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.
