News Code : 42813

US OLEFINS- The US April ethylene contract is expected to settle lower this week as the month draws to a close. Trade participants have said they expected the April contract to come down, citing weaker spot prices throughout the month. April spot levels have averaged 13.54 cents/lb FD USG so far this month, which was down from the March spot price average of 14.88 cents/lb FD USG. Meanwhile, declining inventory in the US propylene market continues to keep upward pricing pressure on spot prices heading into the week.



US polyethylene market participants head into the week still in negotiations over April domestic contract prices. Some sources said last week that some April numbers were finalized, but this was still pending confirmation. US polypropylene spot prices are on the rise after some producers easily cleared their April inventory. Production disruptions muted supply and boosted demand, and that fundamentals shift should enable producers an opportunity to continue seeking pricing increases heading into May.


Latin America will see thin trading activity as most of the countries will be working half a week in observance of International Labor Day on Wednesday. Traders said polyethylene prices have arrived to a floor and will rebound entering May. Some producers told buyers price increases were on the horizon supported by gains in the energy sector and a global demand rebound, sources said. Latin America will see stable to higher polypropylene pricing with Brazil-origin resin leading the pricing dynamics. Regional sourcing became more attractive than deepsea cargoes for buyers, sources said. However, buyers continue watching international pricing indications in other geographies such as Asia and the US, according to market feedback. Asia expects polypropylene prices to rise due to feedstock naphtha prices that moves in tandem with the crude oil prices, sources said. Brazilian trade participants are expected to return to the market following last week's industry event in Sao Paulo. Trade participants said domestic producer Braskem may look to increase prices again on polypropylene and polyethylene for May, but it was unclear if this would be accepted by the market.


US polyvinyl chloride producers were in negotiations for May pricing, and at least one last week nominated a rollover to April pricing at$735/mt FAS Houston despite buyer pressure to put forth a lower price. Market participants expected US May pricing talks to start with lower nominations after Asian offers for May were $30-$40/mt lower than April levels, but those declines were wiped out last week when Asian prices spiked $20-$30/mt after a carbide-based PVC plant explosion in China sparked supply crunch concerns. The explosion was the fourth Chinese chemical plant blast since March 21. However, US market players say last week's price increases in Asia reflect short-term supply concerns rather than global demand, which remains soft, and domestic demand has not seasonally risen in March and April as is typical. In addition, demand in the Middle East and India is expected to decline with Ramadan andmonsoon season approaching, though India buying typically rises to build inventories ahead of monsoon season. US market participants are closely watching an ongoing review of anti-dumping duties on US-origin PVC in India, with many expecting a decision on whether to lift those duties to be unveiled in June.


May spot benzene prices were expected to be relatively stable as the May US benzene contract was poised to rise this week. Initial market estimates suggested a settlement near 232-233 cents/gal, however those estimates could be pressured as spot prices fell roughly 5 cents during the latter half of last week. The April contract settled at 225 cents/gal. Related to fundamentals, demand was slated to improve somewhat with LyondellBasell expected to restart styrene production at Channelview in H1 May. On the supply side, production from conversion units was expected reduced as producer margins were negative. This in turn would limit toluene demand from the chemical segment. Toluene could still see demand from the blending segment with blend values pegged last at 269 cents/gal. Mixed xylene prices were expected to remain steady in the coming week amid limited activity associated with ongoing logistical constraints. Those constraints could start to ease, however, as bids and offers on an ITC basis emerged late last week. Downstream, paraxylene prices were expected to remain under pressure with limited production from MSTDP units and thin producer margins from crystallization units.


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