News Code : 45892


Petrotahlil — Converters face difficulties amid surging polyethylene spot and contract prices, demand for virgin PET starts to ease, and tightness persists in some polymer markets.

European ethylene spot price differentials against the industry-settled contract price over the contract price are expected to widen further into discount territory in February on further import arrivals from the US. Ethylene inland and coastal cargo, prices which were seen at an unusual premium over the contract flipped back into discount territory this week to be assessed at a 2% discount.

MEG Supply remains tight despite the restart of Ineos's Dormagen cracker -- a key ethylene oxide supplier. Spot prices going into March were expected to reflect this despite the arrival of Asian imports at the end of February and beginning of March.


The recent surge in European polyethylene spot and contract prices, which is expected to intensify further in February, could see some converters struggle to pass costs through to the final customer, placing their finances under severe pressure. Producers announced their intention to lift LDPE prices in February by Eur200-250/mt ($241-$301) as a minimum.

European PVC participants will continue to follow the developments around the supply tightness caused by outages and recent force majeure announced by KemOne. The market will continue to watch developments in the Turkish PVC market and product spot availability in NWE.

Buying appetite for European virgin PET started to ease over the first week of February, even as supply remained unchanged. Market players will continue to monitor the response of PET buyers to rising prices.

Although tightness in the European ABS market showed no signs of abating, European producers were seeing requests for material from the Asian market, further underlining the strength of demand for ABS as the market moves into mid-February.


Naphtha market participants are focusing on feedstock demand while contemplating whether the collapse seen toward the end of the week in terms of richly valued structure and crack spreads will continue. Despite demand for blendstocks remaining subdued overall, a shift of domestic blending margins into the positive territory and strong gasoline exports interest to the US will possibly provide marginal support.


Premiums of European mixed xylene rose Feb. 5 following a return of buying appetite to the market. With supply remaining tight, the continuation of the bidding interest will lift the premiums further. In the European toluene market, market players will be on the lookout for signs of returning buying interest from US consumers, as domestic gasoline blenders are likely to remain uninterested in toluene at current prices.


European methanol supply will remain steady to improved this week amid talk of incoming material from Asia, despite ongoing production constraints in Norway and Russia, while demand will stay healthy. Spot activity is likely to be limited due to the large volume of material transacted in the spot market at the close of January.

European MTBE premiums will stay relatively steady at seasonal lows. Tepid demand for high octane components will continue, while some opportunities for mostly domestic gasoline blends in the Amsterdam-Rotterdam-Antwerp hub will provide a floor for MTBE. The negative gasoline-to-naphtha spread continued to weigh on MTBE market fundamentals.

ETBE FOB AR premium to MTBE FOB ARA will stay steady at relatively high levels but ETBE production margins remain under pressure amid high feedstock ethanol prices, meaning reduced ETBE production, in favor of the alternate product -- MTBE. Tepid ETBE buying interest will balance the scarce availability, keeping the ETBE premium relatively unchanged.


Prices are expected to firm as feedstock propylene shortages limit some production rates at oxo-alcohol units in Europe.

Market participants will be looking to digest any further increases to hexane, which hit a 10-month high last week amid firm demand and short supply. Solvent naphtha and white spirit have also rallied in recent weeks on upstream price recovery, and producers will be keen to integrate the higher production costs into their sales prices.

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