US OLEFINS
US November propylene contract prices are expected to be finalized this week, ahead of the Thanksgiving holiday, a trade source said. Market participants anticipate the November contract price will settle 2-3 cents/lb below last month's. Lower spot polymer-grade propylene pricing is also anticipated because of year-end selling by producers. For spot ethylene, the market structure is backwardated, with December trailing 0.5 cents/lb behind November.
US POLYMERS
US export polyethylene pricing was expected to be stable to lower this week as the market faces continued sluggish demand and four new PE plants with a cumulative 1.77 million mt/year of capacity slated to come online by December 31. Sasol's new 420,000 mt/year low density polyethylene plant in Lake Charles, Louisiana, had been slated to start up in November, but the company's latest update slackened that expectation to the fourth quarter of 2019, allowing for a December startup. LyondellBasell's Hyperzone 550,000 high density polyethylene plant in La Porte, Texas, is expected to start up in December and ramp up in the first quarter of 2020, CEO Bob Patel said in October. Formosa Plastics' 400,000 mt/year LDPE and 400,000 mt/year HDPE/linear low density polyethylene plants in Point Comfort, Texas, remain slated to start up by year-end at the company's Point Comfort, Texas, complex. US polypropylene market participants are keeping a watchful eye on feedstock polymer-grade propylene prices as declines in PGP will continue to apply pressure to spot PP pricing. Sources see a stalemate between producers and processors, with the former attempting to maintain profitable 15-cent spreads between PGP and PP during 2020 contract negotiations, while the latter appear content to remain on the sidelines with the potential to dip into the spot market to take advantage of falling prices.
LATIN POLYMERS
Brazilian PE and PP prices are expected to remain under pressure from international suppliers this week, especially the US in HDPE markets and the Middle East and Asia for PP. In the past week, PE and PP prices fell alongside their US and Asian counterparts. Braskem left its prices unchanged for delivered material. On the West Coast of South America, spot import PE prices are expected to continue to be driven by US and Asian prices after four consecutive weeks with $10-$20/mt average falls. Traders expect international prices to remain under pressure, and as a result see decreases in regional HDPE and PP prices, with stability for LDPE and LLDPE. Most prices are at their lowest level since S&P Global Platts began assessing the WCSA PE and PP market in June 2010.
US VINYLS
US export polyvinyl chloride prices were expected to remain in a range of $730-$740/mt FAS Houston this week, the range in which producers settled November pricing, though reduced December offers in Asia last week could add pressure in the US before next month's pricing talks begin. Market sources have been divided on pricing direction, with some seeing $730-$740/mt FAS Houston as the bottom of the current cycle, while others see more room for declines amid rising freight rates and continued sluggish global demand. Despite Shintech's ongoing turnaround at its Plaquemine, Louisiana, complex, market participants expected producers to have export volume availability.
US AROMATICS
US aromatics markets are unlikely to see a significant change in fundamentals this week as prices will continue to face pressure for the most part. Benzene is not expected to see significant support from styrene as demand along the styrenics chains remains subdued and styrene arbitrage opportunities out of the US Gulf Coast are limited. Continued weakness in styrene pricing has led market participants to talk of rate cuts amongst US styrene producers, with the potential that this could ultimately add length to the benzene market, sources said. Details related to specific run rates and confirmation were not immediately available. Both toluene and xylenes were expected to continue being driven by demand from gasoline blenders, as chemical demand remained soft for both products. Pricing was expected to see some near-term pressure as octane availability improves with the restart of multiple US refiners, sources said.
