Ethylene and propylene supplies in Europe are expected to remain long this week even as a few crackers that were set to restart in mid-November after more than month-long maintenance works are expected to delay their restarts or run at low rates.
OLEFINS
Length accumulation is seen particularly strong on the coasts for olefins. The butadiene market is closely watching developments in Asia, following a slight uptick in pricing last week. However, European market participants have questioned whether downstream demand and current availability in Asia will allow the uptick to continue.
POLYMERS
Unlike the ethylene market, supply of downstream polyethylene is tightening as transport along the Rhine remains difficult. Despite a small drop in November feedstock costs, polypropylene prices are set to remain stable this week, amid healthier demand.
Meanwhile, market participants continue to discuss contract prices for November. Polystyrene contract negotiations also continue this week amid rising demand in November.
Producers expect to settle at a decrease but in order to recover margins they hope to limit the decrease passed through from the decline in styrene monomer this month.
Converters, however, are prepared to wait and negotiate further decreases. In the ABS market, bearish sentiment is also set to continue amid lower feedstock costs. Acrylonitrile, butadiene and styrene contracts fell this month.
Recycled PET spot prices have remained resilient despite declines in the virgin PET market. Recyclers are confident that demand is strong and order books healthy, while those in the virgin market predict further falls.
AROMATICS
This week is expected to see little change to the direction of benzene. Demand has been weak, leaving direction to be set by upstream energy movements. Some demand from consumers in Germany is expected, but this is due the difficulty of replacing in the spot market deliveries curtailed by low Rhine levels.
Weak styrene sentiment is set to stay this week, a downtrend in place since early September. Prices fell $76/mt last week to $990/mt, the lowest since October 2016, with further losses predicted.
Global demand for toluene has been weak, with little change expected this week. Supply in Europe is strong in areas of liquid transportation, though pockets of demand are expected from buyers affected by logistical issues on the Rhine. This could trigger upward momentum for the premium in an otherwise dead market.
MX widened its backwardated structure last week, with November-December at a $10 backwardation as a lengthening of supply is expected in northwest Europe in early December.
The market will be watching whether Rhine levels rise enough for the market to gain access to this longer supply and whether premiums will continue to fall in December.
Lagging PTA and polyester yarn demand in Asia has fueled declines in the European PX market. If buyers stay out of the Asian market again next week, we could see further falls in European PX.
METHANOL/MTBE
The European methanol market has become increasingly bearish, influenced by negative sentiment from the Asian markets, while spot market activity remains hindered by low Rhine levels.
The outright price of European MTBE is expected to continue last week's decline as energy markets weaken.
Logistical issues on the Rhine drove the relationship over gasoline to an eight-month high, but Eurobob prices are on a two-week steep decline.
