For the Quarter Ending June 2021
The availability of C9 and C10 solvent improved over the previous quarter, with the resumption of Naphtha crackers and refineries leading to better production rates. As the industrial activities recovered from the impact of winter storm Uri, the demand for petrochemical solvents showed a sharp uptick. Availability of the upstream Naphtha reached the pre-pandemic levels which further supported the availability of C9 and C10 solvent for the paints and coatings sector. Demand outlook observed a significant boost due to seasonal offtakes from the building and construction sector. Firming crude oil kept the regional offers for petrochemical solvent considerably raised. As a ripple effect, the prices remained well supported throughout the second quarter.
C9 and C10 solvent demand outlook in the Asia Pacific region reported several uncertainties during the second quarter of 2021, as the offtakes from the Southeast Asian region were subdued in the first of the quarter owing to the devastating second COVID wave impact in the Indian market. Although in the second half, the overall market sentiments showed some improvement. Solvent offtakes from the Chinese market surged with rising demand from the paints and coating industries due to increasing building and construction activities. Overall, the supplies of C9 and C10 solvent in the APAC region were balanced, however some constraints in the Northeast Asian region were witnessed as a major upstream cracker in South Korea remained temporarily closed. The pricing showed mixed trends in the Chinese market and showed some eases by the end of the quarter. FOB Qingdao price for C9 solvent was assessed at USD 941 per tonne in June.
During the second quarter of 2021, the European C9 solvent supplies were uplifted with the influx of Naphtha and fresh solvent shipments from the US Gulf coast. In June, the regional Naphtha imports were estimated around 3,75,000 tonnes, the highest monthly volume in past four years. The surged volumes in Europe open an arbitrage window with the Asia Pacific region. Demand from the downstream sectors was robust due to economic rebound but high crude oil values continued to maintain the pressure over the refiners.
For the Quarter Ending March 2021
Supplies of petroleum solvents in the region remained constrained during Q1 2021, as major refineries in the region were shut down since mid-February amid power disruptions caused due to extreme freeze weather conditions in the Texas and nearby gulf coast regions in USA. Crude Oil prices touched their record highs in March, translating their strong influence over petroleum derivatives. Brent crude oil futures prices hit its highest closing prices since March 17, which surged above USD 66.5 per barrel during the month. Demand surged from the downstream paints and sectors, while short supplies and constant consumption from the downstream sector depleted the inventory levels.
The supplies of C9 - C10 Solvent were tight during Q1 2021 on account of several throughput cuts in crude oil processing by OPEC nations which raised crude values above USD 65 per barrel in March. Constrained availability of feedstock in the Asian markets, followed by shortfall in US imported cargoes amid severe weather conditions pushed up the regional offers for petroleum solvents. Better offtakes from the downstream paint and coatings sector and recovering automotive sector surged the demand of C9-C10 solvent in the Asian market. Due to the global supply shortages and high upstream values, the C9 Solvent prices witnessed a surge of USD 133/ton to assess around USD 800/ton in the Indian markets.
During the first quarter of 2021, the European market of C9 - C10 Solvent was tight, as the refineries in the Northwest European region were operating at the reduced capacities due to severe cold weather. British Coatings Federation highlighted that reduced inventory levels have severely impacted the paints and coating sector. Demand was ample in the European region as offtakes from the downstream automotive sector improved, however situation balanced out with limited commercial and industrial activities, due to the lockdown in several economies across Europe.
For the Quarter Ending December 2020
Demand for C9 & C10 solvent in the Asian market remained firm as various countries like China and India reported rise in demand from paint and coating industry, while the demand from rubber industries remained stagnant. Pickup in demand in India from paint industry during the festive season in October and November also contributed to a prominent surge in demand for C9 & C10 solvent in India. The prices of WTI crude have risen during the Q4 of 2020, In September 2020 the prices were reported at 39.63 USD / barrel to 47.02 USD / barrel in December 2020. Consistent hike in the prices of feedstock i.e., crude oil across the globe has provided an astonishing upward push to the prices of C9 & C10 solvent in Asia Pacific region.
Firm demand for C9 & C10 solvent from the paint & coating and rubber industry sustained in Europe. As majority of European country have imposed lockdown due to spread of COVID-19 in Q4 2020. The demand for C9 & C10 improved in Q3 2020 while a decline in imports was observed in the months of September and October 2020. In December 2020 imports of C9 & C10 increased three times in Spain. In Russia, the import has gradually increased from September to December, while mixed demand was observed in United Kingdom in Q4 2020. Belgium being one of the top importers of C9 & C10 Solvent in European region and the demand has increased compared to last quarter. In early October 2020, market fundamentals for C9 & C10 solvent remained in a narrow range as various end-use industries kept operating their plants at reduced rates under fear of demand uncertainty. However, the plant utilization rates gradually improved in major countries in Europe under the optimistic demand and a V-Shaped recovery is observed in many countries in Europe.
With the consistent increment in prices of the feedstock crude oil, C9 & C10 solvent prices in the US took an uptrend later in the Q4 2020. There was a mixed demand for aromatic solvent from end use industry due to elections in the USA. Further, the companies operating in the USA and Mexico have gradually increases their operating rate to meet the domestic demand for paint during the Christmas festival. The prices of C9 & C10 solvent have increased by 3-4% compared to Q3 2020. Rising price of Brent crude is further anticipated to support the price trend in the region at least till Q1 2021.