Americas petrochemicals outlook, w/c Aug 19.
US OLEFINS: August propylene contract discussions are expected to start this week, according to trade participants. Direction was unclear, however, as the propylene spot market had been moving higher last week, partially because of falling inventory levels. But sources have also said the market remains well supplied. Meanwhile, US ethylene sources said uncertainty remained about the startup timeline of the closed cracker at ExxonMobil's Baytown, Texas, olefins complex.
Petrotahlil :
US POLYMERS
Trade participants said producers were seeking increasing prices for polyethylene, but thin demand and ample supply were still keeping pricing pressure on the market. US polypropylene sources began discussing the pending monthly polymer-grade propylene contract, with at least one source anticipating that it will settle flat at 38 cents/lb. Negotiations should begin in earnest this week, with the settlement impacting spot PP pricing.
LATIN POLYETHYLENE
Latin America continues watching a downtrend in polyethylene pricing following the same trend in the US market, sources said. Pricing of HDPE film remains under pressure due to healthy availability and soft global demand. But some market participants said US-origin LDPE is less available for exports after the steam cracker was shut at the ExxonMobil Baytown olefins complex. The Brazilian polyethylene market is expected to start another week with pressure from international prices, which could continue triggering CFR prices to lower levels -- the lowest since S&P global Platts started its assessments. Currency exchange volatility is starting the week less favorable to the Real at Real 4/$1, putting less pressure on domestic prices, still unchanged. In Argentina, domestic prices were expected to be flat after a $50/mt increase last week. The polyethylene market has been under uncertainty after Dow Chemical's Bahia Blanca complex suffered an explosion in its ethylene cracker BB 2 plant in Dow Argentina at the end of June. The company said the complex would be offline until the end of the third quarter. The lack of availability was a driver for the hikes, but market sources said it was softened by the latest currency devaluation of around 30% last week after the recent presidential primary. General interest rates increased to 74%. Therefore, credit is almost unavailable, and activity is expected to slow down in the country.
LATIN POLYPROPYLENE
The Latin America polypropylene market is expected to start the week under continued pressure from international prices, sources said. Market participants will continue monitoring the US fluctuating polymer-grade propylene prices, as they influence prices for US PP, sources said. Macroeconomic concerns are also rising as currency depreciation in most Latin America countries against the US dollar continue to affect buying interest. One trader said that market participants had switched their thoughts to September order books, as August demand continued weak. Brazilian polypropylene homopolymer and co-polymer markets were unchanged, seeing less volatility in CFR prices lately.
US VINYLS
US export polyvinyl chloride prices were expected to remain in a range of $765-$775/mt FAS Houston this week, where producers settled August pricing, as market participants look toward September pricing negotiations. A deal for H2 September loading to India was heard done at $790-$800/mt FAS Houston, but market participants were skeptical of whether sluggish demand elsewhere would support that pricing level. Indian demand was seen strengthening as buyers were seeking to stock up on PVC volumes ahead of the end of the monsoon season. In addition, last week Asian producers announced fresh September offers up $30/mt from August levels, and one provided less volume than normal with a turnaround planned next month, and volumes designated for India sold out quickly. However, market sources noted that India's decision in July to lift anti-dumping duties on PVC from various countries, including Japan, the European Union, Indonesia and Malaysia, opens the door to more competition to supply that market. Last month, India reduced anti-dumping duties on material from some US producers but did not eliminate them. Upstream, market participants saw little change to ethylene dichloride and caustic soda pricing amid sluggish global demand.
US AROMATICS
Prompt benzene prices in the US are expected to remain firm after an uptick in buy interest as sources anticipated tightness in the near term. Domestic production is expected to remain curtailed despite recent improvement in toluene conversion margins, while benzene demand was expected to remain firm. Demand was bolstered by talk of an outage downstream at Innova's facility at Triunfo. Details and confirmation were unavailable, but sources said the outage spurred 18,000-20,000 mt of styrene exports, and this had lent support to higher styrene prices. These dynamics were not expected to change, and styrene demand was expected to remain firm amid anticipated outages by multiple European producers. In toluene, prices were expected flat to lower as pricing continued to trace declining blend values. Lower toluene pricing was expected to support toluene conversion margins but was unlikely to lead to an increase in run rates. In xylenes, mixed xylenes pricing was expected to continue tracing blend values after a recent jump in pricing. Participants said that buy interest had increased ahead of planned maintenance by Suncor, though this was not confirmed at time of publication. Paraxylene was expected to see continued pressure from global length. Pricing was talked at $790-$800/mt FOB USG, though discussions were purely academic amid a dearth of spot activity.
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