Americas: The week ahead in petrochemicals
http://www.chemnet.com May 17,2017 PlattsThis week's outlook for petrochemical products in the Americas:
US toluene prices gained ground last week as energy and RBOB lent support. Spot toluene traded as high as 220 cents/gal, up about 7 cents from earlier in the week, and these higher numbers were crunching TDP/MSTDP margins as benzene continued to stagnate and xylenes rose at a slower clip than toluene.
According to S&P Global Platts estimates, TDP margins are barely in positive territory while MSTDP are stronger, near $32/mt, but still down near $30 from a week ago.
If margins continue to weaken, operators are likely to cut rates, thus tightening the market. Margins could rebound though if a recent increased interest in moving styrene out of the US proves sustainable and lends support to benzene pricing.
Additionally, margins could see support from an open Europe-US toluene arbitrage window and increased imports, or via sustained interest in paraxylene exports.
Mixed xylenes prices rose about 3 cents last week to finish at 213 cents/gal. Prices were at a 6-cent discount to Platts' estimated blend value, which should improve octane demand. However, if MX proves uncompetitive as a blendstock, prices could drop, increasing the PX-MX spread and lending support to PX exports.
Prompt-month ethylene could see stable-to-lower pricing this week amid expectations for cracker restarts in the US Gulf Coast.
Dow's 682,000 mt/year Light Hydrocracker Unit No. 7 in Freeport, Texas, and DuPont's 680,000 steam cracker in Orange, Texas, are expected to begin production this week.
Propylene's outlook is continued to be talked bearish, with contracts for May deliveries settling down 7.5 cents Friday to 38.5 cents/lb for polymer-grade propylene and 37 cents/lb for chemical-grade propylene, sources said.
The settlement fell within market expectations, which recently called for a decrease of 6-8 cents/lb, sources said.
US FAS Houston polyethylene prices saw additional decreases over the past week, with export market participants heard continuing to push for additional declines.
Domestic buyers also could be poised to seek lower pricing in May, particularly after preliminary industry data released last week showed declines in sales and corresponding inventory builds for April.
Market sentiment was mixed about potential domestic price decrease for the month, with some sources noting less movement in domestic spot pricing and stock levels that were still in line with historical averages.
Polypropylene prices could be poised for decreases after feedstock ethylene prices settled 7.5 cents/lb lower last week, sources said.
Market participants were paying close attention to export availability and pricing, with sources noting slower demand and strong competition in key export destinations.
Buyers will likely continue to see competitive offers for polypropylene and polyethylene imported from key global regions such as the US and Asia, sources have said, adding that demand in Latin America will remain low until a pricing floor is reached.
In Brazil, domestic demand is also likely to be slower due to recent price cuts by regional producer Braskem, who also cited softening global pricing when adjusting May prices for PE and PP. Polypropylene sellers in the region have taken note of declining import pricing and monomer pricing.
Pricing along the Pacific Coast of South America fell for the fifth consecutive week and the assessment has dropped $105 since reaching $1,225/mt CFR basis on April 5, according to Platts data.
Celanese is expected to start up the 1.3 million mt/year Celanese/Mitsui plant in Clear Lake, Texas, by the end of the week, market sources said.
Last week, Celanese had two unexpected process issues during startup on Saturday and Tuesday, according to filings with state regulators.
Market participants were paying close attention, monitoring any potential impact on the spot market, as well as production for downstream acetic acid, a source said.
The spot market has seen increased activity amid the production issues, with trade activity particularly strong Friday.