable HDPE film prices were assessed stable-to-soft at
$1,030-1,050/tonne CFR SE Asia, while dutiable LDPE film
On the demand side, most buyers in southeast Asia have prices were stable week-on-week at $1,020-1,030/tonne
largely been weighed by bearish market sentiment, which CFR SE Asia, ICIS data showed.
might continue to manifest in 2019 amid tilted supply-
demand balance. Demand growth for PE, including LDPE grade, in most
Asian markets is expected to be slower in 2019, in
Most converters opt to rely on more prompt shipment imports tandem with the global economic slowdown, uncertainty
for their immediate requirements amid market uncertainty. surrounding the geopolitical market and rising
environmental concerns on plastic waste.
Similarly, traders and stockists are cautious to take any
position, opting to hold on to minimally comfortable
allocations and stock levels amid market uncertainty. SE ASIA DUTIABLE PE PRICES
1,450
Industry sources see Vietnam becoming a more 1,400
targeted exports market in Asia, apart from China, in the 1,350
foreseeable future. 1,300
1,250
USD/tonne
Vietnam market has been inundated with competitively-

1,200
priced import cargoes from India and the US due to its full
1,150
reliance on imports and zero import duty policy while other
1,100
southeast Asian countries impose between 5-15% of import
duty for non-ASEAN PE cargoes. 1,050
1,000
Prices in Vietnam could be significantly lower than 950

other southeast Asian regions, which might isolate price
25 ay 18
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1
01
1
1
1
1
-J 01
-M -20
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06 -2
movements in Vietnam from the rest of southeast Asia,

09 an-
19 -
p
-J
warranting separate price assessments, sources said.

19
PE HDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full Market Range (Mid)
PEHDPE
PE LDPE Film
Film CFR
CFR Asia
AsiaSE
SEAssessment
AssessmentDutiable SpotSpot
Dutiable 0-8 Weeks Full Market
0-8 Weeks Range…
Full Market (Mid)
Overall outlook for 2019 remains cautious with some risk PE LLDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full
Market Range (Mid)
of further downtrend across PE grades while some market PE LDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full Market …
players believe that LLDPE prices had reached the bottom. Source: ICIS
PE LLDPE Film CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full Market …


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PLASTICS & POLYMERS
POLYPROPYLENE (PP)
SE ASIA PP TO BE WEIGHED DOWN BY NEW START-UPS
BY LEANNE TAN JANUARY 2019
Polypropylene (PP) spot prices in southeast Asia may DUTIABLE V NON-DUTIABLE PP FLAT YARN SE ASIA PRICES
continue to be suppressed moving into the first quarter of 1,340
1,320
2019 as the market continues to grapple with fresh supplies
1,300
and tepid downstream demand amid global trade tensions. 1,280
1,260
2018 started on a bullish note, with all-origins PP flat yarn 1,240
1,220
USD/tonne
grade prices peaking for the year at $1,305/tonne CFR 1,200
(cost and freight) southeast (SE) Asia in early June, a close 1,180
to 10% increase from January, according to ICIS data. 1,160
1,140
1,120
For the first three quarters of 2018, spot prices stayed 1,100
consistently higher than the same period in the year prior, 1,080
with all-origins spot prices mostly staying over the $1,250/ 1,060
tonne CFR SE Asia mark; supported by healthy import buying
08 ay- 8
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31 ug- 18
10 ul- 18
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1
1
01
1
1
1
1
e 1
1
-M -20
-J 20
-J 20
-A 20
-A 20
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-F 20
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-N 20
-S 20
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-J 20
-2
20 -2
appetite and lower than anticipated inventory levels in China.
23 eb-
p
p
e
u
-F
02
PP Flat Yarn (Raffia) CFR Asia SE Assessment Dutiable Spot 0-8

Some unexpected turnarounds in the Middle East and Weeks Full Market Range (Mid)
PP Flat Yarn (Raffia) CFR Asia SE Assessment Dutiable Spot 0-8 Weeks Full …
parallel gains in the upstream propylene market further PP Flat Yarn (Raffia) CFR Asia SE Assessment Non-Dutiable Spot
propelled regional PP spot prices. PP Flat Yarn (Raffia) CFR Asia SE Assessment Non-Dutiable Spot 0-8 Weeks …
Source: ICIS
However, sentiment took a dramatic turn for the worse in

the last quarter, with spot prices plunging by more than Trade tensions between US and China stoked volatility in
13% within the short span of seven weeks. the petrochemical markets in the later part of 2018, and
the PP market was not spared. For most of Q4, demand in
southeast Asia was in the doldrums.
PP FLAT YARN ASIA PACIFIC PRICES Converters and end-users in southeast Asia were making
1,350 procurements on a hand-to-mouth basis, opting to keep
1,300 stocks lean amid concerns that spot prices may lose further
ground in the weeks ahead.
1,250
1,200 Meanwhile, the market continues to grapple with fresh

USD/tonne
1,150
supply, with the start-up of Nghi Son Refinery and
Petrochemical’s (NSRP) 400,000 tonne/year production
1,100 unit in Vietnam and Lotte Chemical Titan’s 200,000 tonne/
1,050 year facility in Malaysia.
1,000
Availability of duty-exempted ASEAN origin cargoes in
950 particular has lengthened considerably as a result, resulting
in a narrower price gap between dutiable and non-dutiable
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21 ug- 8
31 ug- 18
10 ul- 18
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1
1
01
1
1
1
1
1
-J 20
-J 20
-A 20
-A 20
-M -20
-D 20
-M 20
-F 20
-O 20
-N 20
-N 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
20 -2
PP cargoes in SE Asia; a trend that is likely to continue well

23 eb-
12 -
p
u
-F
into 2019.
02
PP Flat Yarn (Raffia) CFR Asia SE Assessment All Origins Spot 0-8
PP Flat Yarn (Raffia) CFR Asia SE Assessment All Origins Spot 0-8 Weeks Ful…
PP Flat Yarn (Raffia) CFR China Assessment Main Ports Spot 0-8 The scheduled mid-2019 start-up of the Refinery and
PP Flat Yarn (Raffia) CFR China Assessment Main Ports Spot 0-8 Weeks Full …
PP Flat Yarn (Raffia) CFR Vietnam Assessment All Origins Spot 0-8
Petrochemical Integrated Development (RAPID) project
PP Flat Yarn (Raffia) CFR Vietnam Assessment All Origins Spot 0-8 Weeks Fu…
in Malaysia’s southern state of Johor is expected to add a
Source: ICIS
further 900,000 tonnes/year of PP capacity in the region.
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With the start-up of the new unit, Malaysia is expected to However, NSRP’s start-up has led to increased price-
become a net PP exporter with a total production capacity competition between locally-produced materials and
of 1.54m tonnes/year by 2020, putting a massive dent on imports within Vietnam, as new market players struggle to
its demand for imports. establish market share in the country.
In Thailand, some local traders harboured concerns over Meanwhile, Indonesia is expected to see growing volumes
political uncertainties surrounding the upcoming general of South Korean origin exports in 2019, in particular for
election after four years of military rule which could have copolymer grades; for which South Korean exporters enjoy
possible implications on the country’s economy. duty-free status in Indonesia.
The local market in Vietnam continues to struggle to Throughout the past year, Indonesia has seen
achieve a new equilibrium with the start-up of NSRP’s new competitively-priced South Korean copolymer exports
PP production unit. The producer’s main focus thus far has being offered in the country, exerting increasing pressure
been on commodity homopolymer grades, leading to a on ASEAN producers, whose cargoes are similarly exempt
reduced dependency on imports for commodity grades in from duties in Indonesia.
the country.
While there are concerns that the increased availability may
In particular, Vietnam has seen very limited imports of lead to an eroded price gap between dutiable and non-
Chinese origin PP cargoes. dutiable copolymer prices, it is worth noting that the bulk
of PP start-ups in China and southeast Asia have thus far
Initially, there were expectations that new capacities in been focused on mainly homopolymer grades.
China may result in Chinese suppliers seeking to export
more volumes to Vietnam. Hence, some market players are hopeful that spreads
between homopolymer and copolymer grades could be
maintained, at least in the near term.



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PLASTICS & POLYMERS
POLYSTYRENE
ASIA’S POLYSTYRENE TO BE DRIVEN BY FEEDSTOCK VOLATILITY
BY YAW MIN JIE AND YUANLIN KOH JANUARY 2019
Asia’s polystyrene (PS) prices shall take strong cues from Demand wise, buying interest is expected to pick up
volatility in upstream feedstock styrene monomer (SM), as slightly in the first quarter in key market China, as the
margins are a main driving force for liquidity in the regional manufacturing sector gears up ahead of the Lunar New
markets. Year festivities.
The PS prices largely mirrored the movements of feedstock Traditionally, China is a huge PS consumer, raking in
SM last year: they plunged to an intra-year low of $1,220/ 600,000-700,000 tonnes on a yearly basis.
tonne and $1,285/tonne CFR (cost & freight) China in
November in tandem with SM for both general purpose Around 10% of the total PS output in Asia is fed into China,
(GP) and high-impact (HI) grades. one of the top buyers in the region.
The SM prices, as a matter of fact, hit an intra-year low The total capacity of plants in northeast and southeast Asia
of $982.50/tonne CFR China over the same period, ICIS is estimated to be around 7.66m tonnes in 2019.
data showed.
PS resins are used for packaging, toys, consumer
electronics, and a variety of consumer items including
utensils and disposable food-ware.
“The mood of the market is more optimistic [this year]

because US has agreed not to raise tariffs on Chinese
goods and thus US demand for Chinese PS end-
products will not be adversely affected,” a northeast
Asian producer commented.
It was agreed on 1 December that Washington would not

raise tariffs on $200bn Chinese goods from 10% to 25%
from 1 January 2019.
The US is a key importer of PS end-products.

