Bullish sentiment persists in the ethylene market as the energy complex holds strong, while the supply front remains slim. Propylene fundamentals have eased in the second half of September, as European production has caught up with shortages seen in August and early September.
OLEFINS
The contract price for October will settle this week, with expectations of a moderate increase in the range of Eur10-20/mt. Butadiene is expected to remain firm following the recent ascent in Asian prices, while spot material in Europe remains tight.
AROMATICS
The benzene market is set to remain in a contango as prompt demand weakness persists amid downstream plant outages. But with the drop in prices Friday, it remains to be seen whether the October contract price settles higher at the end of this week. The supply front stands dry on toluene and mixed xylenes following heavy exports to the US in previous weeks.
Meanwhile, buyers hold back anticipating spot prices to weaken ahead. Paraxylene and orthoxylene demand is expected to remain at odds as supplies are heard to continue lengthening in Europe. Tightness in the prompt styrene market is expected to ease as imports from the US are scheduled to arrive in early October.
In addition, force majeure declarations by several polystyrene producers, due to railway issues linking northwestern and southern Europe, will lead to additional supply of styrene within Europe.
POLYMERS
The polyethylene market sentiment remains bullish, taking direction from the strength in feedstock ethylene prices, while the demand front also stands healthy. Expectations of polypropylene exports to the US from Europe have somewhat dwindled, as successful plant restarts across the Atlantic kept US spot prices well below levels needed to work the arbitrage.
This has also limited the upside potential for European prices. Polystyrene buyers are faced with the prospects of additional freight costs due to railway issues linking northwestern and southern Europe. Together with tightness in supply, this could pressure PS prices higher.
Styrene-butadiene rubber prices are expected to remain boosted by feedstock butadiene. Polyethylene terephthalate supplies remain tight in Europe as supply-demand imbalances continue. The current situation in Europe is expected to hold until October, when imports are set to arrive.
The polyvinyl chloride market remains balanced, albeit Turkey having surged this month following the seasonal pick-up in demand after the holiday period, and with Middle Eastern sellers favoring Asian netbacks.
METHANOL AND MTBE
European methanol markets remained at a discount to Asia, albeit a correction in prices to bring the two regions within parity is expected as Asian prices continue to shed recent gains. The becalmed MTBE markets will look to once again find some direction, as arbitrage opportunities remain closed.
INTERMEDIATES
The vinyl acetate monomer market is expected to remain tight in Europe, with supplies remaining curtailed in the aftermath of Hurricane Harvey. Monoethylene glycol imports were also disrupted by Hurricane Harvey, and with firm demand met and limited molecule availability interact, European prices will likely see an increase heading into the fourth quarter.
