Ethylene was stable for most of last week as market participants awaited the contract price settlement and following the vacation at the start of the week.
OLEFINS
But downstream demand looks to pick up in May in line with seasonal expectations. Signs of tightness remain in the propylene market on planned turnarounds and light cracking. For butadiene, firm pricing and continuing demand from the US are underpinning the ongoing tightness in Europe's market.
POLYMERS
Polyethylene is currently seen as stable, but bullish sentiment prevails following the rise in upstream ethylene's May contract price. Healthy inventories in Europe could, however, diminish potential price hikes in the short term.
Activity in downstream polypropylene was quiet during the past weeks and market players are expecting it to pick up in May. Spot and contract prices are set to increase following rising propylene contract prices for May.
European PVC producers are set to raise contract pricing for May based on the feedstock increase in ethylene. Buy-side views see margins as healthy enough to absorb the increase, and consumers expect a rollover. Turkish importers are likely to be silent ahead of Ramadan and the Turkish election.
Looking at PET, prices are expected to remain strong and around their current four-year high, as feedstock problems continue and the high season begins.
AROMATICS
European styrene supply is expected to improve with the arrival of imports from the US and good production rates at European units. Downstream polystyrene and acrylonitrile butadiene styrene demand is expected to be firm, following a slow April.
After several weeks in the doldrums, European benzene could shift towards upwards momentum as European consumers work their way through high inventories. Demand has been described as very strong, as nearly all downstream units in Europe are heard to be running or well into their startup phase.
After the May contract settlements at $800/mt, toluene spot fundamentals are finding support from export interest to the US. Meanwhile, MX fundamental remain under pressure from spot demand weakness, with arbitrages shut from Europe.
METHANOL/MTBE
The European methanol market is continuing to see signs of tightness. Tighter availability has been seen in the Mediterranean in particular where sources have seen turnarounds in the Middle East interrupting trade flows.
The MTBE factor to gasoline is expected to remain weak in the near term. Other octane markets are well supplied and can be sent into all gasoline markets, while MTBE cannot. Supply in Europe is also long, with talk focusing on exports of material out of the region.
INTERMEDIATES
Acetic acid: Spot material remains tight, but contract prices are expected to be flat for June. Vinyl acetate monomer: Large amounts of material from Asia are expected to enter the European market in the short term, attempting to deliver to buyers ahead of import quotas filling up.