Source: ICIS
Meanwhile, with several SM plants in northeast Asia and
the Middle East scheduled for turnarounds from January
In a swift response to falling prices, Chinese PS producers 2019, a cut in supply would bolster the feedstock prices
reduced their run rates and curbed supply for December and support PS offers.
and January.
The situation, however, can be a double-edge sword.
“Suppliers in China cut their run rates to around 70% and
above as they had purchased SM earlier at higher prices, The margins could narrow if higher PS offers fail to inspire
rendering their margins narrower since PS is softer now buyers.
given sluggish seasonal demand and falling feedstock
prices,” a regional distributor said. “There is no increase in downstream capacities in 2019.
This may prompt a cut in PS run rates again,” one PS
The market is on the edge over the price movements of SM trader said.
in the new year, as the product is regarded a key driver in
determining PS pricing trends.
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Already, the buying interest for Asian PS has waned in the
Middle East.
The Middle East buyers tend to seek Asian material only

when the regional supplier has sold out all its cargoes, and
at small quantities.
The demand in the Middle East is likely to be stable-to-soft

in the near term during the seasonal lull in the first quarter.
In the Gulf Cooperation Council (GCC), the market is

optimistic about the peak tourism season in the first quarter
because of clement weather conditions.
Source: ICIS
Therefore, the consumption of food disposables would be
higher.
In the Middle East, the buyers prefer to source within the In south Asia, market players are upbeat about the near
region and rely less on Asia, on the back of competitive term when buyers would replenish their inventory levels
rates on a delivered basis, flexible payment terms and after months of paltry purchases.
shorter delivery times.




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PLASTICS & POLYMERS
POLYVINYL CHLORIDE (PVC)
ASIA PVC LIKELY TO BE STABLE-TO-FIRM IN Q1
BY JONATHAN CHOU JANUARY 2019 tariffs were scheduled to rise to 25% on 01 January 2019,
the hikes were delayed by 90 days as both countries enter
Sustained demand in India for polyvinyl chloride (PVC) talks to resolve the dispute.
and increased safety concerns in China are likely to lend
support to firmer prices in the first quarter of 2019. Despite the temporary truce, outcomes of the US-China
trade war still remain unclear, and continues to weigh on
In 2018, PVC prices saw a downturn in May and June due sentiments in the region.
to ample supply from US cargoes. Prices recovered slightly
and then fell again in late September amid depreciating In China, ongoing safety inspections ordered by the
Asian currencies caused by the US-China trade war, as government are likely to continue affecting production rates
well as continued supply from the US. in the country.
For the week ended 21 December, average prices of multi- The increased safety concerns come after an accident
purpose PVC remained stable at $880/tonne CFR China, in late November near a carbide-based PVC producer in
reflecting scant discussions. Hebei. The blast caused 23 fatalities, and was caused by a
leakage of flammable vinyl chloride.
PVC material headed to southeast Asia were assessed at
an average of $867.50/tonne CFR SE Asia, as some sellers While around 80% of Chinese producers are carbide-based
reduced their January-loading indications amid a year-end and get their feedstock from limestone and coke, market
seasonal lull in demand. sources say both carbide-based and ethylene-based
producers are affected by the ongoing inspections.
The trade war between US and China certainly affected
the PVC market in 2018. In late August, tariffs on This may lend support to higher prices amid tighter supply
25% kicked in on US shipments of precursor ethylene in the country.
dichloride (EDC) to China.
Apart from China, India was another key player in the Asian
US EDC export volumes into Asia also fell last year, as PVC market last year, and both countries will continue to
US producers kept their volumes for captive use into play instrumental roles in 2019.
PVC production.
Sentiments in India were particularly affected by the rupee
Tariffs of 10% were imposed by the US on finished goods devaluation against the US dollar in 2018, caused by the
containing PVC from China in late September. While these US-China trade war.
On the other hand, the south Asian country’s economy

is expected to grow at 7.5 percent in fiscal year 2019/20,
reflecting robust private consumption and strengthening
investment, according to the World Bank. Overall demand
for PVC is likely to strengthen on infrastructure demand
and housing projects.
Nevertheless, any currency headwinds will continue

to be a potential disruptive force on India’s buying
sentiments this year.
Southeast Asian importers are expected to be monitoring the

Chinese market as well. When Chinese domestic prices are
higher than import prices, very limited or no Chinese cargoes
will be exported. Buyers in southeast Asia then have to
Source: ICIS
source for other alternatives, typically at higher prices.
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INDIA PVC DEMAND TO RECOVER IN Q1 ON AGRICULTURAL PIPES
BY ZIN XUAN HO JANUARY 2019
Polyvinyl chloride (PVC) demand in India is expected to About 70 per cent of the total demand for PVC in India
improve in early 2019 in view of the peak season for pipe comes from the pipes sector as PVC is widely used in
laying in the region. the manufacture of underground irrigation and water
distribution pipes.
Traditionally stronger demand for pipes from the agricultural
sector is expected to support prices during Q1 2019. The remaining 30 percent of demand comes from the
construction sector where PVC is used to manufacture
In 2018, the market saw seasonal demand in Q1 while films, profiles, insulation and in calendaring applications.
prices were largely stable from May to September after
which prices declined owing to poor demand in the wake of The first quarter of 2019 is expected to see better sales and
an extended monsoon season. higher demand, although a slowdown is expected ahead of
the the upcoming elections in April.
Lower crop prices for the year also affected PVC sales as
farmers were cautious with investments due to a tighter In the Middle East, trends for the Gulf Cooperation Council
cash flow. (GCC) and East Mediterranean (East Med) were similar.
The US-China trade war has also impacted the market, The region saw an uptick in demand in the beginning of the
with the US dollar-Indian rupee exchange rate reaching all- year, from stock replenishing activities.
time lows in the year.
There was a fall from March to May, as demand dwindled,
This caused Indian buyers to be sidelined for most of the but slowly recovered and prices were mostly stable from
year, opting only to buy as-needed from domestic suppliers June to September.
where possible to recoup margins.
The market then saw a dip in prices as demand tapered off
The low interest in imports and excess supply prompted amid an unexpectedly weak Q3.
many producers to decrease offers, resulting in an all-year
low price in November 2018. Exporters reduced offers in a bid to attract buyers, but
majority of the region’s buyers were well-supplied by a local
However, players believe the prices had bottomed out in producer and said they saw no need to order import cargo
mid-December, and demand is slowly improving ahead of given higher prices and longer delivery times.
the seasonal peak starting in January.
Inventories were high due to limited demand for finished
The Indian PVC market is now poised for a recovery, as PVC pipes, and buyers were mostly purchasing only on an
players believe activity should increase in the new year. as-needed basis, from a major domestic producer, whose
prices were deemed more competitive.
1,040
1,020 Much of the demand for PVC in the Middle East comes
1,000
from the construction sector where PVC is used for
making pipes.
980
USD/tonne
960 Last year, Dubai approved the biggest ever budget for
940 2018, to ramp up infrastructure spending ahead of Expo
920 2020, which was expected to give a push to demand for
PVC within the UAE from 2018 onwards.
900
880
Contrary to expectations, demand was dull for much of 2018.
860
While the region saw traditional market lulls in the months

un 18
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11 r- 18
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09 eb- 8
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23 ov- 8
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ep 18
31 ug- 8
21 - 8
10 ul- 8
20 n-2 8
1
01
1
e 1
1
1
1
-O 01
1
1
1
-J 01
u 1
-J 20
-M 20
-A 20
-M 20
-J 20
-D 20
-M 20
-F 20
-N 20
-N 20
-S 20
-A 20
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12 -2
of the Ramadan and Eid ul-Fitr holidays, much of the weak

16 n-
29 -
g
p
a
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sentiment was attributed to the US-China trade wars, which

26
PVC CFR India Assessment Spot Close-weighted Range (Mid) prompted most players to remain cautious about volume
PVC
Source: CFR India Assessment Spot Close-weighted Range (Mid) : USD/tonne
ICIS
import purchases.
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US-origin cargoes were deemed too expensive for majority this did not happen as the ongoing trade war weakened
of the buyers and offers attracted limited interest for much market sentiment, increasing cautiousness in the way
of the year. players approached purchasing.
Other offers from Europe and Asia were met with

similarly weak interest, in view of higher prices and
longer delivery windows. 1,000
980
Market sources conceded that the cash flow issues 960
plaguing the region in recent years also contributed to the
940
lack of demand for PVC in the region as investments in
USD/tonne
construction slowed. 920
900
Looking ahead, demand in the region is not expected to 880
show great improvement in the near future, considering the
860
limited market for finished goods.
840
This is because the region continues to be affected by slow 820
investments in construction, cash flow issues, and high
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9
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11 pr- 18
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21 g- 8
10 ul- 8
20 n-2 8
1
u 1
01
1
1
1
1
-O 01
1
1
1
-J 01
u 1
-J 20
-M 20
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-M 20
-J 20
-D 20
-M 20
-F 20
-N 20
-N 20
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-2
12 -2
prices of imports.
11 -
16 n-
u
a
-J
26
While the market expected rehabilitation efforts following PVC CFR GCC Assessment Spot Full Market Range (Mid)
PVC
PVC CFR
CFR GCC
Med AssessmentSpot
E Assessment SpotFull
FullMarket
Market Range(Mid)
Range (Mid) : USD/tonne
wars in Syria and Iraq to drive construction and building
Source:PVC
ICIS CFR Med E Assessment Spot Full Market Range (Mid) : USD/tonne
activity, thereby supporting greater PVC demand in 2018,




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POLYURETHANE CHAIN
METHYL DI-P-PHENYLENE ISOCYANATE (MDI)
& TOLUENE DI-ISOCYANATE (TDI)
ASIA TDI SOFTENING ON STABLE DEMAND OUTPACED BY SUPPLY
BY IZHAM AHMAD JANUARY 2019
Toluene di-isocyanate (TDI) prices in Asia are expected These two events together combined to drag TDI prices down
to be soft as weak demand is expected to continue in the from the highs they traded at around $4,650/tonne CFR, the
early months of 2019. highest on record since ICIS began tracking these prices.
In 2018, TDI prices in Asia hit fresh all-time highs and then In 2019, further pressure could be forthcoming as
reversed direction from around mid-year to then fall to two- producers such as Hanwha and OCI have resumed
year lows by the fourth quarter of the year. production after undergoing regular maintenance
shutdowns in November and December.
In the week ended 20 December, import prices in
southeast Asia also hit their 2018 lows at $2,100/tonne More supply is expected this year with Wanhua Chemical’s
CFR SE Asia while import prices in China also traded 300,000 tonnes/year TDI plant in Shandong province having
similar levels. These were the lowest prices for TDI in started production in October with on-spec production
Asia since May 2016. expected to have been achieved by the end of 2018.
5,000 Given the current downtrend in TDI prices in China and the
4,500 rest of Asia, it would be generally fair to assume Wanhua’s
new supply could contribute to further declines in prices there.
4,000
3,500 But the Middle East is a much smaller market for TDI and it
USD/tonne
3,000
is unlikely that Wanhua would allocate significant volumes
to the region just yet.
2,500
2,000 More declines could be expected in the weeks ahead as the

