Petrochem trading muted before trade talks
Trading activity across key petrochemicals in Asia were muted ahead of the upcoming US-China trade talks this week. Many market participants preferred to stay on the sidelines until clarity is established on direction. The year-long trade war between the two economies has had an adverse impact on the Chinese petrochemicals industry, with the country grappling with a slowdown in the market for raw material as well as finished goods. Inventories reportedly piled up earlier this year, after the US announced tariffs on Chinese imports.
Reflecting a sluggish economy, China posted a 6.2% GDP growth in Q2 of 2019, the slowest rate since 1991. China is targeting a full-year 2019 growth of 6.0-6.5%, representing a slowdown from last year's 6.6%, which was already a 28-year low.
Manufacturing activities for exports usually peak in Q3, as finished products are then shipped to destination countries for the year-end holidays.
Benzene market players adopted a cautious stance to await some development on the US-China trade talks. Benzene is used to producing a number of intermediates that are used to create polymers, solvents and detergents. On purified terephthalic acid, several ongoing plants turnarounds are keeping supply snug, especially in China. However, buying is done on a need-to basis, given an uncertain market outlook, undermined by persistent slow sales in the downstream polyester markets.
