AMERICAS: The week ahead in petrochemicals, August 18,2020.

Petrotahlil — POLYMERS: Market participants are bracing for another potential price hike for the week starting Aug. 16 amid talk of market tightness across various polymer grades.

Market players during the week ended Aug. 15 grappled with higher supplier pricing as offer levels were talked higher. For US spot export polyethylene pricing, S&P Global Platts on Aug. 12 assessed low-density polyethylene at $1,014/mt FAS Houston, up $11, linear low-density polyethylene at $827/mt FAS Houston, $22 higher, and high-density polyethylene blowmolding at $871/mt FAS Houston, $11 higher.

Meanwhile, in US polypropylene, the market is expected to deal with tight supply and in some cases a lack of product offering. Formosa Plastics Corp. announced a force majeure on polypropylene products from its Point Comfort, Texas, petrochemical complex effective Aug. 8, the company said in a letter obtained by Platts Aug. 10. The market was already considered snug.

Pricing is expected to remain firm in the short term for spot exports. Platts assessed the homopolymer injection Aug. 12 at 49.5 cents/lb ($1,025/mt) on a FAS Houston basis.

OLEFINS: Spot ethylene prices are expected to be stable to higher during the week amid cracker outages and maintenance. Spot polymer-grade propylene prices are expected to continue their stable trend.

VINYLS: US export PVC prices could see sustained strength after Formosa Plastics USA declared force majeure on PVC on Aug. 14 at its Texas and Louisiana complexes. The company's letter informing customers of the declaration cited "unexpected difficulties in its upstream facility at Point Comfort, Texas, impacting the PVC production at both manufacturing sites." The upstream facility refers to Formosa's 736,000 mt/year chlor-alkali plant in Point Comfort, according to sources familiar with company operations, and difficulties bringing it back online after an extended turnaround that began in mid-June. Export PVC prices already had strengthened on tight supply, which was expected to tighten further as domestic customers seek more volumes from other US producers. Market sources had expected PVC pricing to seasonally wane by the fourth quarter, but strength could linger depending on how long Formosa's outage lasts, sources said.

LATIN AMERICA: Latin polymers are expected to see slightly higher prices during the week in the import markets of Brazil and the West Coast of South America. Meanwhile, stability is expected in most of the domestic markets. The foreign exchange rate started the week unfavorable to the Brazilian Real, reaching Real 5.47/$1 on Aug. 17. A domestic producer is not expected to announce further increases later in the week. Sources continue to report lack of availability of several products in the domestic market of Brazil. Polypropylene prices are expected to be stable to lower on the week, following values coming from Asia and the Middle East. In the WCSA, spot import polyethylene prices are expected to continue highly attached to the US movements on the week. As a result, the prices are expected to be stable to higher, following hikes during the week ended Aug. 15. The PVC market in Latin America is also expected to see higher prices considering previous week's hikes from the US, Europe, and Asia, reflecting on imports to the region. In Mercosur, spot pricing new list was announced during the week ended Aug. 15 with much higher values for August bookings. No further increase is expected later in the week. In Argentina, prices are also expected to be unchanged during the week. Distributors said the local producer could push more hikes for August, but it would be more intended for the end of the month.

AROMATICS: As trading for the September benzene contract price begins in earnest during the week, changes in liquidity could affect spot benzene prices. Supply in the US has been constrained by lower import volumes, but at least 40,000 mt are expected to arrive on the US Gulf Coast from Asia in August, market participants estimated. That figure is higher than Asian imports seen in July, June or May. Demand from the styrene sector was heard to be steady. Longer supply from recent production increases depressed prices in early August, but traders said they do not expect producers to lower their operating rates anytime soon.

As blenders look toward winter gasoline vapor pressure specifications, many are expected to switch from toluene to butane for octane boosters, slashing demand for nitration-grade toluene. Market participants are unsure when demand will dry up, but some have estimated early September as a starting point. In the short term, prices are expected to trace daily RBOB gasoline futures movements.

METHANOL & MTBE: US methanol prices are expected to be stable to bearish during the week, with steady demand heard in the market for derivative products. The possible conclusion of supply disruptions at a Trinidad and Tobago methanol production facility could add supply to the market and add downward pressure to spot prices. Poor trading liquidity heard in the market due to the summer holiday season has also added pressure to prompt volume pricing in recent weeks.