Isocyanates TDI CFR Asia SE Assessment Spot 0-6
anticipated peak demand season usually seen in the months
1,500
Isocyanates TDI CFR China and Hong Kong Assessment of October and November was hugely disappointing for
1,000 Main Ports Spot 0-6 Weeks Full Market Range (Mid) producers as prices continued to slide and buyers remained
on the sidelines, buying only on needs basis.
13 ay 016
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9
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-D t-2 6
- - 6
- - 8
-A -2 8
- - 8
- - 8
- - 7
-M -2 7
-N t-2 7
- - 7
31 -Ju 201
28 ay 201
16 Jun 201
01
02 ov 01
an 01
01 ec 01
22 Feb 201
07 Sep 201
07 Oc 201
19 ug 01
13 Apr 201
01 Jun 201
19 ug 01
25 ar 01
17 ov 01
07 Jan 201
22 Oc 201
04 ug 01
25 -Ap 20
10 Ma 20
-
-
06 Feb
-
China’s domestic yuan-denominated TDI prices are

17
Source: ICIS
coming off as demand continues to languish, prompting
Isocyanates TDI CFR Asia SE Assessment Spot 0-6 Weeks Full Market Range…
sellers to moderate offers in a bid to close more sales
In 2018, TDITDI
Isocyanates supply received
CFR China and Hong a boost
Kong with the
Assessment Main entry of0-6 …
Ports Spot and move cargoes.
Saudi Arabia’s Sadara Chemical Co. into the TDI supply
chain in the first quarter of 2018. To date, products from the new plant have yet to be verified
but stocks among domestic traders have been replenished
The company can produce 400,000 tonnes/year of MDI and since November.
polyether polyols and 200,000 tonnes/year of TDI.
And as downstream requirements failed to recover in
Sadara’s TDI were heard to have been sold in Asia and in tandem, traders are again now “feeling the heat from
many parts of the Middle East and Africa as well. mounting inventory pressures to sell more aggressively”, a
TDI maker in China said.
Also in 2018, BASF installed a new reactor at its
Ludwigshafen plant and resumed TDI output from its If sales continue to languish, it is likely “prices could drop
300,000 tonnes/year plant in Germany. further in coming weeks”, an end-user said, adding that this
means he is in no hurry to book fresh cargoes at yet.
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Similarly, in other parts of Asia, TDI import prices into As long as buyers’ confidence stays low, market
southeast Asia and India have essentially been dropping by participants said that pricing sentiment for TDI is unlikely
$50-100/tonne on a weekly basis over the last few months to strengthen much in the near term. The following chart
as sellers dropped offers to stimulate buying interest. shows the spread between feedstock against TDI prices.
They show a narrowing spread between the costs of
Cumulatively, import prices into southeast Asia, for feedstock and the prices of isocyanates, reflecting the weak
instance, have already lost over 10% since end October, demand and hence the recent downtrend in isocyanates
settling at average of $2,200/tonne CFR (cost & freight) prices.
southeast Asia on 5 December, according to ICIS data.
5,000
The situation in India is no better either, as prices there 4,500
moved in line with those in southeast Asia. 4,000
3,500
Demand in southeast Asia and India is “paltry”, a trader 3,000
USD/tonne
said, as off-take from various key applications like foam or
2,500
automotive has been much slower than expected.
2,000
1,500
Even if they may have any import requirements, regional
1,100 Typically healthy spread
end-users’ buying ideas for fresh TDI cargoes are 1,000
Typically unhealthy spread
“disproportionately bearish”, a regional trader lamented. 500
0
Most TDI buyers remain convinced that with supply
8
01 ep- 8
22 t- 8
12 c t- 18
03 ov - 18
31 e c - 18
e c 18
20 J ul- 18
10 ug- 18
un 18
30 ul- 2 8
16 a r - 8
07 pr 18
28 a y 18
18 a y - 8
26 a r - 18
05 eb- 18
12 a n- 8
01
1
1
- J 01
1
1
1
- O 20
- N 20
- D 20
- D 20
- O 20
0
- A 20
- S 20
- M - 20
- J 20
- M 20
- A 20
- M - 20
- M 20
- F 20
- J 20
expected to increase further in China, possibly by early
-2
09 - 2
22 a n-
c
-J
-
2019, the ensuing length in supply would further suppress
01
Isocyanates TDI CFR Asia SE Assessment Spot 0-6 Weeks Full Market Range -
domestic prices in China, as well as drag US dollar- Toluene FOB South Korea Assessment Spot 2-8 Weeks Full Market Range (Mid)
Is ocyanates
Source: ICIS T DI C FR As ia S E As s es s ment S pot 0-6 Weeks Full Market Range…
denominated pricing lower too.



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POLYURETHANE CHAIN
POLYMERIC METHYL DI-P-PHENYLENE ISOCYANATE (PMDI)
ASIA, MIDDLE EAST PMDI TO REMAIN UNDER PRESSURE
BY IZHAM AHMAD JANUARY 2019 3,600

Isocyanates MDI - Polymeric
3,400 CFR China Assessment Spot 0-6
3,200 Weeks Full Market Range (Mid)
It has been yet another tumultuous 2018 for the
3,000
isocyanates in the Asia and the Middle East and 2019 is
2,800
likely to see further volatility with prices expected to remain
2,600
USD/tonne
under pressure at the start of the new year. 2,400
2,200
In the Middle East, PMDI prices started 2018 already under 2,000
Isocyanates MDI - Polymeric CFR
GCC Assessment Spot 0-6 Weeks
downward pressure after the highs traded in October 2017. 1,800 Full Market Range (Mid)
Within the first three months of 2018, PMDI prices in the 1,600 Isocyanates MDI - Polymeric CFR Iran Assessment
Gulf Cooperation Council (GCC) lost about 15% of their 1,400
value and the decline continued into Q2. 1,200
9
05 ar 018
25 pr 018
-M r-2 8
-M -2 8
14 ay 018
05 un- 18
03 ec 018
-2 8
14 an 018
-M -2 8
-M -2 8
-N -2 8
-N -2 8
12 ov 018
03 ep 018
18 ct 018
25 ul- 18
-A l-2 8
-A -2 8
13 ug 018
10 Ap 01
30 ay 01
an 1
01
01 Feb 01
21 ar 01
07 Oct 01
22 ov 01
09 Ju 01
29 ug 01
-J -20
-J -20
-J 20
-A -2
- -2
-D -2
-J -2
- -2
-S -2
-O -2
- -2
- 2
The trend was mirrored to some extent by import values in
25 an
-J
China and SE (southeast) Asia with prices there also under

10
Source: ICIS
pressure through 2018 although China’s import prices have
Isocyanates MDI - Polymeric CFR China Assessment Spot 0-6 Weeks Full Ma…
been more volatile.
AlsoIsocyanates
around MDIthe- Polymeric
same time, Kumhoi
CFR GCC Mitsui’s
Assessment Spot 0-6plant
Weeksin
FullYeosu,
Mar…
Taking prices in the GCC as representative of the broader South Korea, also encountered some difficulties, which
Isocyanates MDI - Polymeric CFR Iran Assessment Spot 0-6 Weeks Full Mark…
Middle East region, PMDI prices started 2018 around have sporadically persisted through the month. In the
$3,250/tonne CFR (cost & freight) GCC and then declined GCC, PMDI demand has generally been soft amid broader
to $2,750 CFR GCC by end-March. slowdown in economic activity in the region.
Since August, PMDI prices in the GCC continued to decline Despite the reduced availability starting from around
at a slightly faster pace before trading down to $1,475/ November 2018, prices are not expected to see a
tonne CFR GCC in the week ended 13 December, the significant boost in the early months of 2019 as demand
lowest level seen in 2018. has not shown signs of any major recovery.
In terms of supply in the Middle East, there are essentially Elsewhere in the Middle East region, 2018 was also an
two main producers of MDI, namely Karoon Petrochemical important year for Iran, as the US decided in May to
Co. in Iran, with a nameplate capacity of 40,000 tonnes/ withdraw from the nuclear deal Iran signed with six other
year, and Sadara Chemical in Saudi Arabia, with an annual global powers in 2015.
capacity of 400,000 tonnes/year.
Between May and the full implementation of fresh sanctions
Both these MDI plants are believed to be running but in November, PMDI imports to Iran appear to have thinned
operating rates are not publicly available. Sadara’s entry out significantly.
into the supply chain in 2017 has had minimal impact on
prices. Some key Asian suppliers said they had suspended dealings
with Iranian customers due to increased restrictions over
PMDI prices in the GCC were under downward pressure financial transactions with Iran and tighter regulations over
through the latter half of 2018 but most players said this shipping of physical cargoes to and from Iran.
was largely tracking a broader downtrend in prices in
China. Iran meanwhile appears to have stayed generally
self-sufficient with regards to its PMDI production and
“Supply is sufficient and demand is stable,” said a source in consumption in 2018.
the Middle East. “End-users are waiting for prices to decline
further.” Toward the end of 2018, the decline in prices PMDI import prices in Iran through 2018 generally tracked
slowed as Wanhua Chemical started maintenance at its the direction of prices in other parts of the Middle East and
MDI plants in Ningbo. is expected to continue to do so in 2019.
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2,800
2,600
In 2019 many market participants said although the US has 2,400
granted sanctions waivers that would allow some countries 2,200
2,000
to still buy crude oil from Iran, the uncertainty over financial
1,800
transactions remains in place.
USD/tonne
1,600
1,400
“For now it is still impossible to import or export with Iran,” 1,200
1,000
said one source. “Sanctions waivers are given but no one 800 800 Typically healthy spread
can trade yet.” 600 Typically unhealthy spread
400
200
Longer-term, most players view the PMDI market as largely
0
oversupplied. In total, global MDI production is forecast at
31 e c - 18
e c 18
8
01 ep- 8
22 t- 8
12 c t- 18
03 ov - 18
20 J ul- 18
10 ug- 18
un 18
30 ul- 2 8
16 a r - 8
07 pr 18
28 a y 18
18 a y - 8
26 a r - 18
05 eb- 18
12 a n- 8
8.65m tonnes by 2020, according to the ICIS Supply and
01
1
1
- J 01
1
1
1
- O 20
- N 20
- D 20
- D 20
- O 20
0
- A 20
- S 20
- J 20
- M 20
- A 20
- M - 20
- M - 20
- M 20
- F 20
- J 20
-2
09 - 2
22 a n-
Demand Database. With consumption estimated to be at
c
-J
-
01
6.55m tonnes by that time, there is sufficient evidence to
Isocyanates MDI - Polymeric CFR GCC Assessment Spot 0-6
support the view that prices will soften. Is ocyanates MDIWeeks Full Market
- Polymeric Range
C FR GC C As- sBenzene
es s mentFOB
S potSouth KoreaFull
0-6 Weeks Assess-
Mar…
Source: ICIS ment Spot Third and fourth half month Closing Value (Mid)
In November, Wanhua Chemical, the world’s biggest MDI

