Ethylene spot prices are expected to remain under pressure because of ample supply, weak derivative PE demand and falling Asian prices.

The butadiene market is awaiting the settlement of the September contract price negotiations, expected to be concluded early in the week.

The August MEG contract is expected to settle as part of a dual settlement with September as producers struggle to accept an increase of Eur28 over the July contract of Eur504/mt as supply has tightened significantly and spot prices jumped to their highest in over 12 months, according to S&P Global Platts data.

Polymers

The European polypropylene market is awaiting news of the upstream industry-settled propylene contract price for September this week, while also watching how the coronavirus pandemic develops across Europe for a sense of how this may affect downstream demand as the market moves into autumn. Sellers' expectations of a rebound in demand following the peak of the August summer holiday period remain contingent on continued economic recovery.

In Turkey, the polymer markets continue to watch the highly volatile lira as currency challenges continue to curb trading appetite.

Virgin PET buyers will be seeking further reductions in offers this week as imports from China are made available for October delivery. European producers now find themselves competing for dwindling demand not just with each other but with importers too.

In recycled markets, all eyes will be on virgin equivalents, this week. Bearish sentiment, which pervade the virgin PET and virgin HDPE markets last week, resulted in an increased premium for recycled material.

Sellers fear this will further deter buyers from purchasing recycled grades at a time when there is already little demand and ample supply in the market.

Aromatics

The settlement process for the September European benzene contract price begins this week, with current traded levels pointing to a reduction. Downstream spot prices are also lower on the month, with sources watching to see if bearishness in the styrene market will continue past the August holidays and into September.

The gap between toluene bids and offers is expected to shrink in the coming week, with sources pointing to discounts of heavy naphtha against light naphtha as an indicator that reformate will fall and create the conditions for BTX production to become profitable again.

Mixed xylenes are expected to remain at a premium to toluene, with sources pointing to stronger demand for the former, though questions remain over the strength of gasoline blending due to blenders' preference for higher-octane components which also remain bearish.

Methanol & MTBE

Methanol demand for September is expected to pick up over the coming days, with sources expecting more liquidity in the market. Supply is healthy, but ongoing and upcoming planned maintenance is likely to limit spot availability.

MTBE demand will be under pressure with a slim gasoline to naphtha spread, creating an unfavorable environment for high-octane blendstocks.