Americas: The week ahead in petrochemicals, July 7.

METHANOL/MTBE

US spot methanol prices are expected to be stable to higher this week, with supply heard to be tightening in the market. Demand from the construction sector continues to be heard to be rebounding, with supply outages in Trinidad due to poor margins earlier in the year contributing to tighter available domestic supply, according to market sources. US spot MTBE prices are expected to be stable to weaker this week, with higher regional production heard to be outpacing demand increases from Mexico and other parts of Latin America.

AROMATICS

US aromatics prices are expected to continue to trace RBOB and reformate markers in the coming week amid steady fundamentals. Participants anticipated little change for either toluene or mixed xylenes with chemical demand continuing to lag. The blending and solvent segments were expected to continue to drive demand amid poor STDP margins and weaker paraxylene prices. Benzene was expected to remain strong in the coming weeks amid ongoing tightness and was likely to lead to higher styrene prices, despite weakness in the downstream PS and ABS segments.

OLEFINS

US spot propylene and ethylene are expected to be higher this week amid reduced supply due to ongoing plant maintenance works, sources said. Last week, June domestic contracts settled at 26.5 cents/lb for polymer-grade propylene and at 24.5 cents/lb for ethylene.

POLYMERS

US polyethylene prices are expected to increase this week as sources anticipate fresh, higher July pricing from major US producers. The market continues to remain tight as participants see limited to no availability for some PE resins, pushing prices higher as demand grows. On July 2, S&P Global Platts last assessed low density PE up $22 at $937-$959/mt (42.5-43.5 cents/lb) FAS Houston, high density PE blowmolding up $11 at $771-$793/mt (35-36 cents/lb) FAS Houston and linear low density PE was unchanged on the day at $727-$749/mt (33-34 cents/lb) FAS Houston. In domestic PE markets, contracts were unchanged week on week after increasing 4 cents/lb the week prior, as supply was heard extremely tight and buyers were heard accepting higher levels for June, sources said. Meanwhile, US polypropylene market participants are bracing for higher levels expected both this week and beyond. Suppliers were heard pushing for a 3-cent increase in August while spot rail car pricing was heard firming at the end of last week. Spot supply was heard tightening, further pressuring pricing higher on Friday. The hike came amid stronger upstream contract settlements of 0.5 cent on the month. The uptick in propylene coupled with rising domestic demand as COVID-19 cases climb in many states could continue to prop up pricing, sources said.

US VINYLS

July export polyvinyl chloride prices were expected to be stable this week in a range of $705-$715/mt FAS Houston, after the bulk of available volumes settled during the week of June 29 at $710/mt FAS. Market participants say a rush of restocking demand in May and early June after sales dried up in late March and April has cooled amid concerns about further global spread of the coronavirus pandemic. Export volume availability has been thin, with Formosa Plastics USA conducting a turnaround in July at its 513,000 mt/year PVC plant in Baton Rouge, Louisiana, and Westlake Chemical's ongoing shutdown of an upstream vinyl chloride monomer line at its Lake Charles, Louisiana, complex. A market source expects August to be a turning point for pricing, with no turnarounds on tap. Upstream, caustic soda pricing was expected to weaken on higher chlor-alkali rates, though spot market activity was thin.

LATIN POLYMERS

Latin polymers are expected to see higher prices following increases of the past week in the US market and expected hikes for July. In Brazil's polyethylene market, prices are expected to see increases due to higher prices in the US, under uptrend sentiment. The foreign exchange rate started the week favorable to the real, reaching 5.32/$1 on July 6. Domestic producer announced increases of Real 300/mt for HDPE injection and blowmolding, Real 600/mt for HDPE film, and Real 400/mt for LDPE and LLDPE, valid for July bookings. Polypropylene prices are expected to be stable to higher on week, with trends coming from Asia and Middle East-Brazil, and the West Coast of South America imports mostly come from Asia and Middle East if compared to the US. Domestic producer announced increases of Real 500/mt for all PP. In the WCSA, spot import polyethylene prices are expected to continue closely connected to US movements on the week, and are therefore expected to be up, considering new prices for July. The PVC market in Latin America started to see some deals, and demand was reported picking up after the pandemic started across the region. In Mercosur, the spot pricing new list had been expected for last week for July bookings, with higher values. Sources believe new prices could reach the market this week. Markets are slightly coming out of the lockdown, resuming slowly, with more activity reported. In Argentina, prices were reported $100/mt higher last week, while sources are willing to see if the market will accept and absorb the new prices.