Pricing is expected to remain firm on the week in the US polypropylene market amid limited market activity in the week beginning May 17, in part due to continued snug supply and limited offers for export resins from suppliers.
Prime material will continue to command a premium over off grade, and despite ramp-ups in availability, demand is expected to soak up any pellets available. A stronger at large energy complex is also expected to keep the market propped up as well, sources said. S&P Global Platts assessed the export homopolymer injection-grade polypropylene flat May 14 at $2,238-$2,260/mt (101.5-102.5 cents/lb) FAS Houston basis. The assessment was expected to continue to firm in the short term. Announced supplier hikes for June are expected to keep pressure on pricing through the month.
Meanwhile, US polyethylene markets were also expected to remain stable to higher with a few exceptions as midmonth lulls had some market participants receiving lower offer levels in the week ended May 14. Still, healthy demand was expected to keep pricing from falling.
US export polyvinyl chloride prices could soften the week of May 17 as buyers push for more workable pricing in key markets, particularly with COVID-19-related shutdowns in India seen shifting some Asian flows to other destinations. Prices were last assessed May 12 at $1,745-$1,755/mt FAS Houston. Supply remains limited amid Formosa Plastics USA's ongoing turnaround at its 513,000 mt/year PVC unit in Baton Rouge, Louisiana, and the mid-May launch of a turnaround at one of three upstream chlor-alkali units at Westlake Chemical's Lake Charles, Louisiana, complex. However, buyers say retreating prices in other regions were expected to pressure US pricing to compete in Middle East and North Africa markets. Upstream, caustic soda pricing could see more strength amid a gradual recovery in demand.
Spot polymer-grade propylene is expected to remain stable amid thin market activity, with all propane dehydrogenation units operating, sources said. Spot ethylene is expected to fall this week amid healthy supply following cracker restarts last month. "Production is improving" though prices will likely remain in the low 30 cents/lb, one source said.
June butadiene contract nominations are expected to be 2-3 cents higher from the May settlement amid tight supply, sources said.
The continuing June US benzene contract price trading period will drive spot prices for both benzene and styrene. Low imports from East Asia and limited inventories in the wake of the mid-February Texas freeze has led to extremely tight prompt supply of US benzene, leading to elevated prices and squeezing US styrene production margins. With fundamentals of tight supply and high demand from styrene and other derivatives expected to be stable this week, the influential CP trading window may drive liquidity and sentiment changes among benzene market participants. The June benzene price closed May 14 at 427 cents/gal DDP USG. Trading toward the June CP runs May 13-26. The May contract price of 460 cents/gal represented a sharp increase over the April CP of 301 cents/gal.
Styrene producers and traders will be watching benzene spot prices closely for clues of where the weighted-average based CP might settle toward the end of May. Volatile benzene prices and limited export demand have made feedstock prices crucial for determining spot value, sources have said. May styrene closed May 14 at $1,435/mt FOB USG.
US METHANOL & MTBE
US spot methanol prices have been and are expected to continue to drop with the YCI Methanol I facility anticipated to come online soon. The facility has been heard to be in the commissioning phase of startup, and with resulting methanol expected to be available by the end of Q2 at the latest. However, prices are still expected to remain high due to market uncertainty. Meanwhile, trading activity has been sparse throughout the month, and the month-on-month price curve continues to be flat.
In the US MTBE market, production issues at two regional facilities in Texas continue to be talked as serving to tighten regional spot supply. As a result, prices are expected to strengthen during the week, with stable to robust export demand to Mexico also contributing, according to market sources.
Latin polymers prices are expected to be stable to lower this week for polyethylenes, driven by material available in the market from the US and lower Asian prices. Lower values are also expected for polypropylenes in the imports markets of Brazil and the West Coast of South America, driven by offers from Asia and Middle East. The Latin American region had been mostly relying on imports from Europe and Asia since early March as the US was having very limited volumes for exports, which opened a window of opportunity for Asian markets to establish more competitive offers than the US. However, since the week ended May 14, more US material became available for the region, still at higher values than Asian material. Markets are dividing their expectations to see if US prices and freight would be more competitive than Asian products considering freight. The US is generally the most important supplier of polyethylene for the region, while Middle East and Asia are the most important suppliers of polypropylene. In Brazil, a local producer already announced prices for May bookings, so flat prices are expected for the week. All prices are already at the historical all-time high for all PE in Brazilian real and US dollars. Polypropylene prices are expected lower for the week, with offers on the sea from Asia, while lower prices are beginning to be seen from local producers in Latin America. Brazilian and the West Coast of South America imports mostly come from Asia and the Middle East rather than the US. The PVC market in Latin America expects to see lower prices on week. Most Latin American countries have relatively low demand at the moment, led by Brazil, where buying interest is very low. WCSA is currently seeing higher prices than Brazil, unusual for the market due to poor Brazilian demand. In Mercosur, prices for May bookings were announced last week, so a new pricing list is expected for June. Prices were mostly higher for polyethylene and saw a large drop for polypropylene. In Argentina, prices saw a $300-$400/mt fall on week due to a reported "price war" as distributors were trying to get rid of its high inventory levels before prices start to decrease again, sources said. A local producer is expected to change its prices only for June, while the directions of the price change is unclear.
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