EMEA: The week ahead in petrochemicals

OLEFINS

London — Ethylene spot prices are expected to remain under pressure in the week, market participants said, citing low downstream margins.

Light cracking has reduced propylene supply but demand is expected to remain limited over the course of the week.

Following recent increases in the Asian market, European butadiene sellers' attention remains fixed on developments in the Far East as domestic demand remains limited.

European MEG supply tightness is expected to remain until September, as US import cargoes are unlikely to arrive before then.

POLYMERS

While polypropylene spot and contract prices have risen in July, following the rise in upstream propylene's July industry-settled contract price, there is uncertainty about demand as the market moves into the summer holiday period.

Discounting for some high density polyethylene grades has been interpreted as producers being under pressure to offload product because of reduced July demand.

PVC producers in Europe expect to be able to pass on the full ethylene cost increase due to an uptick in domestic demand in July.

Gradual demand recovery is expected to continue in the polystyrene market this week, in line with the broader economic trend in Europe as lockdowns ease. While buyers are pushing back hard against July price increases, low run rates of styrene monomer since March could mean availability trailing behind demand.

AROMATICS

In the European benzene market, pricing expectations for the week are mixed. Some stronger long-term support for prices has come from cut supplies due to refinery maintenance and lower extraction rates, but in the short term traders say bullish sentiment has outstripped demand.

Downstream, the styrene market will be watching producers closely for further signs of spot purchasing that could indicate the extent of maintenance plans during the third quarter.

METHANOL/MTBE

Trading in European methanol spot market will be subdued this week because of limited buying appetite. Market sources will keep an eye on imports as inventories in Rotterdam are moving down from the high levels in June. Meanwhile, a rebounding gasoline-to-naphtha spread is expected to boost demand for high octane components such as MTBE and ETBE and support their premiums to gasoline.

INTERMEDIATES

Oxo-alcohols will keep stable with support of firm export demand, and in preparation to upcoming maintenances.

Firm export demand and preparations for upcoming maintenances are helping to stabilize the European oxo-alcohols markets.

SOLVENTS

In Europe's solvents markets, hydrocarbon solvents producers and distributors will be announcing second-half July list prices with the expectation being that higher underlying road fuel and aviation prices will continue to buoy associated solvents markets.

In the oxygenated solvents markets, acetone demand for MMA and acrylics used for hygiene products has picked up significantly in Europe, with traders expecting demand to remain robust in the US and Asia too.

IPA demand has slowed in recent weeks, but traders are pointing to wide spreads as a sign that the price trajectory is still far from certain.

CAUSTIC SODA

Caustic soda prices will remain under pressure from oversupply.