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Americas petrochemicals outlook, w/c May 13

http://www.chemnet.com   May 14,2019 S&P Global Platts
US ethylene trade participants head into the week looking to assess cracker operations following last week's severe weather conditions along the Gulf Coast region. Sources had said Friday that there were a few crackers which had been impacted, but no further confirmation was available. Meanwhile, propylene trade participants said they expected to see April contracts emerge this week. Strong export demand over the past few weeks have pushed spot prices to yearly highs this month, leading some participants to expect increases of 4 cents or higher for the May contract settlement.

Market participants continued to wait for the monthly propylene contracts to settle, as polypropylene spot pricing remained linked to polymer-grade propylene activity. Spot PGP ticked downward a bit late last week, and the recent gains in polypropylene could stall once upstream prices level. Some polypropylene producers have cleared their May inventory, with a majority of customers transacting on a contractual basis to avoid elevated prices.

Latin America expects stable to higher polyethylene pricing compared to last week amid continued China-US tensions, sources said. Earlier, traders had informed of upcoming price increases; however, buyers are taking a wait-and-watch approach, given the volatility stemming from the tariff imposed by the two biggest economies, sources said. Also, Latin America expects stable to higher offers of polypropylene pricing after regional producers increased pricing despite waning demand, sources said. A series of turnarounds in different geographies might keep pricing up for both feedstock and derivative product, sources said.

US export polyvinyl chloride prices were expected to hover in the range of $735-$745/mt FAS Houston this week as market participants await fresh June offers in Asia, which are seen as a bellwether for direction of US pricing. Some small 100-200 mt volumes have been fixed at $750-$760/mt, but were not seen as representative of the market as a whole. However, buyers have sought more incremental volumes since May pricing negotiations settled, often seen as an indication of expectations of higher prices on the horizon. Domestic PVC demand was also seen increasing after being stagnant in March and April, months when demand typically rises ahead of the peak summer construction season. At the same time, the domestic market was mulling a 2-cent/lb price decrease, which would erase the 2-cent/lb price increase accepted in February, bringing prices back to April 2018 levels. Market sources said the small uptick in demand seen in late April could counteract that price decrease and possibly increase export pricing as well by limiting export volume availability.

US benzene prices were expected flat to lower, with an uptick in imports expected in May and June. Some participants expected benzene loadings out of Asia alone to top 100,000 mt in May. This follows an increase in April where an estimated 115,000 mt of benzene landed on US shores. Sources said that demand was steady but that shifts in global styrene pricing could alter trade flows for exporters. After European styrene prices fell last week, Asia has become the highest priced region globally and, accordingly, inquiries were heard from traders looking to move styrene to the Far East. Styrene prices were expected to remain relatively soft. In toluene, prices were expected to continue tracking blend values as chemical demand remained weak. Sources said that STDP units were running at minimal rates as conversion margins were still in negative territory. Toluene's blend value was last estimated at 250 cents/gal. Xylenes were expected to remain relatively soft in the near term amid ongoing weak demand for paraxylene.

The US spot methanol market opened the week following news late Friday that all ITC docks "have been released for use." Logistics have been constrained for nearly two months following a fire at ITC's petrochemical tank farm at Deer Park, Texas. Front- and forward-month spot methanol was last assessed Friday at 97 and 96 cents/gal FOB USG.
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