Propylene trade participants started this week expecting all three US PDH units to be operating normally. Meanwhile, ethylene prices established a near 10-month low last week below the 13 cent/lb level amid weak ethane prices and ample supply. However, feedstock levels rebounded heading into this week, which also brought ethylene prices up again last Friday.
Market participants continued to weigh the fundamentals of ample polypropylene supply against moderate increases in spot pricing. Some expected improved export opportunities now that polymer-grade propylene pricing appeared to have found its floor. Sources talked the exhaustion of PP inventories imported late in Q4 2018 as opening the door for customers to return to a market that has tightened enough to allow for an uptick in demand. Supply could increase again, however, as one of two PP lines at Phillips 66’s Bayway refinery in Linden, New Jersey, is scheduled to restart Monday, according to a source.
Latin American polyethylene and polypropylene will see mixed movement this week, with market participants returning from various industry events happening across different regions. Traders continued to talk about how logistics from the US Gulf Coast remained difficult to deliver product to destinations when promised. Delays have been extended two weeks longer than normal, sources said. Traders believe PE prices to have hit the floor, but buyers are still hoping for more discounts due to lack of definition on the US-China trade tensions, sources said. Regional PP players in Latin America continued to watch the steps Brazil-origin PP would follow. Market players have seen Brazil-origin PP offers more attractive in the market, especially for volume greater than 400 mt. Distributors said they would not be able to offer the same pricing levels seen lately in the market and instead are $80/mt above. Southeast Asia-origin PP has found other markets with more economic incentives than Latin America destinations, sources said. Other players continued to look for US-origin PP but logistics constraints were not helping the flow of the business as product do not seem to be readily available for exports, sources said.
US polyvinyl chloride export prices were expected to remain in a range of $735-$745/mt FAS Houston this week, down $45/mt from March levels, after some producers settled April pricing in that range last week. One producer opted not to nominate April pricing, and offers were heard at $770/mt FAS Houston and $750/mt FAS Houston but were not heard to have generated buy interest. Market sources had expected lower April pricing, given the sluggish domestic demand, robust inventories and a continued logjam in rail storage-in-transit yards ahead of packaging that has hampered exports. Usually domestic demand starts picking up in March and April ahead of the peak summer construction season. However, market participants have said it has been slow to do so this year given prolonged cold weather in the US Northeast and upper Midwest, leaving producers with more-than-anticipated export volume availability despite turnarounds in March and April. Sources also said the domestic PVC market continued to mull a 2-cent/lb price increase for US material, though participants were skeptical that it would be accepted after the market accepted a 2-cent/lb price increase in March.
Spot methanol market participants continued to eye slowed marine traffic in the Gulf Coast this week, with no indications as to when conditions will improve. While sources have reported some activity at alternate locations like Texas City, market activity in recent sessions have still been characterized as “quiet.” Spot values were last assessed at 103.75 cents/gal FOB USG for the front month of April and 101.75 cents/gal FOB USG for the forward month of May.
The US benzene market is poised to remain firm amid tight supply this week as import volumes have dwindled in February and March. Sources noted that weaker toluene conversion margins would help to keep supply snug. Prices were expected to remain relatively steady amid limited liquidity. Sources noted that downstream demand from the styrene segment would likely continue to lull in the near term on the back of planned maintenance. Sources have said that at least one major US Gulf producer was in maintenance during April, though details and confirmation were not available at time of publication. This comes as styrene producers in Europe and Asia are poised to go into maintenance in April and May.
Source: S&P Global Platts