Americas: The week ahead in petrochemicals

New York — Downstream US polymer markets are expected to firm amid proposed supplier increases this week, while olefins are expected to be steady with participants keeping a close eye on a key contract settlement.

OLEFINS: US spot ethylene is expected to be stable to higher this week on stronger upstream ethane prices, sources said. Domestic ethylene contracts are expected to settle this week at a rollover or decrease, sources said. US spot propylene is expected to be stable to lower this week amid higher refinery utilization rates.

POLYMERS: US polyethylene prices are expected to increase this week as market participants anticipate fresh pricing for June, sources say. Prices are increasing based on growing demand domestically and as businesses are gradually opening back up worldwide, one trader said. "I expect producers to push prices a bit more but I am not sure how successful they will be," a separate source said. Week on week on May 27, both high density PE blowmolding and linear low density PE increased $11 at $629-$651/mt (28.5-29.5 cents/lb) FAS Houston and $607-$629/mt (27.5-28.5 cents/lb) FAS Houston, respectively. While low density PE was unchanged on the week at at $849-$871/mt (38.5-39.5 cents/lb) FAS Houston. In domestic PE markets, contracts rolled over for June, sources said.

Likewise, spot export polypropylene is expected to rise amid firmer price indications at the end of the last week. Feedstock propylene settled at a rollover, further increasing market expectations of firm price levels on the back of a rebound in the larger energy sector, including stronger crude.

US VINYLS: US export polyvinyl chloride prices were expected to be stable this week in a range of $620-$630/mt FOB, the high end of where much of June business was concluded in late May. However, a producer was heard to have offered only 50% of available export volumes and could offer the rest this week, potentially pushing prices up further, on expectations that rising demand as economies emerge from coronavirus pandemic-related shutdowns could further boost pricing. Prices fell 39% to $520/mt FAS Houston on April 29 from $855/mt FAS on March 18 as economic shocks, shutdowns and uncertainty crushed PVC demand, but export prices have since rebounded 20% to $625/mt FAS. Domestic PVC prices could begin rising in June as well, as producers are seeking a 3 cents/lb increase for June and most are seeking another 3 cents/lb increase in July after prices fell 5 cents/lb in April.

LATIN AMERICA: Latin polymers are expected to continue to trend up for June bookings for most of its grades following hikes the past week, driven by announced increases by US producers, global upward sentiment and low-rate output from some producers. In Brazil's polyethylene market, prices are expected to be up for June, depending on volume or payments terms. The foreign exchange rate started the week again favorable to the real, reaching Real 5.38/$1 on June 1. Domestic pricing policy is expected to be announced this week from the local producer for all grades for June bookings. Sources advanced possible discounts for HDPE and LLDPE of Real 100/mt, which was not yet confirmed. Polypropylene prices are expected to be higher on week, with much higher prices coming from Asia and Middle East and the US. Along the West Coast of South America, spot import PE prices are expected to continue highly connected to US movements on the week, and therefore they are expected to see hikes for June bookings. The PVC market in Latin America had very limited deals reported last week, while demand has continuously been reported very limited across the region. Prices are expected to be up following an international uptrend in the US and China. In the Mercosur, fresh spot pricing is expected in the coming days for June bookings. Markets are slightly coming out of the lockdown, resuming slowly, with more activity reported. In Argentina, prices usually change in the turnover of the month, and buyers are having expectations of a new pricing list in the coming days for June bookings. Some distributors believe prices could increase from $50/mt to $90/mt.

METHANOL: Long supply in the domestic methanol market has contributed to rising regional storage levels. To balance itself out, the US market is expected to see either some high-cost production cuts or increased exports to Europe and Asia in the coming weeks. As a result, domestic spot methanol values are expected to be range-bound during the coming week, according to market sources.