Paraxylene tumbles, eases cost support for polyester
Crude oil markets opened May on a weaker note with moderate movement on either sides, but plunged after EIA revealed the US inventories hit 2.5-year highs. A strong US$ also pressured the energy complex. The markets were on shaky grounds in the second week moving in either directions as events unfolded. Mid-May saw price increases and moderating due to demand fears amid a standoff in China-US trade talks. For the month, crude oil prices posted its biggest monthly drop in six months, after US President stoked global trade tensions by threatening tariffs on Mexico. The European Brent was 1.6% cheaper on the month while US crude edged down 0.1%
Asian ethylene spot prices fell to a 20-week low on ample supply following downstream production cuts. May saw prices decline close to 4% in Southeast and 3% in Northeast Asia. Early in the month, discussions were curtailed by regional holidays. Prices saw some support in Northeast on post-holiday restocking activity in China amid limited offers. In Europe, spot prices firmed up 6% as supply and demand balance tightened due to planned and unplanned production issues. Contract for June rolled over.
In US, April settled lower amid lower spot prices and lower production costs. Spot prices fell 4-6% in May after start-up of two new crackers and high inventories in Q1 early in the month. Spot prices kept softening as supply continued to outpace demand.
Paraxylene prices plunged 12-13% across regions in May from April as losses in the energy complex exerted the downward pressure on spot market. In Asia, prices fell as new capacities heralded weakness along the value chain, amid pessimism in macroeconomic environment. Markets had partially regained previous losses in mid-May as cargo-holders took a firm pricing stance, which helped reverse a downturn in spot prices. By month-end demand faded as sentiment in PTA markets weakened. No major settlement was reached for June contract price until May end.
In Europe, spot paraxylene prices fell on low demand amid ample availability. May contract settled down following a split settlement while spot prices declined on weak demand and falling Asian values. In US, spot prices fell slower than other regions, amid bearish sentiment while April contracts decreased tracking lower spot and bearish global sentiment. May contracts for paraxylene decreased from April, tracking lower spot prices, increasing global supply and weak downstream demand.
