Ethylene supplies are lengthening, and the outlook for the rest of the month is bearish.
OLEFINS
All steam crackers in Europe are heard to be running, with Borealis and OMV confirming Friday that their respective facilities in Porvoo, Finland, and Schwechat, Austria, were restarting. Average run rates across the industry were heard to be high and maximizing naphtha as a feedstock. Healthy cracker run rates have also been bearish for propylene and crude C4 prices. The European olefins market has shrugged off rising crude prices.
POLYMERS
With the November styrene contract price settling Eur90/mt lower, activity is expected to pick up in the polystyrene and acrylonitrile butadiene styrene markets. Demand for both GPPS and EPS is expected to be solid in November, with sellers optimistic of boosting margins. European spot polyethylene prices could face further pressure this week as weak demand and bearish sentiment take hold. The market has been characterized as soft in recent weeks as many consumers adopt a "wait and see" approach to purchases.
AROMATICS
Export demand is expected to keep the European benzene market tight. European benzene demand has also been reported as strong amid solid downstream operations. Ample supply in the styrene market is expected to keep prices at bay, although expected turnarounds in Q1 2018 will likely lead to increased buying in that quarter. The xylenes market is seen as well supplied. Exports of orthoxylene, including to the US, have been limited, even as an arbitrage is seen open. Paraxylene prices in Europe are tracking Asia, while mixed xylene is tracking gasoline. Strong crude will underpin toluene prices, although premiums over underlying gasoline values are likely to shrink as demand from blenders and for exports start to dwindle.
METHANOL AND ETHERS
Methanol markets remain bullish, with prices making consistent gains throughout last week. This trend is likely to continue over the coming week as European markets look to close the gap with Asia. In the ethers markets, blending and export demand remain weak despite open arbitrage to the US. High naphtha verse relatively low gasoline prices continue to squeeze blending margins. MTBE's factor also remains under pressure with ongoing declines.
INTERMEDIATES
The monoethylene glycol market remains balanced this week with prices likely to remain stable. While PET demand has dropped off heading into the winter months, a marginal uptick in demand from the antifreeze industry has given traders and producers hope that dramatic declines in spot prices are avoidable as material remains available. Eastman's acetic acid plant in the US will remain offline until the end of the year, and the US is sucking in material from other regions. This could push prices higher this week.
SOLVENTS
Acetone and phenol tightness will remain the main talking point of the oxy solvent markets in the coming week. Coinciding production issues at several key producers has caused a shortage of European spot acetone and phenol. Acetone imports continue, by and large, to compensate for the European shortfall. Shell's outage at Pernis, the Netherlands, is likely to keep hexane supplies snug this week, while demand should start picking up as the olive oil extraction season gains pace.
