AMERICAS: The week ahead in petrochemicals

US OLEFINS

US spot polymer-grade propylene is expected to continue on an upward trend amid healthy downstream polypropylene demand, according to sources. Spot ethylene is expected to be lower in the week beginning May 10 amid healthy supply following cracker restarts last month, sources said.

US VINYLS

US spot export polyvinyl chloride prices are expected to remain in a range of $1,745-$1,755/mt FAS Houston the week of May 10, amid continued tight supply. Formosa Plastics USA was conducting a turnaround at its 612,000 mt/year PVC plant in Baton Rouge, Louisiana, and Westlake Chemical had a turnaround slated to begin in mid-May at one of its three chlor-alkali units in Lake Charles, Louisiana. Both turnarounds were expected to keep overall PVC output tight going into June. While prices could retreat, any decline is expected to be gradual, according to market sources. Upstream, US contract caustic soda and chlorine prices are expected to rise, as previously announced price increases begin to be incorporated into contracts. Chlorine, the first link in the PVC production chain, was seen tight going into seasonally high summer demand season, particularly for chlorine tablets used in home swimming pools. A fire destroyed BioLab's chlorine tablet manufacturing plant in Lake Charles, Louisiana, in August, after Hurricane Laura hit the region. The plant was among three that make the tablets in the US, and it is not expected to be rebuilt before 2022, leaving overall US chlorine supply tight, market sources said.

US METHANOL

US spot methanol prices are expected to be rangebound to weaker, following the restart of facilities in Trinidad. While demand continued to be talked about as strong, sources indicated that buyers will be hesitant to enter the market at higher prices in anticipation the startup of the YCI I facility. Additionally, there is still bullish sentiment from the supplier side of the market as US supply is still tight.

US POLYMERS

Spot export US polyethylene prices are expected to lower as sources see the export market softening as production rates grow. Demand is weak and production at most sites are back to normal, one trader source said. "It is just a matter of time to replenish inventories," a separate source said. In US domestic PE contracts, pricing for the April settlement increased on the week May 5 with low density PE, linear low density PE and high density PE film up 9 cents/lb and HDPE blowmolding and HDPE injection rising 7 cents/lb, based on producers pushing pricing higher, sources said. The settlement is in addition to the previous 19-cent increases that have been implemented since January of this year.

Meanwhile, US polypropylene market participants are expected to continue to grapple with firm pricing amid supplier hikes announced for May and June as well tightened availability. Increased supply has been met with continued healthy demand for resin and export availability has been muted through 2021. There is talk of an increase in off-grade pellets available, but prime resin has alluded exporters through the month. On the week May 5, pricing increased $44 and S&P Global Platts assessed the export homopolymer injection-grade polypropylene at $2,194-$2,216/mt (99.5-100.5 cents/lb) FAS Houston basis. Still, there was talk of pricing continuing to climb in the short term. ExxonMobil and Braskem America announced 8 cents/lb price increases for US PP products, effective June 1, the companies said April 3 and May 3, respectively.

LATIN AMERICA POLYMERS

Latin polymers prices are expected to be stable to lower for polyethylene products, driven by material available in the market and lower Asian prices, and also expected 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 was having 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 their 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 for polypropylene.

In Brazil, a local producer has already announced hikes for May bookings, so expectations are for flat prices for the week. All prices are already at the historical all-time high for all PE in Brazilian real and US dollars. Polypropylene prices are expected lower for the week with offers on the sea from Asia, while lower prices are beginning to be seen 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 expects to see lower prices on week. Most Latin American countries have poor demand at the moment, led by Brazil, with buying interest very low. WCSA is currently seeing higher prices than Brazil, which is unusual for the market, due to poor Brazilian demand. But the situation should change as lockdown measures soften in the country.

In Mercosur, market players already expected new prices for May bookings last week, so a new pricing list is expected. Availability was already reported sold out from most distributors. With new prices, new availability is also expected. In Argentina, prices are at its all-time record after the $100/mt increase of the past week for May bookings. No more changes are expected for the month.