AMERICAS: The week ahead in petrochemicals Feb. 1-5.
Petrotahlil — US OLEFINS: Spot polymer-grade propylene is expected to trend higher week starting Feb.1 amid continued tight supply and increased demand.
Spot PGP was last assessed at 71.75 cents/lb on Jan. 28, a five-year high, according to S&P Global Platts data. "A lot more demand continuing and not that much supply coming forth," an olefins source said.
February spot ethylene is also expected to trend higher in the low 30 cents/lb. Demand will ramp up with February buying, sources said. Demand should be high through the beginning of February "...until they finish buying," the source said. The January domestic ethylene contract is expected to settle this week at an increase, sources said.
US POLYMERS: US polyethylene spot export prices are expected to rise this week as market participants await fresh producer pricing and expect previously announced February price increases from producers to be implemented on Feb. 1 for US PE products. Sources have also said they anticipate supply to be limited during February and expect demand to remain strong. In domestic markets, PE contracts were flat on the week after increasing 5 cents on Jan. 6, based on strong demand and producer push for greater margins, sources said.
Meanwhile, in the US polypropylene market, pricing is expected to increase this week, as sources saw no export availability and "resin demand for February is still strong," one source said. Domestic PP pricing was assessed up 12 cents/lb week on week Jan. 27 at 78.5 cents/lb delivered rail car basis for homopolymer injection grades.
Pricing includes a market-accepted 18-cent premium over settled January feedstock PGP contracts at 60.5 cents/lb. Domestic pricing was also higher on the week at 80.5 cents/lb delivered rail car basis for homopolymer fiber, which maintained a 20-cent premium over the PGP contract.
US VINYLS: Export polyvinyl chloride prices were expected to remain in a range of $1,395-$1,405/mt FAS Houston this week, with two producers having sold limited February volumes at $1,400/mt FAS. Supply remains limited, with two turnarounds on tap for March at Shintech's 1.4 million mt/year complex in Freeport, Texas, and at OxyChem's 1 million mt/year PVC plant in Pasadena, Texas. However, market sources said global supply was seen becoming more available, which prompted buyers to reject initial February offers at $1,450/mt FAS, the all-time high reached in mid-December, and $1,420/mt FAS.
The market was watching for fresh offers this week in Asia ahead of the Lunar New Year holidays, which could prompt further declines in US pricing. However, domestic PVC prices have reached a new all-time high of 71-73 cents/lb ($1,565-$1,069/mt) after the market accepted 4 cents/lb price increases announced by all four US producers. Another 3 cents/lb increase was pending for February.
US AROMATICS: With the February benzene contract price settled at 238 cents/gal, market participants who held back from trading in the latter part of January may return to the spot market and introduce greater liquidity and price movement. That trend appeared to emerge Jan. 29 with trading heard for March and prices falling slightly to close the week at 233 cents/gal DDP USG for February delivery.
Low US benzene prices relative to global markets have closed arbitrages from Asia and Europe, limiting interest in the US spot market.
Downstream, styrene monomer trading is expected to center around the March laycan, with some participants looking to April, with much of the February material heard to be sold out.
An unplanned cut in operating rates at CosMar in Carville, Louisiana in the previous week slashed prompt availability even further than expected, sources said, and in the event of supply or further production disruption could boost prompt prices. Forward month prices are expected to hold ground or increase amid mixed interest in exporting to South America and the Mediterranean.
US METHANOL/MTBE: Domestic methanol values are expected to remain relatively stable on the week, with talk of steady demand and limited supply still in the market. Trading activity of spot supply has been heard to be limited, however, with prompt values likely to remain rangebound as a result. In the US MTBE market, poor production margins have led to tighter supply regionally, helping to keep prices stable. Export demand to Mexico and Chile has been heard to be stable, as well, contributing additional support.
LATIN AMERICA: Latin polymers prices are expected to continue under uptrend sentiment in the imports markets of Brazil and the West Coast of South America considering the US movements for polyethylene and Middle East and Asia for polypropylene, among limited offers and deals expected for February. The foreign exchange rate started the week much unfavorable to the Brazilian Real at 5.46/$1 on Feb. 1.
Local producers announced large increases at the end of the last week for domestic products, and sources are already confirming the new prices. Polypropylene prices are expected to be flat to slightly up on week. A small uptrend was seen 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, where prices have increased largely.
In the WCSA, spot import polyethylene prices are also expected to continue highly attached to the US movements on the week, therefore mostly higher on the week. The PVC market in Latin America is expecting to see stability or lower prices in the market as the US and Europe saw lower prices last week. Freight rates from China to the Latin American region has increased significantly. Product is still unavailable in most of the markets.
In Mercosur, market players expect to see higher prices as there is very limited volume for the markets. A new pricing list is expected for February. In Argentina, prices are expected be higher on week after the $150/mt increases announced during January. Market participants say the local producer is following international market trends and higher feedstock costs.
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