Market participants are awaiting the settlement of September propylene contract, which is expected to settle this week, with market expectations calling for an increase of 5-7 cents/lb.
OLEFINS
August polymer-grade contracts settled at 39.5 cents/lb and chemical grade at 38 cents/lb. Spot PGP has hovered in the range of 45-46 cents/lb FD USG for most of last week and was last assessed Friday at 45.5 cents/lb FD USG. Meanwhile, the market is closely monitoring upcoming steam cracker and polyethylene startups after spot ethylene pricing receded a bit at the end of last week after hitting a seven-month high.
Dow Chemical was the first company that started up its new ethane cracker in Freeport, Texas. It adds to downstream startups last week in the first wave of major petrochemical projects to emerge from the US natural gas boom. The company on Thursday announced the startup of a 1.5 million mt/year cracker and a 400,000 mt/year PE plant at its complex in Freeport.
Chevron Phillips now expects to finish construction on its new 1.5 million mt/year steam cracker near Houston in the first quarter next year, followed by ramp-up to full production in the second quarter, the company said last week.
CP Chem had expected to finish construction in the fourth quarter this year and reach full rates in Q1 2018, but severe flooding caused by Hurricane Harvey late last month quashed those plans.
Ethylene contracts had not settled for August or September as of early Monday. Market expectations for August contracts call for an increase of 2-2.5 cents/lb and for September for an increase of 2-3 cents/lb, sources said.
Butadiene market participants will be looking for additional producer contract price announcements for October, following two initial announcements from ExxonMobil Chemicals and TPC Group last week. ExxonMobil Chemicals and TPC Group nominated their respective October butadiene contract prices at 57 and 52 cents/lb each,respectively, up 15 cents and 10 cents from their September contract prices of 42 cents/lb, sources confirmed Friday.
The other two major producers -- LyondellBasell and Shell Chemicals -- have not yet announced a nomination for October, sources said. The companies did not immediately respond to a request for comment.
US spot butadiene continued its upward momentum through the week ended Friday, soaring 9.50 cents/lb ($209.44/mt), as contract announcements and pricing in other regions pulled up the market's notional levels. The CIF USG marker was assessed at 54-55 cents/lb ($1,190-$1,212/mt).
POLYMERS
US prices continue to face additional upward pressure in the wake of continued tightness and strong domestic demand, with some producers announcing additional October increases on top of those previously announced for August and September, according to multiple customer letters obtained by S&P Global Platts.
Some US producers -- including CP Chem, ExxonMobil, Equistar Chemicals and Dow Chemicals -- are pushing to raise US PE contract prices by an additional 4 cents/lb in September after producers implemented a market-wide 3-cent increase in August. Market sources have suggested the September increase is very likely to be implemented, though a second increase for October would likely be more difficult to secure.
Spot resin remains elusive, particularly for export, with trader sources pointing to secondary market deals for bulk rail cars in the low 60 cents/lb for some grades. There were expectations producers offering export resin in October would seek significant increases, particularly during the first part of the month. There were expectations exports would likely pick up in November and December, with multiple market participants saying the typical year-end export activity would again be strong, due in part to the start up of new units.
Chevron Phillips Chemical said last week that is has completed commissioning and begun startup of its two new polyethylene units at Old Ocean, Texas. Each will produce up to 500,000 mt/year of polyethylene resins ranging from metallocene linear low-density polyethylene film to high density bi-modal film and pipe grades.
ExxonMobil is undergoing startup activities for its new 1.3 million mt/year Mont Belvieu, Texas, PE plants, a company spokesman said Wednesday, noting that the units did not sustain damage during Hurricane Harvey.
Dow Chemical also said last week that it had started a new 1.5 million mt/year cracker and a 400,000 mt/year PE plant at its complex in Freeport, Texas.
METHANOL
Market activity gained some traction last week as trading activity picked up as prices continue to soften to pre-Harvey levels.
The 1.3 million/mt year Celanese/Mitsui methanol plant in Clear Lake, Texas, restarted late last week, including its downstream derivative units, Celanese said.
Market participants are awaiting October contract announcements, due out later this week from US producers Methanex and Southern Chemical Corp.
AROMATICS
Prompt DDP spot benzene prices gained 3 cents last week to finish Friday at 271 cents/gal, gaining during the week to reach as high as 277 cents/gal before scaling back Friday.
Prices continued to see support from stronger downstream styrene, where October styrene was heard traded last week as high as $1,270/mt FOB USG. The prompt, spot styrene-benzene spread finished the week at $534/mt, according to Platts data, and styrene margins were estimated at near $437/mt.
US styrene supply was characterized as snug as sellers looked to take advantage of higher prices overseas. Asia continued to provide the best netback, however, it showed signs of weakening, with November CFR China prices falling $21 Monday to finish at $1,327/mt.
US September spot toluene prices fell 1 cent last week to close at 238 cents/gal FOB USG while prompt mixed xylene prices were assessed up 1 cent on the week to 242 cents/gal FOB USG. Prices continued to face pressure as blend values fell sharply following sharp gains seen after Hurricane Harvey.
Toluene's blend value fell roughly 27 cents to finish the week estimated at 211.42 cents/gal. The declines were driven by a drop in regrade values, which narrowed over 8 cents to finish at 11.80 cents.
Toluene and mixed xylenes spread to reformate widened on the week as reformate fell, and spreads were estimated at 24.18 and 28.18 cents/gal, respectively.
