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    Home > Chemicals Industry > Rubber Plastic News > Weak demand for petrochemicals in Asia, container shortages

    Weak demand for petrochemicals in Asia, container shortages

    • Last Update: 2023-01-13
    • Source: Internet
    • Author: User
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    The pandemic and container shortages continue to plague the petrochemical market in Asia
    .

    With uncertainty at the heart of the issue, the mood is pessimistic
    .

    A new round of lockdowns in Asia and imbalances in vaccination rates have led to sluggish demand and disruption to supply chains and logistics
    .

    Chinese ports are particularly prone to outbreak-related closures
    .

    The port of Ningbo-Zhoushan - the world's third-largest port after Shanghai and Singapore - has just fully reopened after two weeks of partial closures
    .

    The closure will have a knock-on effect similar to the closure of the Yantian port in southern China in May
    .

    Impact on petrochemical market

    Impact on petrochemical market

    For example, bearish sentiment will ripple across the Asian PE market
    .

    Sufficient domestic PE supply will have an impact on the Chinese market in the short term, and China's new HDPE and LLDPE capacity of about 1.
    7 million tons/year will come online in the third quarter

    .

    This coincides with off-peak demand partly triggered by persistent power shortages for SMEs in southern China
    .

    "Asian PE demand is likely to remain weak in the near term as some Asian countries have started a new round of lockdown measures," said Amy Yu, senior analyst at ICIS.
    will increase, although some grades, such as LDPE, remain tight in the short term

    .

    "When the arbitrage window from the U.
    S.
    to Asia reopens, we expect imports from the U.
    S.
    to also pick up in the fourth quarter," she noted

    .

    Likewise, weak downstream demand dampened buying interest in the Asian MEG market
    .

    China's major downstream polyester producers have cut production in response to slowing demand for textiles caused by rising global coronavirus cases, while new supply from China has intensified market sentiment
    .

    In the Asian acetic acid market, downstream consumption will continue to decline, while production in the vinyl acetate monomer (VAM) industry in Southeast Asia and China will decline due to planned and unplanned downtime and production issues
    .

    Fears of a third wave of Covid-19 in India further weighed on buying sentiment
    .

    Inventory pressure in China's downstream industries rose as container shortages hindered exports of finished products, dampening acetic acid demand and increasing buyer caution
    .

    In other downstream sectors, plant operating rates at some ethyl acetate (etac) and butyl acetate (butac) facilities in India and Southeast Asia have been affected by various factors including monsoon flooding and raw material substitution since the end of July
    .

    PP demand in Southeast Asia is likely to remain subdued in September despite a traditional seasonal uptick during this time, as countries in the region continue to battle the Covid-19 pandemic
    .

    More capacity is about to start up in Southeast Asia and China, making the challenge even tougher
    .
    Also, suppliers are not keen on selling to Southeast Asia at the moment, as other destinations have far better net returns

    .

    As is customary, PP demand in September and October will improve due to restocking ahead of the year-end holiday
    .
    However, some market participants believe that this may not be the case this year due to the impact of the epidemic

    .

    Asian ABS appears to be bucking the trend, with demand remaining strong ahead of the traditional peak, with demand for consumer products expected to pick up towards the end of the year
    .

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