producer, announced that it selected Convent in St James future export opportunities to the US will pan out. Trade
Parish, Louisiana as the site for its new 400,000 tonnes/ tensions have renewed following the December arrest in
year MDI plant. Canada of a senior executive from the Chinese telecom
giant Huawei, purportedly for reasons linked to the US probe
Construction is expected to begin in 2019, and operations on possible violations of the sanctions against Iran.
and is scheduled to begin in 2021.
Many are now doubtful how fruitful subsequent US-China
With supply set to increase, prices in Asia also look set to trade negotiations may be, failing which the stark reality
be under further pressure in 2019, as offers are reduced to remains that the US would eventually escalate import
elicit buying interest. tariffs, squeezing out inflow of many China-origin products.
However, demand especially in China, may not recover due If this scenario materializes, PMDI demand in China could
to the lingering US-China trade dispute. sink further, weighing down prices even more.
PMDI demand is “extremely slow”, a China-based trader The chart shows the spread between feedstock against
conceded, as talk emerged that Chinese factories are PMDI prices in the GCC. It shows a narrowing spread
cutting back on production of appliances like refrigerators between the costs of feedstock and the prices of
and air-conditioners, until they get more clarity on how isocyanates, reflecting the weak demand and hence the
recent downtrend in isocyanates prices.


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POLYURETHANE CHAIN
POLYOLS
CHINA PO UNDER PRESSURE ON LONG SUPPLY, SLUGGISH DEMAND
BY AI TENG LIM JANUARY 2019
China propylene oxide (PO) prices may stay capped in 1,700
2019, unless demand from key application polyols could 1,650
pick up sufficiently to absorb burgeoning supplies. 1,600

1,550
PO supplies in Asia are set to grow in 2019, with several 1,500
USD/tonne
new plants coming on stream. 1,450
1,400
For instance, in the second half of 2018, South Korea’s 1,350
S-Oil started up a new 300,000 tonne/year PO plant in 1,300
Ulsan, and products were available for exports since 1,250 Propylene Oxide CFR China Assessment Spot
Week-Ahead Full Market Range (Mid)
November 2018, and set to grow in time, according to 1,200
sources familiar with the matter. 1,150
01 ay- 8
22 n- 8
9
an 18
20 ar- 8
11 r 18
30 ar- 18
07 ov- 8
04 c- 8
09 eb- 18
26 ct- 8
16 ct- 18
05 p- 8
14 ug- 8
24 ug- 18
03 ul- 18
un 18
1
1
01
1
1
1
1
e 1
1
-J 20
-M 20
-A 20
-M -20
-J 20
-D 20
-M 20
-F 20
-O 20
-O 20
-N 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
13 -2
Another new 120,000 tonne/year plant in Nanjing, China,
16 an-
e
u
-J
owned by Nanjing Hong Bao Li, is also undergoing trial

26
Source: ICIS
operations, and may be able to achieve on-spec production
Propylene Oxide CFR China Assessment Spot Week-Ahead Full Market Rang…
in early 2019, market sources said.
As for existing plants in northeast Asia, including Japan was shut down on technical grounds.
and China, most are running at healthy rates, and have no
known maintenance plans in 2019. But “this is likely a short and transient surge, and limited to
sentiment only”, a regional trader said.
PO plant maintenances are typically conducted once in
two years, and many regional plants went through their last Substantive impact on market supply may be quite
overhaul in the first half of 2018. “manageable”, the same trader noted, as the Jilin plant
had been shut for much of 2018, and only operated for a
The heavy wave of regional turnarounds in first-half 2018 couple of weeks late in the year before it had to be turned
and ensuing tightness in regional PO availabilities had off again.
pushed PO prices to two-year highs during that period,
market participants said. “Supply from this plant has not been sufficiently entrenched
yet for it to shift market supply-demand fundamentals
ICIS data showed that, at its peak in H1 2018, PO trades substantially,” another China-based trader conceded.
fetched $1,725/tonne CFR (cost & freight) China, nearly
5% more than the year-high of $1,650/tonne CFR China Hence, the consensus view among market players
recorded in 2017. remained that demand may be in the longer run, be the
bigger determinant for PO pricing trend.
But a repeat of this in 2019 seems unlikely, now that
the supply constraints seen in H1 2018 have eased And it seems increasingly unlikely that downstream
substantially, at a time when demand starts to whither demand, especially from the key application of polyols,
under the impact of US-China trade rows. could recover in the near term, as long as the US-China
trade spats continue to simmer.
According to ICIS data, PO prices nose-dived recently, with
CFR China prices chalking up 30% of culmulative losses to PO is a key feedstock for polyether polyols.
finish at barely $1,200/tonne in early December 2018.
The flexible slabstock polyols grade, when combined with
PO prices recovered somewhat in late December, as toluene di-isocyanate (TDI), finds outlets in PU foam for
200,000 tonne/year of capacity in China’s Jilin Province mattresses, furniture and automotive seats.
➔
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Rigid polyols, when combined with polymeric methyl di-p- 2,100
phenylene isocyanate (PMDI) is used in refrigerators as 2,050
well as insulation in the construction sector. 2,000
1,950
The US is hitherto a major outlet for China-origin PU 1,900
USD/tonne
products like car seats and refrigerators, and these are the 1,850
same items, among many other related products, that the 1,800
US had slapped with a 10% punitive import tariffs beginning 1,750
August/September 2018. 1,700

1,650
The tariffs were scheduled to rise to 25% in January 2019, 1,600
but is now put on hold until March 2019 following a 90- 1,550
day truce agreement reached between Presidents Donald
-M r-2 8
-M -2 8
14 ay 018
05 un- 18
-M -2 8
05 ar 018
25 pr 018
03 ec 018
-2 8
9
14 an 018
-M -2 8
-N -2 8
12 ov 018
03 ep 018
18 ct 018
-N -2 8
-A -2 8
13 ug 018
25 ul- 18
-A l-2 8
10 Ap 01
30 ay 01
an 1
01
01 Feb 01
21 ar 01
07 Oct 01
22 ov 01
09 Ju 01
29 ug 01
-J -20
-J -20
-J 20
-A -2
- -2
-D -2
-J -2
- -2
- -2
-S -2
-O -2
- 2
Trump and Xi Jinping at the fringe of the November 2018
25 an
-J
G20 Summit in Argentina.
10
Polymer Grade 10.0-13.5% Polymer CFR Middle East Assessment
Bulk Spot 0-6 Weeks Full Market Range (Mid)
Polymer Grade 10.0-13.5% Polymer CFR Middle East Assessment Bulk Spot 0…
But the initial euphoria surrounding the truce agreement Polyols Flexible Foam - Slabstock CFR Asia SE Assessment Spot
has fizzled out, as US-China tensions seem to renew Polyols Flexible Foam - Slabstock CFR Asia SE Assessment Spot 4-6 Weeks …
on the December arrest in Canada of a senior executive Source: ICIS
from the Chinese telecoms major Huawei, purportedly

for reasons linked to US probe on possible violations of Middle East is not spared either - import prices for Asia-origin
sanctions against Iran. polymer polyols with 10-13% polymer content have also
fallen in line during 2018, settling at an average of $1,750/
As long as apprehensions continue to linger about the tonne CFR Middle East in early December, down from a high
eventual escalation of US punitive import tariffs on PU of $2,125/tonne CFR Middle East seen in April/May.
products, regional foam and appliance makers “will go slow
on their production, which means that off-take for polyols Despite the lower asking prices, POP sellers said that
will not improve”, a polyols maker in China conceded. they are still finding it hard to find takers, suggesting that
end-user foam makers in Middle East believe prices could
Polyols prices have indeed slipped substantially in 2018 in drop further in 2019 and want to hold out for longer before
southeast Asia, and may continue to trend down in 2019 on committing on fresh purchases.
poor demand.
“I will stretch my current inventories as much as possible,”
According to ICIS data, flexible slabstock cargoes traded one Dubai-based import said.
at $1,600/tonne CFR southeast Asia in December 2018,
$250/tonne below its year-peak seen in May. “It is a vicious cycle,” another regional trader said, adding
that “if polyols stays under fire, PO will suffer alongside”.


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reconciling demand with supply, production, local capacity and net trade. Forecasts are
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Find out more and request a demo

RUBBER
ACRYLONITRILE BUTADIENE STYRENE (ABS)
ASIA ABS, SAN DEMAND SEEN WEAK DESPITE US-CHINA TRADE TRUCE
BY CLIVE ONG JANUARY 2019
Import demand for acrylonitrile-butadiene-styrene (ABS) The tariffs implemented on appliances made in China for
and styrene-acrylonitrile (SAN) resins in the key China exports to the US has heightened uncertainty among ABS
market is expected to remain tepid in 2019, despite the users, which adopted a wait-and-see stance on the market.
temporary truce achieved in the US-China trade war in
early December. Output cuts among producers in Asia in the fourth
quarter could not stem the decline in ABS prices as
Spot prices of ABS have fallen below $1,500/tonne CFR demand was lacklustre.
(cost & freight) NE Asia in December from around $2,075/
tonne CFR NE Asia in June, ICIS data showed. Buying momentum among Chinese end-users tapered
off considerably after the third-quarter manufacturing-for-
The escalation of the US-China trade war from the third export season in China ended in October.
quarter caused Chinese demand for resins to weaken, as
end-users were hesitant to commit to purchases. ABS resins are used for appliances, consumer electronics,
toys, and have applications in the automotive and
construction sectors.



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SPOT PRICES OF ASIA ABS AND SAN Despite the pause in the trade war, a number of market
2,100 players expect only a modest improvement in demand.
2,000
After all, the trade war truce is only temporary while tensions
USD/tonne/Original Quoted
1,900 might escalate again after the 90-day cooling period.

