High run rates at all European crackers are expected to exacerbate the length in all olefins markets this week.
OLEFINS
High run rates at all European crackers are expected to exacerbate the length in all olefins markets this week. Ethylene traders are looking for outlets in Asia in order to manage the region's inventories, with at least two vessels already fixed.
Crackers will continue maximizing naphtha cracking as alternative, lighter, feedstock prices are underpinned by heating demand. This will mean that there will be a healthy production of co-products, such as propylene, butadiene and pygas.
Butadiene prices had already fallen to a 17-month low last week amid an overhang. Firmer naphtha and falling ethylene prices will continue squeezing producers' margins. Some are, however, hopeful that December contract price negotiations, which start this week, would bring some relief.
POLYMERS
Uncertainty over the direction of crude oil prices going into December and then into the new year is sending mixed signals to downstream polymer markets.
Usual for this time of the year, destocking has begun in some markets, such as polyethylene and PVC, and this is likely to exert further pressure on prices. However, in other markets, for example, polystyrene, consumers and traders feel that pre-buying could be a wiser strategy as they expect feedstock prices to rise next month.
AROMATICS
The European benzene market will continue borrowing strength from the US this week, as the West-bound arbitrage remains open. However, anticipated restarts of refineries in the US and arrival of imports from other regions in December will likely cool off the US market soon and Europe will likely follow suite.
In the meantime, the HDA conversion margins have flipped into black territory, but this is likely to be short-lived.
Strong spot demand for toluene and mixed xylenes resurfaced at the end of last week, but it remains to be seen if this will continue. Despite limited imports to Europe, the region's styrene market is expected to be balanced.
Prices would likely be supported by firm sentiment in the feedstock market.
METHANOL AND MTBE
Several methanol traders are looking for product as inventories in Rotterdam remain low, and this could provide some upside.
The recent re-closure of the arbitrage to the US chocked off a key export avenue for European MTBE. Despite the MTBE factor marginally gaining over the last week, it continues to hover around an all-time low.
SOLVENTS AND INTERMEDIATES
Uncertainty over caustic soda availability in late November and early December have kept prices at their highest levels since March 2009.
AkzoNobel's Ibbenburen chlorine plant in Germany closed on November 1 in preparation for the start-up of a new facility, while the Czech Republic-based Spolana's existing chlorine facility in Neratovice is set to close on November 30.
The acetone market will see some relief this week now that Versalis has lifted its force majeure, which was declared around a month ago after a fire.
OTHERS
France's CGT labor union called for a 24-hour strike in the petroleum and petrochemical sector on Thursday, however, it could be canceled if an agreement is reached before then.
Russia's Ministry of Energy is expected to publish an updated version of the country's plan for the development of the gasochemical and petrochemical industry until 2030 on Monday. The plan is unlikely to include any major regulatory changes, which could affect the configuration of the petrochemical markets in Russia.
