Olefins markets are likely to post further increases this week as supplies tighten amid production constraints in the Netherlands.
OLEFINS
Shell's Pernis refinery is expected to remain idle at least until the end of this week, while the company's Moerdijk steam cracker will operate at lower run rates amid reduced naphtha supplies from Pernis.
The spike in prices and the remaining force majeure on supplies of propylene and ethylene will keep the arbitrage window into Europe open, inviting resupply from other regions.
Butadiene is the only olefin which seems to be shrugging off the Pernis/Moerdijk issues.
AROMATICS
Key aromatics markets are expected to remain well-supplied this week. Reduced run rates at the Ellba POSM plant in Moerdijk are keeping demand for benzene subdued. On the flip side, styrene prompt supply will be tight, even though LyondellBasell and Covestro are said to delay the turnaround at Maasvlakte POSM unit to later in Q3.
Xylenes and toluene are likely to remain relatively weak amid a summer lull in demand from the chemical and distribution segments. Some upside is possible amid global production outages, which include GS Caltex's Yeosu reformer in South Korea and Citgo's Lake Charles refinery in Louisiana.
This week traders will also evaluate the Indian OMPL's 10,000 mt MX buy tender, as European MX remains competitive versus supplies from Korea.
POLYMERS
There is upside potential in various polymers this week. Propylene restrictions could prove bullish for polypropylene prices in Europe.
Feedstock constraints occur at the same time as Sabic shuts one of its copolymer lines at Geleen and ahead of several cracker turnarounds in Europe.
European polyethylene terephthalate demand remains firm as traders and converters continue to stock up. Despite a relatively soft demand, cheap polyethylene has become difficult to source and traders already look towards September for potential price movement.
Shin-Etsu's force majeure declaration on K67 polyvinyl chloride grade produced at its plant in Pernis, is expected to add bullishness to the otherwise lethargic PVC market.
Acrylonitrile butadiene styrene prices are expected to hold up too, as sellers attempt to grow margins in August on reported strength in demand. Downside is more likely in polystyrene and styrene butadiene rubber, where feedstock decreases are yet to be passed down the chain.
METHANOL, MTBE
Methanol market is likely to face downward pressure amid good supplies, seasonal summer decline in activity and strengthening euro against the dollar.
Diversion of ethylene cargoes from the Middle East away from Asia and to Europe, might also lend support to Asian olefins and improve the MTO economics in the region. However, Asian methanol prices will likely have a minimal effect on Europe for now.
The MTBE factor continues to hover around 18-month highs as markets assess the extent of the impact of Shell's Pernis production issues.
SOLVENTS, INTERMEDIATES
Acetone and butac are facing downward pressure due to imports and summer seasonality. Solvent naphtha, MEK and IPA face further tightness following Shell's declaration of a force majeure last week.
Recent expansion of the Indorama's purified terephthalic acid Rotterdam capacity will continue to keep the European acetic acid market in balance.
OTHER
The euro is trading near the highest levels since early 2015, and this could hamper Europe's ability to export petrochemicals to other regions.
Crude oil has again recovered to above the $50/b mark. Earnings season continuesthis week, with DSM, Borealis, Lanxess and OMV scheduled to announce their results for the second quarter.
