AMERICAS: The week ahead in petrochemicals

US POLYMERS: US polyethylene spot export prices are expected to remain stable in the week, as limited offers are heard in the market, sources said.

Pricing has been firm and rolled over last week, sources said. HDPE Blowmolding grades continue to be talked tight and are expected to remain strong in the short term.

In the US polypropylene market, pricing is also expected to remain firm on the week. Sources are hearing no availability for the grade with spot homopolymer PP prices talked heard notionally up to 120 cents/lb rail car basis. The market remains tight for exports amid healthy domestic demand.

Additionally, Total Petrochemicals & Refining will increase its prices of polypropylene products by 5 cent/lb on Aug. 1, the company said in letters to customers seen by S&P Global Platts. The increase is in addition to any change in monomer pricing, Total said July 16.

Meanwhile, LyondellBasell has shut its Equistar Chemicals polypropylene plant in Lake Charles, Louisiana, following a lightning strike, LyondellBasell said July 16.

The lightning strike occurred July 13, LyondellBasell said in a letter to customers obtained by Platts.

"This unforeseen event caused utilities outages and a shutdown of all plant production lines," the company said. "We are currently evaluating the overall impact to the plant and are working towards restart; however, at this time, we do not have a complete timeline for startup."

US OLEFINS: Ethylene prices have dramatically risen since the beginning of July, with several outages leading to tight US supply. Sources said domestic ethylene prices have been driven too high for exports in August for most offtakers, adding that some restarts have not occurred within producer's stated timelines, leading to uncertainty of when supply constraints will ease. Mont Belvieu prices have risen 87.56% since June 25, and FD Choctaw prices have risen 92.56%. However, lower priced bid/offers for August Mont Belvieu ethylene heard July 19 may indicate peak price spikes have already been seen.

US VINYLS: US export polyvinyl chloride prices could rise in the week of July 19 amid supply availability tighter than usual. Shintech was running operations at its Plaquemine, Louisiana, complex at reduced rates after lightning struck and ignited a fire at a transformer at the site on July 2. Market sources said the interruption has reduced Shintech's August export volume availability, and Westlake Chemical's PVC output remains reduced with the continued shutdown of an upstream vinyl chloride monomer plant at its Lake Charles, Louisiana, complex. Sources said domestic demand remains strong, which has further squeezed export volume availability, given much stronger domestic pricing. Market participants are keeping an eye out for the latest US housing starts data slated to be released July 20 for further insight into continued strength in domestic demand. Upstream, export ethylene dichloride availability remained thin at best with producers lacking incentive to dedicate chlorine to spot EDC cargoes, given better returns for other chlorine products, from downstream PVC to hydrochloric acid, polyurethane foam, refrigerants and water treatment. Overall chlorine and caustic soda supply remained tight, with expectations of higher availability after Olin concludes a September turnaround at its 3 million mt/year chlor-alkali unit in Freeport, Texas.

US METHANOL & MTBE: Methanol prices have been stable following trading in the weeks ending July 9 and 16. Market sources have said that the YCI Methanol One facility is expected to begin production by the end of the week ending July 23, which could alleviate some supply tightness. However, while sources have said that it seems buyers are heavily betting on the startup of the facility to decrease prices, it is not anticipated that the Koch, the owners of YCI, will immediately flood the market with new material, leading to a substantial price decrease.

In the US MTBE market, prices were poised to remain stable to stronger, with the likelihood of spot MTBE flipping back to a slight premium to RBOB futures. Relatively stable export demand to Mexico is expected to continue adding a floor to prices, with talks of lower regional production also potentially adding price support moving into the remainder of the month.

LATIN AMERICA: Latin polymers prices are expected to be stable to slightly higher this week for polyethylenes, driven by higher prices from Asia and continuously high freight costs from the region, while more availability from the US at not so much competitive prices doesn't affect the tradeflow in the region. The region had been mostly relying on imports from Asia since early March as the US was having very limited volumes for exports, which opened a window of opportunity for Asian markets to stablish more competitive offers than the US. However, since mid-May more US material became available for the region, still at higher values than Asian material.

Markets are dividing their expectations to see if US prices summed with freight would be more competitive than Asian products considering freight. The US is generally the most important supplier of polyethylene for the region, while Middle East and Asia for polypropylene. The only concern in traders is logistics costs from Asia, increasing lately and putting pressure on final CFR prices from that region. Costs were reported up to $500/mt in a short container week just for shipping and handling.

Latin America also expects higher values for polypropylenes in the imports markets of Brazil and the West Coast of South America, driven by offers from Asia and Middle East. Polypropylene prices are expected higher for the week with offers from Asia. Higher prices were also seen from local producers in Latin America if compared week on week. Brazil and the West Coast of South America imports mostly come from Asia and the Middle East if compared to the US. In Brazil, local producer is expected to withdraw a discount of Real 500/mt for the week.

The PVC market in Latin America expects to also see flat-to-higher prices on the week for the WCSA, driven by limited US availability. Most Latin American countries have poor demand at the moment, lead by Brazil with buying interest very low. WCSA is currently seeing higher prices than Brazil, unusual for the market due to poor Brazilian demand. In Mercosur, prices are expected to be flat for the remaining of July, while distributors are reporting lower prices from extra-zone material. In Argentina, prices are expected to be flat on the week, while expectations for the rest of July are mixed. One producer was reported decreasing prices for the month, while the other decided to keep the pricing list unchanged. Imported material is at least at a $100/mt discount compared to domestic delivered, sources said.