London — OLEFINS: The European olefins market is starting to show signs of tightness. Ethylene supply in Europe remains long, although trade sources have begun to report lower spot discounts to contract prices. In the propylene market, signs of tightness remain following a reduction in cracker run rates due to hot weather in northwest Europe and healthy demand. Cracker maintenance in Europe during the August-October period may also tighten supplies. In the European butadiene market, contract price negotiations for August will get underway in earnest this week, following a strong July with good demand
AROMATICS: In benzene, market fundamentals are broadly balanced. The market structure has now flattened from the sharp backwardation in late-June to early July. The European styrene market is expected to lengthen in coming weeks as demand eases. The supply loss as a result of Synthos’ turnaround is expected to be more than offset by imports from the US. In European toluene, TDP units are enjoying positive margins and are propping up toluene demand in Europe, despite an otherwise anaemic consumption picture. In MX, demand from blenders is expected to remain absent due to the present length in octane. But interest from PX producers remains good. Demand for PX is strong, with interest from European PTA producers and good export opportunities expected to remain.
POLYMERS: General purpose polystyrene market participants expect July GPPS demand to shrink on a year-on-year basis, reflecting the presently weak styrene market. ABS prices might come under further pressure as the growing arb window could invite more imports and European producers would face a choice between margins and market share. Bearish ethylene has weighed on polyethylene and this could keep prices flat for several grades. But metallocene and certain grades of high density PE are expected to experience supply restrictions due to plant maintenance. With improvements in downstream PTA supply, there is anticipation from market participants that this will filter into downstream PET. PET has been at high prices this summer due to the extreme tightness. The market now sees some buyers holding off purchasing in expectation of prices dropping with this improvement in supply.
INTERMEDIATES: The European methanol market continues to monitor low Rhine water levels. But the impact of low water levels on logistics in the methanol market has been offset by a lull in demand, which is expected to last during the summer holiday period. Market participants will also be watching developments in Russia as a ban on the movement of dangerous products, including methanol, was expected to come to an end on July 25. Current supply length of MTBE has been in question this week after 10 days of high liquidity for the market. If demand is sustainable, this could lead to further increases for the MTBE factor to gasoline. Gasoline demand was focused on the Mediterranean last week, a positive for MTBE, although this focus may be shifting towards the US where MTBE-blended fuels cannot be consumed. Poland’s Zak is expected to lift the force majeure at its oxo-alcohols plant in Kedzierzyn-Kozle. Meanwhile, force majeure at Ineos’ oxo-alcohols plant in Lavera, France is still in place.
–Emmanuel Latham, [email protected]
–Edited by Jeremy Lovell, [email protected]
Source: S&P Global Platts