OLEFINS: December contract prices settled last week, with the ethylene CP rising Eur32/mt to Eur1,057/mt ($1,252/mt) FD NWE and the propylene contract price rising Eur32/mt to Eur892/mt FD NWE. Rising contract prices defied largely lengthening fundamentals, but rising naphtha prices lent support to olefins and are expected to do so this week as well. The CP increases were widely expected in the market, with some feeling there was pre-buying as a result. Material remains widely available in Europe with high production runs reported. An unplanned shutdown and subsequent restart at the site of Sabic’s Geleen steam crackers was reported mid-week, with some expecting a possible impact on the market. Butadiene demand in Europe is good as December gets underway. One producer commented that it had yet to see signs of an end of year slowdown. Although the European December contract price has been settled lower on the month, spot prices are facing upwards pressure after signs of demand from export markets.
POLYMERS: The return of Borealis’ PE and PP assets in Schwechat, Austria are expected to add bearishness to the spot PE and PP markets. Demand remains solid, but capped by the usual seasonal eye kept on inventory management. Buying was strong in November meaning some consumers could be absent from the market in the coming weeks. Some producers reporting order books full for up to six weeks as the year winds down. As for PS, following an increase in the December styrene contract price, downstream polystyrene prices are expected to rise. Minor production issues in Europe, as well as a lack of competitive import offers will continue to keep fundamentals tight in the PS market.
AROMATICS: With the styrene and benzene contract prices settling at a healthy spread, benzene demand is expected to remain robust in Europe. Furthermore, a healthy benzene premium to toluene could ensure decent benzene-to-toluene conversion run-rates in Europe. Chemical demand for toluene was on the rise in the last days of November and this is expected to continue in the first half of December at least. Furthermore, the toluene arbitrage to the US could prove a catalyst, as benzene converters in Europe and traders looking to shift product across the water could end in fight over available spot volumes.
METHANOL AND ETHERS: European methanol has found support from a bullish Asian market in recent days, and the same trend could extend into this week. As for MTBE and ETBE, gasoline-blending demand remains subdued in line with seasonal trends, but rising methanol and an overall strengthening crude oil complex has offset most of the losses in MTBE prices.
INTERMEDIATES: Bearish sentiment remains in the MEG market as a result of a second successive mild winter dampening demand for anti-freeze. Some market participants have suggested last year’s stocks are still being sold as a result. Producers await full-blown winter weather hitting Europe to increase demand.
SOLVENTS: As the annual slowdown towards the second half of December approaches, market participants will be looking to get their last business done before year-end. Some decent pre-buying was reported last week, which could possibly result in a dormant market towards the end of the week.