According to the report released by ICIS, as the risk of economic recession continues to increase, the bearish sentiment on the price of petrochemical products spreads across the board, and the Asian petrochemical market is in trouble. The intensified economic concerns such as the conflict between Russia and Ukraine and the sanctions against Russia, coupled with concerns about the spiraling inflation, continue to depress market sentiment. Central banks around the world have raised interest rates to combat inflationary pressure, which has also aroused people's concern that the global economy is in recession.

    Due to the sharp drop in crude oil prices and weak downstream demand, the ethylene glycol market in Asia fell sharply this week to the lowest level since the end of 2020. Due to concerns about global inflation and economic recession, terminal demand is still low. Asian polyester manufacturers have started a new round of production reduction after reducing their operations due to the epidemic in April. Continued supply cuts have not stopped the recent price decline, as the slowdown in overall demand has outpaced the decline in supply.

    Affected by various factors, the sentiment of Asian petrochemical product Buyers was suppressed, including the depreciation of the Korean won and Thai baht against the US dollar, which led to the increase of import costs. Concerns that rising interest rates and working capital pressure may continue to drag down downstream demand in the third quarter further dampened the momentum of Asian downstream customers to replenish petrochemical products inventory.

    The Asian dichloromethane market will face the pressure of oversupply because India's booming new capacity may soon make it an exporter. In the second quarter of 2022, the spot price of methylene chloride in Asia rapidly fell to the lowest level in more than a year. The previous long-term upward trend began in the fourth quarter of 2021.

    The spot market of ethylene propylene diene monomer (EPDM) in Asia may continue to be bearish because the demand has not yet recovered. In the Southeast Asian and Indian markets that rely on imports, the cost and freight (CFR) price of EPDM fell by 10% ~ 12% from May 2 to the end of June.

    The producers of recycled polyethylene terephthalate (r-PET) in the Asian market began to discuss the goods delivered in July under the condition of weak market demand, because the end-user demand in various countries was restrained by inflation. The demand for fiber grade r-PET flakes and granules for low-end applications has been significantly affected because processors choose to increase the purchase of PET materials with more competitive prices. The demand for r-PET goods for fiber applications is expected to shrink further.

    Since the demand is still low, the ethanolamine market in East and South Asia will continue to be in a downward trend. Buyers are still reluctant to buy in large quantities because most of them expect the market to weaken further.