Petrochemicals - Mixed trends witnessed across the chain
As per the latest weekly update, petrochemical margins have exhibited a mixed trend where Polyvinyl Chloride (PVC) margins have increased by 4% WoW whereas Purified Terephthalic Acid (PTA) margins tapered off 2% WoW, respectively, while Polyester Staple Fibre (PSF) margins rose by 3% WoW.
On weekly basis, ethylene prices saw sharp correction, down 5% WoW, to stand at USD790/ton. The reported decline is attributable to meager demand interest and weaker pricing in upstream chain. On the other hand, PVC prices were noted at USD870/ton, unchanged for the week. Resultantly, PVC margins stood at USD475/ton, a rise of USD20/ton WoW.
Weekly Purified Terephthalic Acid (PTA) margins have been noted at USD140/ton, a meager decline of 2% WoW from USD140/ton. Paraxylene (PX) prices stood USD10/ton lower WoW to stand at USD775/ton. PTA prices for the week were noted at USD665/ton, a drop of USD10/ton or 2% WoW
On weekly basis, Polyester Staple Fibre (PSF) margins grew by 3% WoW to USD334/ton amid weaker feedstock rates. Mono-Ethylene Glycol (MEG) and PTA came off by 1% and 2%, respectively, while PSF prices stood stable at USD1,111/ton.
We reiterate our buy rating on Engro Polymer Chemicals Limited (EPCL) and Lotte Chemical Pakistan Limited (LOTCHEM) trading at a forward P/E of 6.1x and 5.1x, respectively.
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