Spread improved amidst a quiet market
The petrochemical market in Asia remained muted in the past week due to the Chinese New Year holiday, with most market participants continuing cautious on the impact of tariffs and other policies of the US government and the potential adverse impact on global economic and demand dynamics. (Polymerupdate) Most product spreads grew WoW on a 1% WoW slip in naphtha price to US$665/t from lower oil price and slower demand in China and easing geopolitical tension. Even so, PE spreads were still below cash cost. Integrated PET spread improved 4% WoW to a 6-week high of US$109/t, but was still below 12MMA of US$113/t due to supply additions and slow demand in Asia, despite planned maintenance shutdowns of plants in China. Aromatics product spread was stable WoW as product prices moved in tandem with feedstock cost. We believe weaker oil price will continue to depress petrochemical product prices, which is likely to restrain demand and product spread in the near term.
SETPETRO weakened 4.8% WoW, underperforming the SET’s fall of 3.3%, an indication of market concerns about the adverse impact of trade flow after the US put higher tariffs on products from China, whose economic outlook is still gloomy. Profit in 4Q24 for companies in the sector is expected to remain low. We will stay cautious on the sector until positive catalysts are in sight.
