US spot ethylene prices have come under pressure in recent weeks, with sources pointing to healthy supply length as steam crackers begin to resume normal operations after post-Hurricane Harvey shutdowns.
US OLEFINS
Even with the startup of new downstream polyethylene plants, prompt-month ethylene prices have shed more than 22% since a post-Harvey peak of 32.25 cents/lb FD USG on September 20, while the forward month has fallen by 23% during the same span.
Data from the American Fuel and Petrochemical Manufacturers showed an output build of 175 million lb or 8% in the third quarter of the year, compared with the previous quarter.
The October contract price settled last week at 34.75 cents/lb ($766/mt), down 50 cents/lb compared with September.
Spot propylene prices also come under pressure of late, due in part to slower downstream demand for polypropylene, sources say.
Enterprise Products Partners late last week said its 750,000 mt/year propane dehydrogenation plant in Mont Belvieu, Texas, is in startup mode and the company anticipates full-rate production by the end of November.
The PDH unit, for which startup has been pushed back several times, was most recently expected to come online in October, but has experienced a delay due to Harvey, the company said in its earnings call.
US AROMATICS
US spot toluene assessments fell roughly 6 cents week on week as prices were supported by strong disproportionation economics and, in theory, healthy blend values, sources said.
TDP and MSTDP margins rose sharply week on week, driven by prompt benzene strength and weaker toluene prices. TDP and MSTDP margins were estimated at near $201.50 and $120/mt, respectively, according to S&P Global Platts data.
HDA margins remained positive this week, increasing roughly $60 to finish Friday near $95.50/mt.
The increase was driven by stronger prompt benzene pricing, which rose roughly 14 cents to finish Friday’s session estimated at 302 cents/gal DDP USG.
Toluene also saw support on paper from stronger blend values. Blend values rose roughly 4.5 cents week on week to finish Friday at near 238 cents/gal, according to Platts data.
Sources said, however, that reformate was better value and a more attractive blendstock.
Spot mixed xylene prices dipped slightly week on week, falling 2 cents to finish the week at 235 cents/gal FOB USG.
The market continued to be characterized as tight amid a dearth of high-purity barrels, although supply is likely to improve with the restart by Citgo of production at Corpus Christi, sources said.
Demand is also expected to improve in the near term with the restart of Indorama’s 1.3 million mt/year paraxylene facility in Decatur in the middle of the month, sources said, adding that demand from Canada and Mexico also remained healthy.
Downstream, prompt spot PX prices increased over the past week, finishing Friday at $825/mt FOB USG amid steady fundamentals.
The PX-MX spread widened in October and was estimated near $265/mt Friday.
US POLYMERS
US polyethylene export volumes remain limited, with some producers still offering little material for export as production ramps back up or the emphasis remains on fulfilling domestic obligations.
With expectations that supply for exports — which has been tight since Harvey hit the Texas coast in late August — could improve later in the month, some sources say expectations remain that prices could eventually move lower.
In the domestic market, sources say there could soon be pressure on pricing, with some talk that decreases could be in play as soon as this month, particularly if buying slows.
Domestic contract prices have moved up by a combined 10 cents/lb in August, September and October.
US polypropylene exports remain nearly non-existent, as most available resin is being routed to the domestic market, where sellers are able to obtain a 5- to 10-cent premium to spot export pricing. Higher contract prices for feedstock propylene in October have helped push domestic pricing higher.
A significant portion of PP contracts in North America remain on a monomer-plus basis, with the premium over polymer grade propylene talked at 16-18 cents/lb.
US VINYLS
October’s slide could extend into November this week on soft global demand, though some traders said prices that fell below $800/mt FAS Houston last week enticed dormant buyers to emerge.
Formosa Plastics last week re-entered the export market after a month on the sidelines post-Harvey, with its repaired Texas vinyl chlorine monomer unit ramping up, bringing more supply into the market.
Resin packagers, however, do not expect exports to reach pre-Harvey levels until mid-November to early December, followed by a seasonal year-end rush to reduce inventories.
Caustic soda prices could continue to rise on strong demand in Australia and Latin America, declining exports from China and Europe, and no known capacity additions.
Shintech is seeking permits to expand its PVC capacity and build a new plant to make VCM, ethylene dichloride, chlorine and caustic soda at its Plaquemine, Louisiana, complex.
The company has asked regulatory agencies to approve permits by May 2018, but has announced no formal plans for the project or target startup dates.
LATIN POLYMERS
Market activity is expected to pick up this week as industry participants return from regional holidays late last week and with pricing for some imported plastics resins expected to continue softening on improved availability this month, sources said.
On-the-water cargoes should continue to be the most sought-after by importers who are looking to avoid timing deliveries during December’s holiday downtime, sources said.
In Chile, PP producer Petroquim is increasing its run rates to around 75% this week amid improved availability of feedstock propylene from state-owned ENAP, a company source said.
Pricing for PVC has been talked lower recently along South America’s Pacific Coast, with some market participants expecting that trend to continue this week as prices in the US — where most competitively priced PVC imports originate — have come pressure due to weak domestic and global demand.
Brazilian PVC import pricing has been talked stable in recent days, with buyers pointing to unchanged offers from Europe being the most competitive option.
Demand for PE and PP imports has been weak recently in Brazil, where buyers have been rejecting offers for December and January holiday season deliveries, sources said.
Domestic pricing in Brazil was relatively stable in October, sources said, with market sentiment mixed for November.
