AMERICAS: The week ahead in petrochemicals

US POLYMERS

Spot export US polyethylene prices are expected to increase in the week starting April 19 as sources anticipate continued limited availability and price increases.

Dow Chemical and Equistar Chemicals announced a price increase of 5 cents/lb effective May 1, and one source anticipates other producers to follow with similar price hikes. "At the same time, I think the arbitrage from the US is almost non-existent at this stage," the same source said. In US domestic PE contracts, pricing is expected to remain stable on the week as the April settlement has not been announced yet.

US OLEFINS

US spot polymer-grade propylene is expected to rise in the week beginning April 19 amid healthy production as all three propane dehydrogenations were heard running as of Enterprise's PDH restart in late March. Gulf Coast spot ethylene is expected to continue climbing this week amid unplanned cracker outages in Texas and Louisiana.

US AROMATICS

Skyrocketing US benzene prices during the week of April 12-16 could continue to see strength if downstream demand proves robust enough in the short term. However, feedstock benzene could prove too costly for derivative producers such as styrene unit operators that would be sourcing that benzene for spot market material, sources said. April benzene closed April 16 at 440 cents/gal DDP USG after rising more than 80 cents in one week, marking a new high of more than six years for prompt cargoes. The ongoing May contract price trading period will also influence market participants' decisions amid an environment of extremely tight prompt supply, strong backwardation that is starkest between May and June, and the aforementioned demand from producers of styrene, cumene, cyclohexane, and phenol. Downstream, US styrene prices reacted to rising feedstock costs with higher prices and a return in liquidity during April 12-16. Market participants said they expect that strength to remain and may expand as producers seek to retain a wide enough production margin to make spot production lucrative. April styrene closed April 16 at $1,470/mt FOB USG.

US METHANOL & MTBE

US spot methanol prices are expected to strengthen in the week beginning April 19 amid tighter regional production driven by talk of reduced rates at two facilities in Texas and given limited imports driven by ongoing facility outages in Trinidad. MTBE prices are expected to be stable to weaker, with talk of limited export activity from the US Gulf Coast adding pricing pressure to prompt supply. Favorable production margins for MTBE could also lead to increased supply in coming weeks, adding further pressure to spot prices.

LATIN AMERICA

Latin polymers prices are expected to see stable to lower prices in the week beginning April 19 for polyethylenes, driven by more material available in the market, and also expected are lower values for polypropylenes in the imports markets of Brazil and the West Coast of South America, driven by offers from Asia and Middle East. The Latin American region had been mostly relying on imports from Europe and Asia since early March as the US had very limited volumes for exports, which opened a window of opportunity for Asian markets to establish more competitive offers than the US. Markets are still dividing its expectations to see if US prices added to freight would be more competitive than Asian and European products considering freight. The US is generally the most important supplier of polyethylene for the region, while Middle East and Asia are for polypropylene. In Brazil, local producer is expected to remain flat for April bookings. All prices are already at the historical all-time high for all PE in real and US dollars. Polypropylene prices are expected lower for the week with offers on the sea from Asia, while higher prices are seen especially from local producers in Latin America. Brazil and the West Coast of South America imports mostly come from Asia and Middle-East if compared to the US. The PVC market in Latin America is seeing mixed expectations regarding prices in the market. Most Latin American countries have poor demand at the moment, led by Brazil with buying interest very low. In Mercosur, market players expect flat prices for April bookings. Distributors believe prices will be steady until the turnover of the month. Availability was already reported sold out from most distributors. In Argentina, prices are at their all-time record high and are expected to change only for May bookings.