1,800
End-users have low stocks after weeks of slow purchases,
1,700
and some might decide to pick up some parcels if the price
1,600 ABS General Purpose, Injection Grade downtrend ends.
CFR Asia NE Assessment Spot 0-4
Weeks Close-weighted Range (Mid)
1,500
SAN General Purpose CFR China
“Some end-users may replenish stocks in January,
1,400 Assessment Spot 15-30 Days Close- especially if prices stabilize amid the trade war truce,” a
weighted Range (Mid)
1,300
China-based trader said.
8
6- -18
-A 8
-M 18
8- -18
No 8
-N 18
2- -18
-F 8
-M 18
-A 18
-S 8
-O 8
-J 8
-J 8
-A 18
27 r-1
-1
2- t-1
23 b-1
21 g-1
12 p-1
29 n-1
20 n-1
However, demand in Asia on the whole is expected to be

18 pr-
23 v-
16 b-
10 ul-
31 g-
an
ar
ov
ay
c
Ap
u
Ju
u
Fe
e
-J
soft with the Lunar New Year holidays kicking off across the
12
Source: ICIS
region in early February.
ABS General Purpose, Injection Grade CFR Asia NE Assessment Spot 0-4 We…
In the
SANSAN market,
General demand
Purpose CFR in China
China Assessment was
Spot 15-30just
Daysas weak with
Close-weight… Most of northeast and southeast Asia celebrate the Lunar
buyers hesitant to commit, especially to large cargoes, in New Year.
view of the weekly decline in prices.
Manufacturing activities typically sees a low ebb in the first
Traders also kept lean stocks as they did not want to be quarter before notching higher in the second.
saddled with high-priced resins in a slumping market.
“Demand hinges on the outcome, if any, of the trade war,”
SAN resins are used for cigarette lighters, toothbrush said a producer in Taiwan.
holders, fan blades, fridge trays and host of consumer items.
back to contents
RUBBER
STYRENE BUTADIENE RUBBER (SBR)
ASIA SBR STABLE TO SOFT IN Q1 AMID US-CHINA TRADE WAR
BY HELEN YAN JANUARY 2019
Asia’s styrene butadiene rubber (SBR) prices are likely

to be stable or soft in the first quarter of 2019 if tensions
in the US-China trade war failed to ease.
■ Spot appetite muted on market uncertainty

■ US-China trade tensions weigh on demand
■ Weak regional currencies dampen imports
Market players were cautious amid uncertainties following

the 90-day trade war truce announced on 1 December
between the two economic giants, which will prevent the
anticipated spike in US tariffs on $200bn worth of Chinese
imports to 25% from the current 10%.
SBR trades are expected to slow down and remain

Source: ICIS
subdued in the first quarter although activities or spot
interest may pick up in January ahead of the Lunar New
Year, which falls on 5 February in 2019. AUTOMOTIVE SALES SLOW IN CHINA
China is a major production hub for regional and
Trading usually picks up speed prior to the holidays as international tyre manufacturers, but a slowing Chinese
buyers or importers re-stock inventories at this time. economy and declining vehicle sales have weighed on
demand for SBR, which is used in the production of tyres
The Lunar New Year is celebrated in several countries in Asia, for the automotive industry.
including key SBR market China, as well as South Korea,
Taiwan, Indonesia, Singapore, Malaysia and Vietnam. The country is the world’s largest automotive market, but
demand growth is expected to decline in 2018, the first time
However, 2019 may see a departure from this annual trend in more than two decades.
as market players are likely to retreat and adopt a wait-and-
see stance in view of ongoing tensions between the world’s In January-November, China’s total vehicles sales
two largest economies. were down 1.7% year on year at 25.4m units, while
production fell 2.6% over the same period to 25.32m
The US-China trade war has roiled equities and units, according to the China Association of Automobile
commodities markets for most of 2018. Manufacturers (CAAM).
Spot prices for non-oil grade 1502 SBR are likely to November vehicle sales slumped 13.9% year on year to
remain flat in January or soft at around or below $1,500/ 2.55m units, falling for the fifth consecutive month; while
tonne CIF (cost, freight and insurance) China, given the production stood at 2.50m units, down 18.9% over the
weak market sentiment. same period, according to CAAM.
On 19 December, non-oil grade 1502 SBR were assessed On the macroeconomic level, China’s economy has also
at $1,400-1,500/tonne CIF China, down by about 18% been slowing down.
since early September due to prevailing sluggish demand
and weak market sentiment, according to ICIS data. In November, China’s official manufacturing purchasing
managers’ index (PMI) fell by 0.2 points from October
Non-oil grade 1502 SBR prices had declined since early to 50.0, the third decline in a row and the lowest since
September, when prices hit $1,750/tonne CIF (cost, freight August 2016, according to the National Bureau of
and insurance) China, ICIS data showed. Statistics (NBS).
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A reading of 50.0 represents neutral, neither expansion Weak currencies against the US dollar, including the
nor contraction. Indonesian rupiah and Indian rupee, are also likely to
continue to curtail spot appetite for US dollar-denominated
A slowing Chinese economy and the ongoing US-China SBR import cargoes.
trade war tensions are likely to continue to weigh on
sentiment in Southeast Asia and India. An upcoming general election in India in April in 2019 will also
dampen buying sentiment in the sub-continent as market
WEAK SE ASIA, INDIA CURRENCIES WEIGH ON players stay on the sidelines to wait for a clearer picture.
MARKET
Spot trades in both southeast Asia and India are expected India’s production of passenger vehicles in November
to be muted in light of the uncertain market outlook as declined 20.9% year on year to 279,333 units, with sales
procurement managers adopt a cautious stance. Buyers down 3.4% at 266,000 units, according to data from the
will likely opt for smaller purchases on a need-to-basis and Society of Indian Automobile Manufacturers (SIAM).
hold back large purchases.




➔
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SOLVENTS
ACETONE
ASIA’S ACETONE SENTIMENT SOFT IN FIRST HALF 2019 ON SUPPLY DELUGE
BY ANGELINE SOH JANUARY 2019
Asia’s acetone market is likely to remain weak in the first 900

half of 2019 as a result of supply deluge while demand may
800
not see any improvement.
700
More phenol/acetone volumes were added from the recent
USD/tonne
600
restarts at China-based plants from maintenance to an
already-ample market. 500
400
On 21 December 2018, acetone prices on a cost and
freight rate (CFR) China Main Port (CMP) basis were at 300
their lowest levels since 26 February 2016, at $400-420/ 28 eb 18
04 un- 18
9
-2 9
20 pr 018
-M -2 8
-M -2 8
13 ay 018
18 an 018
04 ar 018
02 ec 018
16 Feb 018
21 ov 018
07 ov 018
17 ep- 018
02 Oct 018
28 ep 018
12 ug 018
24 ug 018
08 Jul 018
20 ul- 18
01
09 Apr 01
25 ay 01
an 1
-F -20
-J -20
-J -20
-J 20
tonne CFR CMP, according to ICIS data.
-A -2
- -2
-J -2
-M -2
-D -2
- -2
-N -2
-S -2
- 2
-N -2
-S -2
-A -2
-A -2
- 2
09 an
-J
24
Acetone CFR Asia SE Assessment Spot 4-6 Weeks Full Market Range (Mid)
Despite a series of turnarounds scheduled in the last three Acetone CFR China Assessment Main Ports Dutiable Spot 4-6 Weeks Full Market Range (Mid)
Acetone CFR Asia SE Assessment Spot 4-6 Weeks Full Market Range (Mid)
months, acetone supply remained high. Acetone CFR India Assessment Spot 4-6 Weeks Full Market Range (Mid)
Source: ICIS
Acetone CFR China Assessment Main Ports Dutiable Spot 4-6 Weeks Full Mar…
This was due to high operating rates in China, motivated by
Acetone CFR India Assessment Spot 4-6 Weeks Full Market Range (Mid)
strong margins of co-product, phenol. The acetone prices in 2018 were curbed by the high
import volumes.
The average run rate at phenol plants in China stood at more
than 80% in 2018 whereas average operating rate in the From January to November, China’s acetone imports were at
country was 70% in 2015, 71% in 2016 and 76% in 2017. 622,000 tonnes, as compared with 454,000 tonnes recorded
in January-November 2017, according to customs data.
In addition, more acetone is produced than phenol, as one
tonne of benzene produces one tonne of acetone and only The average port volume on a monthly basis was less than
0.6-0.62 tonnes of phenol. 24,000 tonnes in 2017.


➔
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In 2018, this figure was at more than 34,000 tonnes. 2019 MAINTENANCE SCHEDULE
Phenol Acetone
Timing
Company Location (‘000 (‘000
Meanwhile, the supply is set to increase when Zhejiang tonnes/year) tonnes/year)
Petrochemical’s 250,000 tonne/year acetone unit starts in Linyuan,
20
December
the second quarter, according to market participants. TPCC Kaohsiung 360 220
2018 – Early
county, Taiwan
Jan 2019
Changshu Changchun would expand their Changshu- Daesan, South March-April
LG Chem 300 180
Korea 2019
based plant in China to 240,000 tonnes/year from 180,000 Kumho P&B Yeosu, South
250 150 May 2019
tonnes/year. No 3 Korea
Kumho P&B Yeosu, South
300 180 May 2019
No 4 Korea
Although these plants will have downstream units, such Formosa
consumption will not completely utilize the additional Chemicals &
Mailiao, Taiwan 440 250 H1 2019
Fibre Corp
capacities. (FCFC)
Mitsui End-June to
Osaka, Japan 200 120
Chemicals end-July
The additional volumes will be sold to the open market.
End-October
Mitsui
Ichihara, Japan 190 114 to mid-
Chemicals
As most of the projects are slated to happen in the second November
half of 2019, acetone volumes are likely to be under-utilized

in the first half, with prices anticipated to be curbed.
“We are definitely more optimistic about prices in second-

half 2019,” a northeast Asia-based producer said.
“It may not be so bleak in the first-half [2019], since there

are a few turnarounds scheduled,” a southeast Asia-based
distributor said.
Producer Region Country Acetone BPA MMA IPA MIBK Start-up

