Americas petrochemicals outlook, w/c October 14
US OLEFINS|Trade sources were looking to October ethylene contract price discussions this week. After starting October at a 2019 high of 29 cents/lb, spot prices have gradually decreased as demand has fallen. Trade participants saw spot prices end last week at 20.50 cents/lb. Also, the spot November price begins this week at parity with October's price. Meanwhile, the US propylene market headed into this week with spot prices falling amid a recent increase in domestic inventory. The decline in spot levels and increase in inventory comes even as one producer has its PDH unit offline through next month.
Petrotahlil :US POLYMERS
US polyethylene market participants were starting to evaluate domestic contract pricing for October as the week kicked off. Trade participants said September contracts recently settled at a 3-cent increase, but sources said they were pessimistic regarding another increase in October, citing ample supply and soft global demand. US polypropylene market participants continue to see muted demand and the potential for producers to cut rates to offset high inventory levels. Feedstock polymer-grade propylene climbed slightly last week on the back of a planned Dow Chemical turnaround at Freeport, Texas, but there was minimal impact on polypropylene pricing, according to sources.
LATIN POLYMERS
Brazilian polyethylene and polypropylene markets are expected to remain under pressure from international prices over the coming week. Currency rates started the week in a more supportive position of Real 4.13/$1, compared with Real 4.06/$1 a week ago, putting less pressure on domestic prices. Braskem said it managed to increase prices by Real200/mt for the high density polyethylene family and linear low density polyethylene, and Real250 for low density polyethylene. On the West Coast of South America, spot polyethylene and polypropylene import prices are expected to dance to the tune of US and Asian prices during the coming week. As most polyethylene comes from the US, prices may not be affected much, while polypropylene imports in the region come from the Middle East and Asia and could continue to see more volatility during the week. The Argentina polyethylene market is expected to be stable during the coming week as the country typically sees more price changes at the turn of each month. Dow Argentina was reported to have begun producing at limited rates at its Bahia Blanca complex, putting more material in the domestic and possibly exports markets. With more material available, pricing could drop. The Mexican polyethylene market is expected to start the week following the lead of US markets and US Gulf Coast prices. The proximity, logistical convenience and trading relations with the US makes the pricing connection inevitable, while exchange rates and internal demand are also drivers for consumption.
US VINYLS
US export PVC prices were expected to remain in the settled October range of $740-$750/mt FAS Houston this week, though market participants were watching for fresh November offers from Asian producers. Those offers are often seen as a bellwether for the direction of US pricing. Asian market participants expect November pricing to be flat to lower, depending on the market. US market participants have consistently said global demand remains sluggish, and US producers resisted pushes for pricing below $740/mt FAS Houston during October pricing talks. Upcoming turnarounds in the fourth quarter are expected to reduce PVC export volume availability, but sources say inventories remain ample and producers will need to sell export volumes. The domestic PVC market is continuing to mull a 3 cents/lb price increase, but market participants remained skeptical that the entire increase would be accepted, given the seasonal decline in demand as autumn temperatures take hold in multiple regions.
US AROMATICS
Spot benzene prices are expected to remain under pressure as activity improves headed into the contract negotiation period. Benzene values were not expected to increase significantly as downstream styrene and styrene derivative demand remained soft. Domestic benzene output was expected to remain limited amid poor toluene conversion economics. Selective toluene disproportionation margins were not expected to show significant signs of improvement given current benzene dynamics and considering length in the global paraxylene market. Recent capacity additions in the Asian paraxylene markets have put pressure on spot prices in the US and muted interest in spot activity. Paraxylene supply was expected to remain curtailed on poor STDP margins and a weaker spread between paraxylene and mixed xylene. Demand for mixed xylene was also expected to remain weak from both the paraxylene and gasoline blending segments.
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