Europe's ethylene market is balanced in advance of the settlement of the monthly contract price for February. Most market players expect an increase in the CP despite the cost of feedstock naphtha remaining close to flat throughout January.
OLEFINS
A disruption at Dow's Boehlen cracker in Germany has added tightness, with few deals reported in a quiet spot market.
Propylene is expected to remain tight in the first quarter amid reports of light cracking and solid derivative offtake.
With the February butadiene CP settling at an increase for February and spot prices for both domestic and import deals rising amid buoyant demand, sellers appear to be confident.
Market players will be watching availability closely as the market moves into February as some have predicted a reduction in availability.
AROMATICS
The February benzene CP is expected to fall from January's level, as an ever lengthening spot market on downstream outages and closed arbitrages has piled pressure on spot prices.
Crude oil and gasoline prices have lent support to toluene, rendering the economics of converting toluene into benzene unattractive in Europe.
The Amsterdam-Rotterdam-Antwerp market could lengthen in the first days of February as imports from southern Europe were heard to be offered into the spot market.
It remains to be seen whether there are any MX exports out of Europe, as the trans-Atlantic arbitrage remains open on paper.
After a full settlement of the PX January European CP at Eur795/mt, market participants are now keeping an eye out for developments in the PX February Asian CP negotiations.
The February styrene CP is expected to settle this week and expectations are bullish. Turnarounds in all regions are expected to keep supply tight in February.
The polystyrene and ABS industry will be concluding January contracts this week.
Lackluster demand for GPPS in January has meant seller margins are unlikely to grow in January. In ABS, rising Asian prices have limited import competition from Asia.
POLYMERS
Sentiment in the polyethylene market is stable, with few price changes in recent weeks. Supplies are reported to be readily available, with January buying not as strong as many had expected.
The Asian price surge of recent weeks is keeping European prices steady, despite abundant supplies.
PP demand is expected to remain solid amid concerns of tight propylene supply.
PET market participants are eyeing feedstocks as they continue to support the spot in the low-demand season.
Virgin demand is expected to see some bullish sentiment in Asia amid a Chinese ban on waste plastics. This could in turn also drive EU prices higher.
European PVC markets are set to feel upward pressure in the coming week and just ahead of February amid expectations of higher feedstock prices and wide spreads.
The Turkish markets are likely to remain stable to tight as numerous production issues are offset by the seasonal demand slowdown.
SBR participants will continue to keep an eye on feedstock butadiene this week as well as Asian demand.
Amid large pre-buying reported ahead of the Lunar New Year, demand for EU products takes a hit, although demand is expected to pick up post-Lunar New Year.
METHANOL AND MTBE
Sentiment for the European methanol market moving into February has been positive and seems likely to shore up fundamentals in the week ahead.
The Asian market has cooled somewhat as Lunar New Year approaches and business will likely remain minimal in China until late February.
March numbers for EU methanol show some signs of backwardation over February, but this is likely a result of liquid trading as there has been no strong evidence for a market downturn.
Tight supply in Saudi Arabia and the US has kept global outlook buoyant.
European MTBE markets are likely to face ongoing upward pressure in the coming week amid improved gasoline demand from Latin America.
Wider naphtha and gasoline margins have also helped to support the rising MTBE factor over gasoline.
INTERMEDIATES
The MEG market is balanced after consecutive price increases in recent weeks on strong demand for both anti-freeze and PET.
Some players are expecting an increase in the cost of feedstock ethylene when its monthly contract settles, to be passed down to MEG.
Caustic soda demand remains healthy in Europe, with prices continuing to trend at their highest level since March 2009.
European AA/VAM markets remain stable as the low Q1 demand cancels out the relative shortfall of available product.
Rising Asian prices continue to mean imports into Europe will remain limited.