Zhejiang Petrochemical Zhejiang China 250 230 90 2019-2020
Chang Chun (Changshu) Jiangsu China 60 135 Q2 2019
Formosa Chemicals Industries
Zhejiang China 60 2019-2020
(Ningbo)
Covestro Shanghai China 200 2019-2020
Lihuayi Weiyuan Shandong China 120 End-2019
Sinopec SABIC Tianjin
Tianjin China 240 2020
Petrochemical
Sailboat Petrochemical Jiangsu China 85 Q3 2019
Heilongjiang Longxin Northeast China China 25 Q1 2019
Dadi Supu Chemical Shandong China 100 Restart in early 2019
Shandong Hongxu Chemical Shandong China 50 2020
Chongqing Yixiang Chongqing China 225 2020
CNOOC Oriental Petrochemical Huizhou China 100 2020
Zhuhai Long Success Pasir Gudang Malaysia 50 Late 2020
Mitsui Chemical Southeast Asia Southeast Asia 60 2021
Kellin Chemicals Zhangjiagang China 15 H1 2019
Yantai Wanhua Yantai China 15 No start-up date heard
Zhuhai Long Success Zhuhai China 15 No start-up date heard
➔
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SOLVENTS
BISPHENOL-A (BPA)
ASIA BPA MARKETS SET FOR LIMITED FLUCTUATIONS
Asia bisphenol A (BPA) markets are poised to see limited

fluctuations amid expectations of demand to stabilise at
best in early 2019.
Spot prices of BPA in key China markets have slumped

in the fourth quarter of 2018, dragged down by dwindling
downstream demand, particularly in polycarbonate (PC)
and epoxy resin applications.
The largely bearish market was exacerbated by a

persistently weak Chinese yuan (CNY) currency to the
US dollar, depressed by the China-US trade war, making
imports uneconomical.
On a CFR (cost and freight) China basis, spot prices have

Source: ICIS
tumbled to $1,250/tonne as of 21 December, marking a
23% decline from the same period a year ago and lows not
seen since October 2017, according to ICIS data. The bearish sentiment might spill over to the first quarter of
2019, amid a slowdown just before the Chinese Lunar New
Chinese domestic prices of BPA have nosedived through Year festival from 5 February 2019.
most of the fourth quarter and were at CNY 10,700/tonne
EXWH as of 21 December. “There might be some [BPA] demand in January in China,
but February will be quiet … March is uncertain although
This was down by 20% from the same period a year earlier, scheduled plant turnarounds should limit supply,” said a
ICIS data showed. northeast Asia-based market source.


➔
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The spread between BPA and raw material phenol in China 2,000
has also been squeezed from $557/tonne at the start of the 1,800
third quarter of 2018, to just around $160/tonne towards the 1,600
end of the fourth quarter. 1,400
1,200
USD/tonne
This has prompted several BPA producers to reduce plant
1,000
operating rates as part of efforts to combat squeezed margins.
800
600
By and large, “February [markets] should be quiet because
of the Lunar New Year holiday”, said a northeast Asia- 400
250 Typically healthy spread
based market source. 200
Typically unhealthy spread
0
Depending on the US-China trade war and crude oil’s
26 ov - 18
17 ov - 8
e c 18
8
e p 18
05 c t- 18
24 - 8
03 ug- 8
13 ul- 18
23 ul- 2 8
11 a y - 8
02 n- 2 8
30 pr - 8
21 pr - 18
09 a r - 8
19 b- 18
26 eb- 8
01
1
1
- J 01
1
u 1
1
1
1
- N 20
- D 20
- S 20
- O 20
- N 20
- S 20
- A 20
-J 0
- J 20
- A 20
- A 20
- M 20
- M 20
- F 20
- F 20
price direction, spot BPA prices are not expected to see a
-2
15 -
05 a n-
e p
e
-J
significant rebound, according to market participants.
15
Bisphenol A CFR China Assessment Spot 2-6 Weeks Full Market Range (Mid)
BisPhenol
phenol CFR
A C FRChina
C hinaAssessment
As s es s ment S potPorts
Main 2-6 Weeks FullWeeks
Spot 4-6 MarketFull
Range ( Mid) …
Market
Crude oil prices have weakened considerably in the fourth Range (Mid)
quarter of 2018, on the back of oversupply concerns and a Phenol C FR CAhina
Bisphenol CFRAs s es sAssessment
China ment Main Ports
Spot S2-6
potWeeks
4-6 Weeks Full Market
Full Market RangeRange…
- Phenol
CFR China Assessment Main Ports Spot 4-6 Weeks Full Market Range (Mid)
global economic slowdown.
Bis phenol
Source: ICIS A C FR C hina As s es s ment S pot 2-6 Weeks Full Market Range - Phe…
Several key petrochemicals have also fallen to multi-year

lows in the fourth quarter.
China’s manufacturing activity measured by the Caixin

China General Purchasing Managers’ Index (PMI) was 50.2
for November, hovering at just above the 50 level.
A PMI reading of 50 or higher indicates an expansion,

while a number below that denotes a contraction. The PMI
reading was at 50.1 in October.
back to contents
SOLVENTS
GLYCOL ETHER
ASIA’S BG CONTINUES TO FACE AMPLE SUPPLY, WEAK CHINESE DEMAND
Butyl glycol spot prices in Asia may continue a trend of CHINA BG IMPORTS (TONNES)
China BG Imports
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
decline going into the first quarter of 2019, as the market 21K
would be inundated with Middle East flows and growing 20K
exports from other Asian producers. 19K
18K
Demand wise, weakness would persist as China, a key 17K
buyer, faces shrinking economic growth. 16K
15K
Signs of weakness were already apparent in the last three tonnes

14K
months of this year when fundamentals were bearish, and 13K
the outlook for next year is little changed.

12K
11K
10K
In the week ended 19 December, spot BG prices in China 9K
on zero antidumping duty (ADD) but subject to import duty 8K
basis, were assessed stable at an average of $930/tonne 7K
CFR (cost & freight), according to ICIS data. 6K

2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
2016
2017
2018
Source: ICIS
The levels were the lowest since September 2016.
Spot BG prices in southeast Asia were assessed at A CHANGING SUPPLY LANDSCAPE

$1,010/tonne CFR southeast Asia, down by $10/tonne China is the biggest import market in Asia, importing
week on week; prices declined to their weakest level 151,403 tonnes of BG/butyl dy-glycol (BDG) between
since July 2017. January to October 2018, while the total imports in 2017
were 156,141 tonnes. (please see interactive below)
While supply from producers of various origins were readily
available, demand from the downstream sectors was The market has gone through a phase of change in trade
lukewarm and would remain unchanged going forward. flow since China imposed an increase in antidumping
duties for cargoes of deep-sea origin earlier in the year.
On 12 April 2018, BG/BDG originating from the US is subject

to 37.5-75.5% ADD rates, up from 10.6-14.1% previously.
Cargoes from the EU is subject to ADDs of 10.8-43.5%, up

from 9.3-18.8% previously. There was also an increase in
supply in 2018.
For origins not subjected to China’s ADD, the BG/BDG

plant of Taiwan’s Oriental Union Chemical Corp (OUCC) --
with a combined annual capacity of 30,000-40,000 tonnes
-- started commercial operations in early 2018.
In addition, volumes from Sadara Chemical Company,

which is a joint venture (JV) between US Dow Chemical
and Saudi Aramco, became stable and cargoes are
Source: ICIS
regularly exported to Asia from early 2018.
➔
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Sadara’s BG/BDG plant with a capacity of 200,000 tonnes/ WEAK SENTIMENT, SLOW DEMAND
year, started commercial runs in mid-2017. The market has been plagued with weak sentiment and
slow demand for most part of 2018.
As the hefty hike in ADDs of US and EU cargoes
hampered the sales of deep-sea material to China, China’s industrial firms reported 1.8% decrease in profits to
Middle Eastern and other Asian producers became the CNY594.8bn ($86bn) in November comparing with one-
key suppliers for China. year ago, the first contraction since May 2015, data from
the National Bureau of Statistics (NBS) showed.
Some of these deep-sea cargoes were then diverted to the
wider Asia region where there is no ADD concern. Slowing growth in sales and factory prices, combined with
rising cost, led to the profits decline last month, the NBS said.
Together with the increased capacity, Asia is awash with
ample supple and intense competition from suppliers of The November’s figure also marked the seventh
various origins. consecutive drop.
This situation would persist in 2019 and some market Downstream demand had been hit amid dismal business
consolidation could happen. conditions largely attributed to the US-China trade war and
China’s stringent environmental protection measures that
South Korea’s Lotte Chemical has been running on affected downstream plant operation.
reduced operation rate at above 50% from November
2018 amid slow market conditions with no certainty when Moving forward, the outlook remains uncertain. Even as
operation will resume to normalcy. market players take a breather during the 90-Day trade
truce between US and China, existing tariffs continue to be
While Sadara plans to undergo a turnaround in end in place.
January for around three weeks, it is unlikely to result in
any supply tightness as the turnaround coincides with the Market players are largely uncertain if any concrete and
Lunar New Year period. positive outcome could be reached after the 90-Day
truce. In the near team, demand from downstream paint
China and many Asian markets will be celebrating the and coating sectors would likely remain in a lull, amid a
Lunar New Year that begins in early February, traditionally slowdown of the building industry during winter.
celebrated for fifteen days.
Feedstock n-butanol and higher upstream ethylene have
Businesses are expected to be slow around half a month been largely on a downtrend in the fourth quarter of 2018
before and after the holiday. and may provide limited support to BG prices in January.
BG, derived from ethylene oxide (EO) and n-butanol (NBA),

is also known as ethylene glycol ethers (EGE).


➔
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SOLVENTS
ISOPROPANOL (IPA) AND METHYL ETHYL KETONE (MEK)
ASIA SOLVENTS DEMAND MAY PICK UP ON RESTOCKING ACTIVITIES
BY YUANLIN KOH JANUARY 2019
Asia’s isopropanol (IPA) and methyl ethyl ketone (MEK)

may see a light at the end of the tunnel, with a demand
recovery foreseeable in the earlier part of 2019 and that
could set the trend of a balanced market for the year amidst
a steady flow of supply.
Demand is likely to emerge as soon as early 2019 after the

year-end holidays as buyers are likely to stock up inventories.
In the near term, demand for MEK is likely to pick up a little

as buyers prepare some stocks before the Lunar New Year
in early February.
However, with the volatility of feedstock naphtha values,

Source: ICIS
MEK demand in 2019 may be weaker than previous years.




