OLEFINS

US spot ethylene prices are expected to continue their slide to the downside on a surplus of supply and weaker energy prices. Mont Belvieu ethylene was last assessed Friday at 13.25 cents/lb, 1.125 cents lower day on day. Choctaw ethylene was assessed at 13.125 cents/lb, 0.625 cent lower day on day. Sources attributed the fall in pricing to the excess of supply, cracker restarts, and weak feedstock costs.

POLYMERS

US polyethylene prices are expected to fall this week as market participants anticipate all three grades will reflect the wider market volatility caused by the coronavirus outbreak. Sources see high-density polyethylene blowmolding and linear-low density polyethylene at 31 cents/lb rail car basis. There was talk of prices softening as the global spread of the virus continues to widen and after oil fell more than 30% after Russia and Saudi Arabia began a price war over the weekend. Sources said pricing is currently off to a "terrible start," and grades are expected to fall more this week, reflecting the more bearish sentiment in the market. As was the case last week, exporters are struggling due to poor export opportunities and a collapse in demand. US spot polypropylene fell $11/mt last week. Sources said there was limited spot availability due to a heavy turnaround season. The market is unlikely to see any change in the month of April until polypropylene plants restart, sources said. Meanwhile, market sentiment continued to be that general tightness was propping up the market and that a lack of trade activity has muted volatility.

VINYLS

US March export PVC prices were expected to remain in the settled range of $850-$860/mt FAS Houston this week as market participants evaluate the potential fallout from the global spread of the coronavirus outbreak and the sharp declines in global oil prices amid Saudi Arabia's decision to cut prices and engage in a price war with Russia. Sources said there was growing concern about a looming container shortage as ships reduce sailings from China as coronavirus-related plant shutdowns and slowdowns have reduced the amount of finished products to export. Those reductions had already begun amid the US-China trade dispute, and sources say the coronavirus outbreak has exacerbated the issue, causing concern in the US. Too few containers could lead to full resin packaging warehouses and rail storage-in-transit (SIT) yards, which in turn could prompt rate cuts to allow the backup to clear. Upstream, recent strength in export caustic soda and ethylene dichloride prices was expected to hold steady this week amid restocking, but coronavirus and oil price uncertainty could siphon upward momentum.

LATIN POLYMERS

The Latin American polymers market is expected to see instability this week due to the coronavirus outbreak generating uncertainty in global markets, especially the latest slump in oil prices. In Brazil's PE market, prices during the coming week are expected to slide. The foreign exchange rate has seen intense volatility, with the Real reaching the 4.80/$ levels Monday, making room for price hikes in the domestic market. Polypropylene is likely to be driven by Asian and Middle-East movements instead of the US. International PP prices have been dropping in the past few weeks in Asia, as a result of operational slowdowns and limited shipments from the region. On the West Coast of South America, spot import PE prices are expected to be highly correlated to the US this week, with HDPE falling and LDPE stable, while polypropylene is expected to receive conflicting prompting from the Asian and US markets. The drop in global oil prices is generating instability in the market, especially for PP, particularly when combined with the coronavirus outbreak's impact on shipments from Asia and talk of increased freight rates. In Mercosur, fresh spot pricing lists were expected for early March bookings, but most prices are holding steady until they arrive. In Argentina, distributors also expecting a new list for March bookings. Some distributors reported increases in LDPE prices, but the rest were stable.

AROMATICS

US aromatics prices are expected to remain under significant pressure amid anticipated continued declines in the energy complex on the Saudi Arabian price decrease and April output increase. This follows reports of a nitration-grade toluene deal at 215 cents/gal on Friday. Demand for both mixed xylenes and toluene was expected to remain soft this week from both the chemical and octane segments at a time when supply was poised to improve with the return from planned work of Citgo's Lake Charles facility. Further pressure is possible if talk of US toluene imports are validated. Paraxylene prices were expected to remain soft as well on the back of further East Coast arrivals.

METHANOL

In methanol, US supply tightness could continue to ease, with at least one major facility returning to full production rates following a period of planned maintenance. The arbitrage to ship methanol volumes from Northwest Europe to the US remains widest, which could contribute to increased volumes arriving. As a result, prompt methanol prices could continue to be pressured lower during the week.