Supply of some petrochemicals will rise after the Golden Week holidays (1-7 October) in the key market of China. However, overall demand condition is deemed weak as a result of the ongoing US-China trade war, notwithstanding improving economic indicators in China, the number two economy after the US.
The general manufacturing purchasing managers’ index rose to 51.4 in September from 50.4 in August amid a rise in overall orders, while the country’s official manufacturing PMI rose to 49.8 in September from 49.5 in August.
The Asian paraxylene market is unlikely to elude a longer supply going forward as demand will stay weak, while new capacities are due to come on stream before the end of the year. Downstream, production margins of purified terephthalic acid are being squeezed, prompting several producers in China to shut their facilities for upcoming maintenance.
Meanwhile, ethylene supply in Japan and China could remain ample as the ongoing production issues at some downstream plants are expected to persist until at least the end of October or early November. Earlier concerns on mono ethylene glycol supply disruption from the Middle East were dispelled by a sooner-than-expected recovery in Saudi feedstock supply, although a major Middle East producer was heard to still supply minimum contract volumes to its customers. The upcoming start-ups of two major MEG plants in the US and Malaysia also weighed on the market sentiment as a total of 1,500 kilo tons a year of new MEG capacities will come on stream in October.