➔
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Market sentiment traditionally improves after the Lunar 1,300
New Year holidays, when most of the market would come 1,200
back in full force to restock their depleting inventories and 1,100
prepare for the year ahead. 1,000
900
USD/tonne
Supply of MEK, on the other hand, is not expected to
800
be disrupted in 2019 after the biennial turnarounds of
700
Japanese plants in 2018.
600
Similarly, in the near term, IPA demand may pick up on 500
restocking activities in most parts of southeast Asia after 400

the year-end holidays and before the Lunar New Year. 300
29 un- 8
9
27 pr- 8
18 pr 18
08 ay- 8
an 18
11 c- 8
06 ar- 8
14 ov- 8
16 eb- 18
02 ct- 18
23 ov- 18
ep 18
21 ug- 8
31 ug- 18
10 ul- 18
20 n-2 8
1
1
01
1
1
1
1
1
u 1
-M -20
-J 20
-J 20
-A 20
-A 20
-D 20
-M 20
-N 20
-F 20
-O 20
-N 20
-S 20
-A 20
-A 20
-J 0
-J 20
Supply may re-balance or lengthen when propylene-based
-2
23 eb-
12 -
e
-F
IPA plants come back onstream.
02
Acetone CFR China Assessment Main Ports Dutiable Spot 4-6
WeeksCFR
Acetone FullChina
Market Range (Mid)
Assessment : USD/tonne
Main Ports Dutiable Spot 4-6 Weeks Full Mar…
A longer IPA supply situation is likely in the near term with
Isopropanol CFR Asia SE Assessment Spot 4 Weeks Full Market
support from other plants which would have resumed full Isopropanol CFR: Asia
Range (Mid) SE Assessment Spot 4 Weeks Full Market Range (Mid) …
USD/tonne
operations after scheduled turnarounds by the end of 2018. Propylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market
Propylene CFR Asia NE Assessment Spot 2-6 Weeks Full Market Range (Mid)…
Range (Mid) : USD/tonne
Source: ICIS
These may exert further downward pressure on IPA prices.
In both of these markets, there will be sufficient supply to on 23 February – according to ICIS data – because of
meet demand at least in the first quarter of 2019. softening feedstock acetone costs on abundant supply and
weak downstream demand.
This will moderate expectations of any price hikes amid the
ongoing trade row between the world’s top two economies. Another major IPA feedstock, propylene, was on the rise
during the better part of 2018, hitting a new high on the
2018 had found both IPA and MEK markets on a steady back of tight supply on 12 October.
decline after peaking in the first quarter, owing to a re-
balancing of markets after the arbitrage windows that opened Spot prices were assessed at $1,187.50/tonne CFR NE
in the second half of 2017 to Europe and the US closed. (northeast) Asia, ICIS data showed.
The IPA market declined steadily after peaking at This resulted in even tighter margins for propylene-based
$1,052.50/tonne CFR (cost & freight) SE (southeast) Asia IPA producers.
Most of the propylene-based IPA plants in China were

forced to shut on loss of margins.
Japanese propylene-based IPA suppliers were under

immense pressure to sell at competitive prices to their
regular customers.
Coupled with several plant troubles during the course of the

year, Japanese supply was limited.
As such, their exports during this troubling time were few

and far in between. Demand for acetone-based IPA was
higher as a result.
However, IPA prices fell due to weak downstream demand

and the ongoing Asian currency depreciation against the
Source: ICIS
US dollar.
➔
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MEK had been on a downward trend for the better part of 1,750
2018, as the market rebalanced following the arbitrage to
Europe and the US in 2017. 1,500
MEK prices in Asia fell to a four-month low, tracking 1,250
weakness in the Chinese domestic market.
USD/tonne
1,000
On 30 November 2018, prices in Asia were assessed at

750
$1,050/tonne CFR (cost & freight) NE (northeast) Asia;
$1,070/tonne CFR SE (southeast) Asia; and $1,085/tonne
500
CFR India, according to ICIS data.
250
Prices were down about 34.8-36.5% from their peaks hit on
08 ay- 8
29 n- 8
9
an 18
27 pr- 8
18 pr 18
11 ec- 8
06 ar- 8
16 eb- 18
02 ct- 18
23 ov- 18
14 ov- 8
ep 18
21 ug- 8
31 ug- 18
10 ul- 18
un 18
1
1
01
1
1
1
1
1
5 January 2018, ICIS data showed.
-M -20
-J 20
-J 20
-A 20
-A 20
-D 20
-M 20
-N 20
-F 20
-O 20
-N 20
-S 20
-A 20
-A 20
-J 0
-J 20
-2
20 -2
23 eb-
12 -
u
-F
02
2018 was a heavy turnaround year for Japanese and MEK CFR Asia NE Assessment Spot 4-6 Weeks Full Market
Taiwanese producers, whose export availability was MEKRange
CFR Asia NE :Assessment
(Mid) USD/tonne Spot 4-6 Weeks Full Market Range (Mid) : US…
severely limited in addition to unforeseen facility or MEK CFR Asia SE Assessment Spot 4-6 Weeks Full Market
MEKRange
CFR Asia SE Assessment
(Mid) : USD/tonneSpot 4-6 Weeks Full Market Range (Mid) : USD…
upstream issues. MEK CFR India Assessment Spot 4-6 Weeks Full Market Range
MEK CFR India Assessment Spot 4-6 Weeks Full Market Range (Mid) : USD/to…
(Mid) : USD/tonne
Also, in light of weak Chinese domestic demand and Naphtha
Naphtha CFR Japan
CFR Japan Assessment
Assessment Spot
Spot Half Half4 and
Month Month 4 and
5 Full 5 Full
Market Range (…
Market Range (Mid) : USD/tonne
the ongoing US-China trade war, Chinese supply was
Source: ICIS
considered long in 2018.
In an effort to offload their cargoes, China offered at

competitive prices to the rest of Asia, which buyers found to
be attractive.
However, most of the market stood on the sideline, buying

hand-to-mouth, in an eventful year which saw crude prices
rise and fall dramatically on geopolitical factors such as the
trade war between US and China and the expected global
economic slowdown in 2019.
back to contents
SOLVENTS
METHYL TERTIARY BUTYL ETHER (MTBE)
ASIA’S MTBE MAY FACE A SUPPLY DELUGE FROM NEW PLANTS
BY KEVEN ZHANG JANUARY 2019

CHINA’S MTBE IMPORT 2017-2018 (TONNES)
Asia’s methyl tertiary butyl ether (MTBE) is likely to face a
supply glut in 2019, owing to the onset of new plants while
sluggish demand would prevail.
In 2019, increasing supply availability will change the

regional balance.
The key plants in China are the mega-sized integrated

refinery-petrochemical projects, including Hengli
Petrochemical in Dalian and Zhejiang Petrochemical in
Zhoushan.
Source: ICIS
In addition, all eyes fall on Malaysia’s Petronas Refinery and

Petrochemical Integrated Development (RAPID) and the CHINA’S MTBE EXPORT 2017-2018 (TONNES)
upgrade of Taiwan’s Formosa Petrochemical Corp (FPCC).
Chinese import volumes had fallen year on year owing to

ample local supply, after the 740,000 tonne/year Sinopec
Jinling-Huntsman MTBE plant started in the second half
of 2017.
China saw its first export MTBE to India from Sinopec

Jinling-Huntsman, and the export volumes to Singapore
and South Korea increased.
Source: ICIS
Meanwhile, South Korea will become a net MTBE
exporting country.
As northeast Asia becomes self-sufficient, the excess supply
S-Oil commissioned a high-severity residue fluid catalytic is poised to flow into the southeast Asia market, which is
cracker (HS-RFCC) at Onsan in September 2018. traditionally dominated by the Middle-East producers.
In October 2018, Korea’s MTBE imports fell by 58.4% to MTBE of Middle East origin including Saudi Arabia, United
5,402 tonnes from 12,979 tonnes in September 2018. Arab Emirates and Qatar, accounts for more than 90% of
Singapore import market.
On the export side, the volume saw an explosive growth
from 34 tonnes in September to 10,004 tonnes, indicating a A steady number of Middle Eastern origin cargoes continue
net export of nearly 5,000 tonnes. to flow to Asia throughout 2018. For 2019, several term
Middle East contracts were concluded at lower levels than
last year.
Estimated
MTBE Capacity
Start Up (as
(‘000 tonne)
of Nov ‘18) “The [term contract negotiation] process were more difficult
Petronas, Malaysia 390 Q2 2019
than [it was in 2018],” said a northeast Asian producer.
FPCC, Taiwan 350 Q2 2019
In response to rising supply, producers may cut operating
Hengli Petrochemical, China 840 Q3 2019
rates of the less profitable plant units, or convert MTBE
Zhejiang Petrochemical, China 180 Q3 2019
units into alkylate ones.
➔
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Floating price Floating price Downstream gasoline will remain well supplied as several
Basis premium for 2019 premium for 2018 ($/
($/tonne) tonne) refinery capacity will be further added in 2019, including
China’s mega refinery project, Malaysia’s RAPID and
CFR Singapore FOB Singapore + 17 FOB Singapore + 22 Adnoc’s Ruwais plant restart.
FOB Singapore + 0 FOB Singapore +3
FOB NE Asia
to -1 to +5 However, other downstream applications of MTBE would see
CFR NE Asia FOB Singapore +20 FOB Singapore + 25 a growth in capacity, supporting demand for the product.
China’s Wanhua Chemical 50,000 tonne/year MMA plant

Chinese MTBE consumption will be dampened as will start up in the first quarter of 2019, and Singapore’s
China’s planned implementation of Ethanol-10 (E10) Sumitomo Chemical will restart MMA Line 2 in the fourth
gasoline draws near, and following recent hikes in quarter of 2019. Both plants use MTBE as sole feedstock.
domestic fuel prices.
Eleven provinces in the country have started trial usage of

E10 gasoline this year, with Beijing and Tianjin expected to
follow suit, before the expected full implementation in 2020.
E10 refers to the fuel with a 10% ethanol blend.
Ethanol, which is a chemical derived from food material,

can replace MTBE as octane-boosting additive for gasoline
in China. Elsewhere in Asia, demand is driven by gasoline
blending in Singapore and prices of other blending stocks
such as aromatics products.
The consumption of MTBE became weak since October

2018 because of a gasoline supply glut.
Asia’s gasoline cracks over Brent crude oil weakened to

Source: ICIS
below $1/bbl since November 2018.


