EMEA: The week ahead in petrochemicals

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OLEFINS: The European propylene market looks fairly bullish this week on the back of light feedstocks usage, maintenance works at refineries and healthy offtake, with spot prices expected to remain at a premium to the contract price. Supply of ethylene remains ample in , with double-digit discounts to the monthly contract price on spot volumes in sight after the European ethylene contract price settled Eur63/mt higher month-on-month. While expectations had been bullish for , the magnitude of the increase came a surprise to many market participants. Butadiene prices in continues to be supported by the strength of export markets, while demand remains robust in and other regions alike.

POLYMERS: The weakness of the euro against the dollar has lessened the attractiveness of the European polyethylene market for exporters from other regions. This is reducing the length seen previously in parts of the PE market, while the much firmer June contract price for feedstock ethylene is set to push PE prices higher. The polypropylene market looks set to remain balanced-to-tight in June on the back of good demand and declining imports. Meanwhile, availability remains extremely tight on polyethylene terephthalate amid the persistent drought on feedstock PTA as the force majeure remains in place at ’s plant in Geel, Belgium. Some PET producers are currently unable to meet their contractual obligations to customers, which is expected to now remain in place for at least a few months. Styrene-butadiene prices have risen in response to the rise in the butadiene contract price and amid a lack of competition from imports. However, tire demand is expected to drop in the second half of the year following normal seasonal patterns. Polystyrene and acrylonitrile-butadiene-styrene prices are also expected to rise on the back of higher feedstock styrene costs in June.

AROMATICS: The European benzene market remains long with prices hovering in the high $800s/mt range, while spot arbitrage opportunities to export are shut. Meanwhile, toluene fundamentals remains strong amid export interest to the US, although domestic chemical demand in Europe remains weak. Mixed xylenes supplies are lengthening amid persistent demand weakness, and as arbitrage opportunities remain difficult to work. Meanwhile, market participants are looking forward to developments in the paraxylene and orthoxylene contract price negotiations for June. With higher spot prices globally and a rise in feedstock costs, expectations for the June styrene contract price have been bullish. However, fundamentals are expected to remain balanced as Trinseo is shortly expected to restart its Bohlen unit in Germany.

METHANOL AND INTERMEDIATES: Signs of tightness remain in the methanol market amid planned turnarounds in Europe, talk of delayed vessels and shrinking imports. Acetic acid remains in tight supply as BP’s Hull, plant is still in turnaround. Vinyl acetate monomer imports into the EU will now carry a 5.5% tariff as the duty-free quota for the year has been reached. Chlor-alkali in the Mediterranean is long at present, amid a drop in demand from Turkey. The length is expected to remain through the summer as demand is expected to drop off from and Spain through the summer holidays.

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–Sam Hashmi, sam.hashmi@spglobal.com –Shashank Shekhar, shashank.shekhar@spglobal.com

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