Petrotahlil - The US Gulf petrochemical industry is preparing for a potential disruption as two storms head to the region the week starting Aug. 24.
US OLEFINS: US olefins market participants are watching for possible effects from tropical storms Laura and Marco on Gulf Coast petrochemical plants, sources said. Gulf Coast spot ethylene prices are currently at a seven-month high amid cracker maintenance and outages and are expected to continue firming this week. August propylene and September butadiene contracts are expected to settle an increase this week.
POLYMERS: US polyethylene prices are expected to continue to be firm amid key plant maintenance works and a 5-cent price hike on the table for polyethylene in September.
An uptick in demand combined with snug availability including for polypropylene is expected to support higher pricing. However, some participants question how easily a full implementation of increases can be withstood by buyers.
Meanwhile, the US Gulf Coast is bracing for potential disruptive weather that could impact production and logistics, as well as hamper trade activity.
Limited to no availability of spot export polypropylene is expected to continue this week and through the month. Also, feedstock propylene contract pricing is expected to increase amid firm spot activity and a rebounding in the broader energy sector, including stronger crude.
US VINYLS: US export polyvinyl chloride prices were expected to be stable this week at $795-$805/mt FAS Houston ahead of negotiations for September volumes. Market participants expect September pricing to strengthen on increasingly tight supply. Formosa Plastics USA's force majeure on PVC production in both its Texas and Louisiana complexes declared Aug. 14 remained in place, leaving the company's domestic customers reaching out to other producers for volumes. That squeeze was expected to further reduce export volume availability, given strong domestic demand amid improving housing starts and growing sales by US homebuilders. Upstream, Formosa's 736,000 mt/year chlor-alkali plant and its 1.47 million mt/year ethylene dichloride plant were operating after the chlor-alkali unit restarted the week of Aug. 10, but that output had yet to reach the point of fully supplying downstream PVC production, according to sources familiar with company operations. Formosa declined comment.
LATIN AMERICA: Latin polymers are expected to be mostly stable during the week in the imports markets of Brazil and the West Coast of South America, and expect to see stability in most of the domestic markets. The foreign exchange rate started the week unfavorable to the Brazilian real, reaching Real 5.60/$1 on Aug. 24. A domestic producer is not expected to announce further increases this week after confirming a Real400/mt increase last week. Sources continue to report a lack of availability of several products in the domestic market of Brazil. Polypropylene prices are expected to be stable on week, following values coming from Asia and Middle East-Brazil and the West Coast of South America imports mostly come from Asia and the Middle East, if compared to the US. In the WCSA, spot import polyethylene prices are also expected to continue highly attached to the US movements on the week, therefore expected to be stable. The PVC market in Latin America is expecting to see higher prices considering higher prices in Europe and Asia, reflecting on imports mostly to Brazil, reported tight on material. In Mercosur, spot pricing new list is only expected for September bookings. No further increase is expected for the current week. Distributors reported a lack of availability in the market. In Argentina, prices are also expected to be unchanged during the week. Distributors believe the local producer could push more hikes but only for September, depending on the acceptance of the last increases.
BENZENE AND STYRENE: The main factors affecting spot benzene prices this week should be the completion of the September benzene contract price trading period on Aug. 27 and the impacts of tropical cyclones Marco and Laura on production and ports on the US Gulf Coast. Multiple refineries on the coast were rumored to be considering or implementing temporary shutdowns, which could dent aromatics production. Market participants on Aug. 24 were unsure what impact the storms would have on prices. "That is what I want to know," one trader said regarding spot prices. Demand for benzene from the styrene sector was heard to be steady. Styrene monomer supply is expected to be steady, regardless of any storm-related shutdowns, as multiple styrene producers were heard to have stored extra material to prepare for that situation.
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Source : Platts