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Americas: The week ahead in petrochemicals, w/c July 24

https://www.chemnet.com   Jul 25,2017 Platts
Spot ethylene this month has been hovering near levels seen from Q4 2015 to Q1 2016, according to S&P Global Platts data.


US OLEFINS

With ethylene prices near 15-month lows, buying interest began to pick up late last week as the market prepares for the upcoming wave of derivative startups, sources said. The startup of LyondellBasell subsidiary Equistar Chemicals' 1.134 million mt/year olefins unit in Corpus Christi, Texas, provided some downward pressure last week, sources said.

Propylene has been showing similar upward movements recently. The reason for the climb was unclear, as sources said that propylene continues to rise despite completion of the last remaining PDH turnaround.

Dow Chemical has restarted its 750,000 mt/year PDH unit in Freeport, Texas, following a planned maintenance, sources said. Market participants said the unit was running at reduced rates, with full rates expected in early August. A company spokesman could not be reached for confirmation.

US POLYMERS

Export polyethylene has been talked tight, particularly for high density grades, and there were expectations the market would remain tight in the coming week. Prices have been talked mostly firmer in recent weeks.

Availability for some grades has been limited for much of the month, due in part to an ongoing force majeure by Formosa Plastics. The force majeure will run through the end of July, according to a letter to customers obtained this week by S&P Global Platts.

There were growing expectations that domestic contract pricing would roll over for July. While most producers have announced plans to increase prices by 3 cents/lb in August, Dow Chemical on Wednesday reaffirmed plans to increase HDPE prices by 3 cents/lb for July, while shifting increases for other grades to August.

Sentiment on an August increase was mixed, with a distributor source noting that mostly stable pricing in the generic prime spot market was a good indicator that an increase would be difficult to secure.


LATIN POLYMERS

Buyers in key South American markets could see some softening PE offers after prices from the US firmed in the first half of July. Some traders who were using proposed August PE increases from US producers to prop up higher offers have found demand wane in recent weeks as buyers are content to source smaller volumes locally while waiting for lower import prices, sources said.

In the Brazilian market, Braskem has lowered domestic HDPE film pricing by Real 75-100/mt (around $24-$32/mt) while raising HDPE injection prices by Real 100-150/mt (around $32-$48/mt) this week, a company source said. Prices for all other grades of PE and PP sold in the domestic markets are rolling over, the source said.

Dow Chemical, meanwhile, recently raised pricing by 3 cents/lb ($66/mt) on all grades of PE sold in South America's Andean region, the Caribbean, and in Central America, according to a letter to customers obtained by S&P Global Platts.


US AROMATICS

US aromatics prices posted gains throughout the first half of last week before sharp declines in energy dragged prices lower to finish the week.

Toluene-fed chemical production margins were relatively steady week on week, posting only slight declines, with HDA margins down roughly $6 to $21/mt, while TDP and MSTDP fell about $10 and $1 to close Friday near $110 and $92/mt, respectively.

Operating rates will be key going forward as demand for toluene from the blending segment was likely to soften following a drop in blend values. Blend values were estimated at near 191.50 cents/gal as of close of business Friday.

Extraction margins will also play a role in production as toluene and mixed xylenes finished the week at near 6 and 9 cents/gal premiums to reformate, respectively. Further, prices will be guided by movement in RBOB gasoline.


US BENZENE

US spot benzene values lost ground last week with July DDP finishing 244 cents/gal, down 2 cents week on week as derivative styrene prices weakened.

Brent crude values fell roughly 85 cents week on week to finish at $48.06/b, while WTI prices gained just 27 cents to finish at $45.77/b. Benzene prices saw the most pressure from lower styrene values, which were last heard traded at the end of the week at $1,090/mt FOB USG, down roughly $25 week on week.

Pressure came via improved supply globally following the restart of the Elba's styrene unit at Moerdijk. The benzene-styrene spread fell $21 to near $360.50/mt.


US METHANOL

Recent stable spot pricing should lead to a rollover for August contracts; those prices are likely to be announced this week, sources said.

US spot pricing reached 88.75-89.25/gal FOB USG for July and August on Friday, according to S&P Global Platts data. Spot pricing has increased 2 cents/gal since the final announcement for July posted contract prices on June 28, data showed.

Despite a pickup in trade activity over the past week, market sources continued to talk spot prices flat for July and August.
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