US ethylene contract prices settled last week up 2 cents to 31.25 cents/lb ($689/mt) for August deliveries and an additional 4-cent increase to 35.25 cents/lb ($777/mt) for September deliveries, market sources said.
US OLEFINS
The 2-cent August increase was within market expectations, which recently called for an increase of 2-2.5 cents from July. The September increase of 4 cents, however, was above recent market expectations for an increase of 2-3 cents, sources said. Those expectations were driven by tightness in the spot market after Hurricane Harvey affected more than 60% of US ethylene capacity in late August, sources said.
US POLYETHYLENE
Demand remained strong in the US, leading to additional expectations that producers could implement a third consecutive monthly increase in October.
Multiple producers have announced mid-month hikes of 3 cents/lb after raising prices in August (3 cents/lb) and September (4 cents/lb). With spot cargoes in the domestic market maintaining strong premiums over export prices, sources noted domestic increases stand a good chance of being implemented.
Some market players, however, questioned how long producers will be able to maintain higher prices -- potentially 10 cents/lb above pre-Hurricane Harvey levels -- once the market returns to normal and the impact of new capacity in the US Gulf is seen.
Export availability has been limited primarily to allocations from producers to traders with existing relationships, as any available spot resin was being routed into the domestic market, sources said. Traders who have managed to secure resin noted that pricing was not workable to most key export destinations, with only some spots in Latin America willing to take on PE from the US at current prices, and virtually no chance of moving resin to Asia or Africa.
There were indications the export market will remain slow throughout October and into early November, with expectations that typical year-end export activity would be seen during the second half of the fourth quarter.
US PVC
US export polyvinyl chloride prices declined $20 last week, with a producer settling at $875/mt FAS Houston, a source said.
Multiple traders, meanwhile, regarded that export price as too high while pointing to tight domestic supply as a factor enticing producers to stay out of the export market.
Asian PVC and EDC/VCM activity was light last week amid Golden Week holidays in China and weak Indian demand as monsoon season wraps up, so traders said they would be watching for stronger appetites for US imports this week.
METHANOL
In the weeks following October North American contract announcement nominations (Methanex: 119 cents/gal ($396/mt) FOB USG, SCC 114 cents/gal ($380/mt) FOB USG), spot prices have stabilized in the low 90s cents/gal.
Trading activity was thin last week, with a limited number of deals heard done, while several offers were heard through the week with only a few bids found. Market participants said prices are expected to remain flat to slightly lower through October.
LATIN POLYMERS
Import prices for key South American markets were expected to hold steady at $940-$950/mt CFR WCSA and $960-$970/mt CFR Brazil, sources said.
US-origin product is likely to remain the preference for importers along South America's Pacific Coast, sources said, adding that Brazilian buyers are likely to continue turning to Europe for imports.
PE buyers, meanwhile, will continue to monitor availability from the US, where the effects of Hurricane Harvey are still being felt by producers and traders alike. With US-origin resin hard to come by and rapidly rising in prices, South American importers have instead been sourcing smaller volumes from regional producers while awaiting a price correction in the US.
Offers for Asian PE could decrease in frequency this week with China buyers returning from last week's holiday hiatus, sources said.
Brazil's Braskem will maintain stable prices on PE and PP sold in the domestic markets, a company source said.
