Americas: The week ahead in petrochemicals.
Petrotahlil - US OLEFINS: US spot olefin prices are expected to remain stable to lower despite the recent agreement by the OPEC+ group to reduce crude oil production.
No olefins pricing or supply effects are anticipated in the short-term, sources said. Domestic propylene contract negotiations have been delayed and will likely settle near the end of the month due to increased volatility and uncertainty in the market, sources said.
US AROMATICS: Aromatics prices in the US were also expected to remain under pressure despite a recent agreement by the OPEC+ group to cut crude oil production. Demand was not expected to improve in the near-term with demand for both toluene and paraxylene lagging. Participants were expected to continue eying exports of mixed xylenes to Asia as arbitrage opportunities were possible. Further downstream, paraxylene production was expected to remain curtailed from selective toluene disproportionation, or STDP units and accordingly toluene demand from the chemical segment was expected to be weak. The gasoline segment was likely to remain the predominant demand center for toluene.
US VINYLS: US export polyvinyl chloride prices could extend declines this week on growing demand uncertainty amid worldwide responses to the coronavirus pandemic. Asian producers could announce offers for May volumes this week, which market participants expect to be up to $100/mt lower than those for April. US export PVC prices were last assessed on April 8 at $615-$625/mt FAS Houston, down nearly 27.5% from $850-$860/mt FAS on March 18, illustrating rapid demand deterioration ahead of what would normally be the peak summer construction season. Upstream, ethylene dichloride prices also have sharply declined, falling nearly 59% to $115/mt FOB USG on April 7 from $280/mt FOB on March 24, S&P Global Platts data showed. Market participants also expect chlor-alkali rates to decline, in part amid Olin's April turnaround at its 3 million mt/year chlor-alkali plant in Freeport, Texas, and amid lower chlorine demand stemming from weak downstream PVC demand.
US POLYMERS: US polyethylene prices are expected to fall this week as market participants see sentiment continue to be weak for US exports, a source said. On Sunday, OPEC producers and its allies agreed to a record deal to cut global oil output by about 10% or 9.7 million b/d. In turn, oil prices rose in early trading Monday but polymer prices won't react immediately and may continue to fall as the lower demand continues to reduce PE prices, the same source said. High-density polyethylene was talked near record lows between 25-26 cents/lb railcar basis and linear-low density polyethylene was talked 1 cent lower at 24-25 cents/lb railcar basis. Low-density polyethylene was talked around 39 cents/lb railcar basis as the market sentiment weakens overseas for all three grades, sources said. In domestic markets, US domestic contract pricing for all three grades is expected to remain tight as contracts haven't indicated any change, a source said.
US METHANOL: Domestic spot methanol prices are expected to remain relatively rangebound this week with lackluster overall demand and despite any rebound in crude futures following the production cut agreement struck between OPEC and Russia. In the US MTBE market, the effects of weak gasoline blending demand on price could be partially offset by regional production cuts that have led to more limited volumes available for blending on the US Gulf Coast.
LATIN POLYMERS: Latin polymers are entering the middle of April amid pressure from international markets and all-time lowest prices since S&P Global Platts started the assessments. In Brazil's polyethylene market, prices during the week are expected to see $10/mt to $30/mt lower values in most of the grades, especially HDPE and LLDPE, while LDPE could see stability due to the lack of availability reported from the US. The foreign exchange rate started the week on uptrend with the Real reaching 5.18/$1 on Monday. Domestic prices for all grades are expected to be unchanged on the week. Polypropylene prices saw a $60/mt hike last week in Asia and Middle East, therefore increasing the possibility of higher prices in Brazil and on the West Coast of South America. On the WCSA, spot import polyethylene prices are expected to continue to closely track the US movements on the week, with possible drops for all grades. In Mercosur trade zone, spot pricing new list was received last week for April bookings, with much lower prices amid global and regional uncertainties. Distributors and traders still have concerns on the availability of some polymer grades from the local producers. Demand is expected to be null in the market amid the lockdown. In Argentina, prices are still not expected to see movements as the country is under quarantine and lockdown measures. Activity in the country is only related to food and medical chains.
Follow us on twitter @petrotahlil
END