➔
back to contents
SOLVENTS
PHENOL
ASIA PHENOL H1 SENTIMENT SEEN SLUGGISH ON PLANT RESTARTS
BY ANGELINE SOH JANUARY 2019 1,600
1,400
The sentiment in the Asian phenol market is expected to
be sluggish in the first half of 2019, weighed by ample 1,200
supply following the restarts at China-based plants from 1,000
USD/tonne
maintenance.
800
On 2 November 2018, prices on a cost and freight rate 600
(CFR) China Main Port (CMP) basis were at their highest 400
levels since 24 October 2014, at $1,430-1,490/tonne CFR
200 Higher incentive for integrated phenol producers
CMP, according to ICIS data. 150 to produce phenol instead of selling benzene
Lower incentive for integrated phenol producers
0 to produce phenol instead of selling benzene
The benzene-phenol spread also reached a historical high
12 t- 18
03 ov - 18
31 e c - 18
e c 18
8
01 ep- 8
22 t- 8
20 J ul- 18
10 ug- 18
18 a y - 8
un 18
30 ul- 2 8
16 a r - 8
07 pr 18
28 a y 18
26 a r - 18
05 b- 18
12 a n- 8
01
1
1
- J 01
1
1
1
- O 20
- N 20
- D 20
- D 20
- O 20
0
- A 20
- S 20
- J 20
- M 20
- A 20
- M - 20
- M - 20
- M 20
- F 20
- J 20
of more than $720/tonne as of end-October; the average
-2
09 - 2
22 a n-
c
c
e
-J
-
spread is typically set at $150/tonne.
01
Phenol CFR China Assessment Main Ports Spot 4-6 Weeks Full Market Range (Mid)
Phenol C FRFOB
Benzene C hina AsKorea
South s es s ment Main Ports
Assessment S pot and
Spot Third 4-6 Weeks Full
fourth half Market
month Range…
Closing
The strong margins led to high average operating rates Value (Mid)
in China. The average run rate at phenol plants in China Benz eneCFR
Phenol FOB China
S outhAssessment
Korea As s Main
es s ment
PortsSSpot
pot T4-6
hird and fourth
Weeks half month
Full Market Range -CBen-
los …
zene FOB South Korea Assessment Spot Third and fourth half month Closing Value (Mid)
stood at more than 80% as of mid-December. China’s
Phenol
Source: C FR C hina As s es s ment Main Ports S pot 4-6 Weeks Full Market Range…
ICIS
average operating rate was 70% in 2015, 71% in 2016 and
76% in 2017.
On 26 March, China started anti-dumping investigations on
From 2 November 2018 to 14 December, prices dropped phenol imports from the US, European Union, South Korea,
by $350/tonne, with levels assessed at $1,050-1,150/tonne Japan and Thailand.
on the latter date. Prices on 14 December fell by $350/
tonne from 2 November to $1,050-1,150/tonne on bearish The investigations were undertaken in response to requests
sentiment following the restart at several domestic units. from representative domestic producers, including PetroChina
By January 2019, all domestic phenol plants in China are Jilin Petrochemical, Changshu Changchun, CEPSA Shanghai,
expected to be in operation. Moreover, trades were further Sinopec Mitsui Chemicals, Bluestar Harbin Petrochemical,
hindered by the upcoming announcement of the preliminary Yangzhou Shiyou and Huizhou Zhongxin.
anti-dumping duty (ADD).
The preliminary results of the investigation was expected in late
PRICE TRENDS FROM 2014 TO 2018 September, typically six months after the launch. However, as
1,700 of mid-December, the results had not been announced.
1,450
Market players explained that it was first delayed after the
trade war between China and the US commenced. US-origin
USD/tonne
phenol bound for China was slapped with a 10% import duty
1,200
in late August, when the second volley of shots were fired
in the trade war between the two economic giants.
950
Subsequently, another delay occurred due to the G20

700 leaders’ summit in Argentina, where there was a truce in
new import tariffs between China and the US.
-A -2 5
- -2 5
-A -2 8
- -2 8
-2 8
9
-J -2 8
-M -2 4
-M r- 4
- - 7
-M r- 7
- - 4
- l- 7
- - 7
14 pr- 017
- -2 6
-A -2 6
-S -2 6
-N -2 6
- -2 5
- - 6
-J -2 5
07 ay 201
23 ug 01
10 ay 201
26 ug 01
an 01
06 Dec 201
22 a 01
09 Dec 201
25 Ma 201
18 Oct 01
01
05 Sep 201
29 -Ju 201
15 Sep 201
10 ov 01
28 Feb 01
02 Jun 201
18 ep 01
01 an 01
17 Apr 01
15 Oct 01
- l-
19 -Ju
There was much caution noted during the contractual

04
Phenol CFR China Assessment Main Ports Spot 4-6 Weeks Full negotiations for 2019, with some players expecting about
Market
Phenol RangeAssessment
CFR China (Mid) Main Ports Spot 4-6 Weeks Full Market Range…
10% of ADD for several Asia-based producers and more
Source: ICIS
than 10% for the US-origin cargoes.
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2019 MAINTENANCE SCHEDULE
Company Location Phenol Acetone (‘000 tonnes/year) Timing
(‘000 tonnes/year) Linyuan, Kaohsiung county, Taiwan 360 220 20 December 2018 – Early Jan 2019
Acetone Daesan, South Korea 300 180 March-April 2019
(‘000 tonnes/year) Yeosu, South Korea 250 150 May 2019
Timing Yeosu, South Korea 300 180 May 2019
TPCC Linyuan, Kaohsiung county, Taiwan 360 220 20 December 2018 – Early Jan 2019
LG Chem Daesan, South Korea 300 180 March-April 2019
Kumho P&B No 3 Yeosu, South Korea 250 150 May 2019
Kumho P&B No 4 Yeosu, South Korea 300 180 May 2019
Formosa Chemicals & Fibre Corp Mailiao, Taiwan 440 250 H1 2019
Mitsui Chemicals Osaka, Japan 200 120 End-June to end-July
Mitsui Chemicals Ichihara, Japan 190 114 End-October to mid-November
“We don’t expect to see much US cargoes from 2019 “After the ADD, origins not slapped with the duty will be in
onwards, unless there is a major surprise from the trade- high demand. This means buyers will be keen in the Saudi-
war,” a China-based trader said. and India-origin cargoes,” another China-based trader said.
According to data from China Customs, phenol imports Meanwhile, Saudi Arabia’s Petro Rabigh started up its
hit a record low at 172,900 tonnes in 2015, down by 470,000 tonnes/year plant at the start of 2018 while
20.4% from 217,200 tonnes in 2014, but then increased Deepak Phenolics started up its 200,000 tonnes/year plant
significantly in 2016. in August 2018.
In 2016 the US was the leading exporter of phenol to China, On the other hand, domestic demand could be met with
contributing nearly 30% of total imports compared to the higher local supply, with Zhejiang Petrochemicals’ 470,000
second largest exporter, Taiwan, at 25%, and the third largest, tonne/year plant expected to start in H1 2019. Despite
Japan, at 15%. Import volumes went up further in 2017, up expectations of longer domestic supply from China, other
by 47.2% year on year to 365,500 tonnes, with cargoes from Asia-based sellers hoped prices in H1 could be bolstered
the US, EU, South Korea, Japan and Thailand amounting to with the regional turnaround schedule.
330,000 tonnes and occupying 90% of the total.
Prices could also be bolstered by downstream expansions:
However, in 2018, there was minimal spot volumes of US- ■ CPDC China is set to start its 150,000 tonnes/year
origin cargoes heard following the ADD investigation. cyclohexanone plant in Rudong, Jiangsu province in April 2019.
■ Chang Chun Plastics is set to start its 135,000 tonnes/year
On the supply front in the US, availability of the material bis-phenol (BPA) in Jiangsu province in June or July 2019.
has fallen after Shell idled its Phenol 3 plant at its Deer ■ Lihuayi is set to start its 120,000 tonnes/year BPA plant in
Park facility in Texas in mid-January 2018; the plant Shandong in Q4 2019.
produced about 240,000 tonnes of phenol per year, ■ Covestro is set to expand its BPA capacity in Shanghai in
representing about 40% of the company’s total capacity. Q4. The exact capacity could not be immediately verified.


➔
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ASIA

Key markets covered:

Acids Polymethyl Methacrylate (PMMA) Polybutylene Terephthalate (PBT)

Acetic Acid Soda Ash and Butanediol (BDO)

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INDUSTRY NEWS SUPPLY & DEMAND DATABASE

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BY HELEN LEE JANUARY 2019

In the near term, suppliers are of the view that the

This is in view of rising output in China, balanced market

Asia’s acetic acid spot prices consequently concluded 2018

The overall operating rate of acetic acid plants increased

850 Source: ICIS

750 Feedstock spreads between methanol and acetic acid

650 expected to remain healthy in 2019.

550 LONGER TERM BALANCED VIEW

In India, general elections in 2019 and its impact on

Acetic Acid Ex-Tank E China Spot 2-6 Weeks Full

Market Range (Mid)

the country’s economy on the other hand weigh on the

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BY JUDITH WANG JANUARY 2019 ASIA SPOT ADIPIC ACID PRICES

The ADA market is expected to see a slippery slope, with 1,400

prices trending weaker going forward as uncertainties over 1,300

the impact of the US-China trade row lingers. 1,200

Adipic Acid CFR Asia NE Assessment China Origin

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BY LI LI CHNG JANUARY 2019

Spot prices fell steadily in the fourth quarter of 2018 to

In the week ended 22 December, etac prices were at

This represented a 12.9% decrease since mid-October

Acetic acid FOB (free on board) China spot prices shed

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BY IZHAM AHMAD JANUARY 2019 ASIA ETHANOL PRICES

The Asia-Pacific market for fuel-grade ethanol and b-grade 600

ethanol is expected to remain depressed in the early months 580

Prices of fuel-grade anhydrous ethanol rose to just shy of

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ASIA ETHANOLAMINES MAY STAY 1,240

Notably, China has finalised anti-dumping duties (ADD) 1,300

prices, amid bearish market conditions particularly in the

Domestic spot prices for MEA were pegged at yuan (CNY)

Ethylene import prices nosedived towards the fourth

quarter to hit around $870/tonne CFR (cost & freight) NE

(northeast) Asia, nearly a 40% slump from those in January,

MEA Ex-Warehouse China E Assessment Domestic Drummed Spot 0-3 Days …

TEA 99% Ex-Warehouse China E Assessment Domestic Drummed Spot 0-3 D…

Local users are likely to place orders in January instead,

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