What to expect in the coming week in Americas petrochemicals in olefins, benzene and styene, aromatics, PVC, polyethylene, polypropylene and polymers.
US OLEFINS
US propylene market participants enter the week awaiting the settlement of June propylene contract pricing, with expectations of increases heard at a range of 6-10 cents, with most sources leaning towards the lower end of that range. The May propylene contract settled 5 cents higher than April at 51 cents/lb for PGP and 49.50 cents/lb for CGP. US spot prompt polymer-grade propylene was last assessed Friday at 55.75-56.25 cents/lb FD USG, unchanged from Thursday and up 0.25 cent on the week. US spot refinery-grade propylene was assessed at 44.75-45.25 cents/lb FD USG, up 2 cents on the day, 1 cent on the week. Trade activity has been limited for RGP with product scarce despite the summer driving season, which typically sees increased supply length, sources said. US refinery interests have seen multiple FCC turnarounds in June, most notably ExxonMobil's 560,000 b/d refinery in Baytown, which is expected to remain down for 40-45 days. In ethylene, market participants continue to monitor major capacities that are slated to come online in the coming weeks to add length to an already long market, specifically ExxonMobil's new 1.5 million mt/yr Baytown, Texas, steam cracker, The cracker is expected to begin feeding as early as late June, market sources have said, with the company confirming last week that the plant remains in the commissioning phase and expects production to begin this summer. June contracts have not been been settled, however one market source expects at least a 1-cent increase from May. US ethylene for prompt-month delivery was assessed Friday at 12.75-13.25 cents/lb FD USG, up 0.25 cent on the week and 0.125 cent on the day.
US BENZENE & STYRENE
US spot benzene prices finished the week on strong note, bolstered by sizable gains in crude values. Prompt spot barrels on a DDP basis finished the week at 286 cents/gal, up 4 cents on the week. Prices had been stagnant in the low-280's cents before moving higher to finish the week. Looking ahead it was expected that prices could sustain some strength as sources awaited the settlement of the July benzene contract in the US, which was expected to move lower from the June settlement of 299 cents/gal. Sources pointed to ample supply and weaker derivative demand as justification for a downward adjustment however noted that the contract is settled on an average of traded barrels which could impact the settlement. Sources said that demand from styrene was lackluster with at least one producer heard selling benzene barrels into the market. The additional supply could be offset somewhat from weak disproportionation margins, which have been mostly negative throughout June suggesting that units are running at very low rates, if at all. One producer was seen selling toluene late last week, an indication that its disproportionation unit could be shut. Styrene prices were slightly lower on the week and continued to face downward pressure, particularly following increased anti-dumping duties by the Chinese government on US styrene. The increase puts dutiable levels at 13.7% for Westlake and 13.9% for LyondellBasell, Americas Styrenics and Ineos Styrolution. All other US companies will pay a 55.7% duty. Initial dutiable levels were between 9.2 and 10.7%. The measures will take effect on June 23 and will remain in place for five years. Styrene margins finished the week lower at near $320/mt.
US AROMATICS
Market sources said MX should rebound moving into July and August, citing an expected increase in demand from the downstream PX market following the restart of BP's Texas City unit earlier this month. MX spot levels dropped below the 260 cents/gal level last week, a two-month low, based on thin demand, ample supply and weaker energy futures. Further downstream, sources said they expect downward pricing pressure on PX prices down as more product is expected to come back into the market following BP's restart. PX producers appeared to only be making enough to meet contractual volumes. With BP's restart and a force majeure on purified terephthalic acid (PTA) in the US, PX should be well supplied, according to market participants. Also, with PX units operating properly and MSTDP?s with positive margins recently, one trader noted that there could be a temporary arbitrage window to Mexico or Brazil.
US PVC
July pricing talks were expected to begin in earnest this week between US polyvinyl chloride producers and buyers amid tight export volume availability and soft demand in some key global markets. Market participants initially expected June US export PVC pricing to rise as high as $860/mt FAS Houston, up $50/mt from the May settlement, as prices rose more than 4% throughout May to last week?s assessed range of $840-$850/mt FAS Houston. However, lukewarm demand in the Middle East and North Africa after Ramadan and ahead of the monsoon season in India, on top of rising freight costs for both trucks and vessels, has deflated that momentum. A producer was heard to be offering July volumes at $850/mt FAS Houston last week, leaving some buyers uninterested. At least one deal was done in the last two weeks at $830/mt FAS Houston, while other business was conducted in last week's assessed range. However, producers say they have little pressure to export given strong domestic demand and tight supply. Formosa Plastics' ongoing planned work at its Point Comfort, Texas, facility is expected to stretch into the first or second week of July, and Westlake Chemical was ramping up production at its Plaquemine, Louisiana, complex after finishing maintenance. Upstream, ethylene dichloride pricing could rise as well amid limited export volume availability that left Olin the only producer able to bid on a late May tender from Brazil's Braskem for 13,000dmt that Braskem eschewed, deeming Olin's offer of $300/mt FOB USG too high.
US PE
Export market sources were keeping a close eye on global markets after pricing for some grades recently saw some reduction amid improved availability. Linear low-density butene, in particular, faced downward pressure as supply was heard ample, according to market sources, and low density polyethylene was feeling the impact of weaker global pricing. In the domestic market, ExxonMobil Chemical will seek a 3 cents/lb increase for June domestic polyethylene pricing, the company confirmed in a letter to customers obtained by S&P Global Platts on Friday. The roughly $66/mt hike applies to all high-density, low-density, linear low-density, Enable, Exceed and Exceed XP PE resins and would be effective June 1, ExxonMobil said in the letter, which served as confirmation of increase notification first issued February 2. Platts last assessed domestic PE contract pricing Wednesday unchanged to May, based on market feedback suggesting stable pricing for the period as buyers pushed for further decreases to those seen in May in the HDPE and LLDPE markets. A market source said some price concessions were still being seen, though settlements were likely to be mixed depending on grade and customer.
US PP
Market players continued to monitor upstream propylene contract prices, with some polymer participants suggesting gains of 6-7 cents/lb ($132-$154/mt) were possible for monomer-plus buyers. Even with upward pressure on pricing, domestic demand remains strong with availability limited due to production issues at multiple US locations. Spot activity is limited, with some talk of spot prices in the low 70s cents/lb range for rail cars on an ex-Houston basis and in the mid-70s cents/lb range for rail cars in the Chicago area. Exports were virtually non-existent, with market sources saying there was little incentive to price cars below domestic spot levels, which do not work in global markets.
LATIN POLYMERS
Buyers in key South American markets entered the week looking for signs of lower US-origin polyethylene offers tied to improved availability, while eyeing Asian polypropylene buying interest in the face of firm pricing, sources said. A recent widening in the gap between low-density PE and linear-LDPE -- often mixed by converters producing film goods -- has driven up demand for LLDPE while hurting it for LDPE. Many PE buyers have spent recent weeks looking for signs that LDPE pricing will start inching toward LLDPE rates, looking to skew mixtures to a more LDPE-heavy formula that produces a more-desirable film product, sources have said. On the PP front, pricing has been trending higher on more expensive feedstocks, leaving buyers monitoring the propylene market for any signs of a price correction to come. In Argentina, polymers buyers could continue to sell off product available as exports to Brazil have risen in line with weakening by the Argentinian peso in June, sources said. Brazilian polymer buyers could see availability improve this week as the country continues to slowly recover from a 10-day independent trucker strike that paralyzed logistics in late May and early June, with retail centers and gasoline stations particularly impacted. Additionally, Braskem enters this week with production restored to full levels after the strike led to a 50% reduction in output, the company said.
