Global chemistry sentiment is bearish as Omicron emerges

Buyers opted to wait and see as some countries imposed travel restrictions and temporary border closures as bearish sentiment rose in global chemical markets amid the rise of the coronavirus Omicron variant
.

The new variant has cases in several countries around the world, including Japan, South Korea, Singapore, the UK, Germany, Italy and others
.

The emergence of Omicron has dashed hopes that the outbreak will subside again, as travel will be more restricted as new variants emerge in more countries
.

This will affect the progress of the global economic recovery and disrupt the demand for petrochemicals
.

At this juncture, if oil prices continue to fall due to travel restrictions imposed to prevent the spread of the epidemic, Omicron could further erode U.
S.
PE profits
.

The domestic first-class base oil market in Europe ended 2021 rather sluggish, with heightened concerns about Omicron, prompting a slow start to trading in December
.

Sentiment in Asian oleochemicals markets has become increasingly bearish due to the emergence of new disease strains, leading to a drop in spot trading interest
.

Falling crude oil prices and falling values ​​of upstream crude palm oil (CPO) and key feedstock palm kernel oil (PKO) weighed on demand
.

Southeast Asian biodiesel producers have lowered their sales targets due to lower CPO futures prices
.

In the ethyl acetate (etac) regional market, buying sentiment is increasingly cautious
.

Near the end of the year, market participants are less keen to build inventories in the current market environment that lacks certainty
.

As of Dec.
2, asking prices for spot etac cargoes have eased from the low $1,400/t CFR Southeast Asia low, due to weak import demand amid high freight rates
.

A Southeast Asian market source said: "January shipment talks have yet to start due to the uncertainty.
.
.
Oil and upstream (markets) are trending down
.
End users expect prices to soften, so they are waiting and watching
.
"

Upstream, naphtha prices in Asia fell along with global crude futures as concerns over fuel demand resurfaced
.

But while direct prices closely track volatility in the crude oil market, the practice of supporting physical demand for naphtha has largely cushioned the market structure for refined products
.

Demand for petrochemical feedstocks has been partly stimulated by improved profit margins for downstream olefin producers against the backdrop of falling naphtha prices in Asia
.

However, as Europe re-imposes stricter travel restrictions, there are growing concerns about the impact of Omicron on European fuel demand, which could increase excess naphtha flows to the east
.