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Factbox: Coronavirus affects Americas petrochemicals markets

Houston — While chemical manufacturing is among sectors deemed critical to combat the spread of the coronavirus, markets continue to face serious challenges as end-users step back and cancel or postpone orders, unable to gauge demand in the coming weeks and months amid increasing stay-at-home orders throughout the Americas.

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Some polymer markets are showing the strain, as export markets want less US polyvinyl chloride, a construction staple and key economic indicator, and US prices for polyethylene terephthalate, the plastic used for beverage bottles, reached a 14-year low as its feedstock prices take sharp dives.

"Petrochemical liquidity and price transparency during March has been severely limited as buyers and sellers prioritize managing the

safety of their employees. As we head into April, contract negotiations will force market participants to set prices based on the lowest

energy and feedstock prices since 2008," Rob Stier, Senior Manager Petrochemical Analytics at S&P Global Platts, said.

He added S&P Global Platts Analytics expects prices for many petrochemicals and polymers to decrease over the next two months and set new multiyear, if not record, lows. PVC has been a bright spot but, with shelter-in-place orders around the world, construction also will be disrupted and demand for PVC will fall in April. Aromatics prices have fallen along with record-low gasoline prices, taking PET down as well.

"There will be continued pressure on prices and margins for the next few months as the world overcomes the pandemic and OPEC floods the market with low prices in crude oil," Stier said.

PRODUCTION

**Formosa Plastics has restarted its 798,000 mt/year PVC plant in Texas after planned work, while Shintech has launched a turnaround at its 1.4 million mt/year PVC complex, also in Texas.

**While Shintech's work would normally support higher prices by tightening export supply availability, traders say end-users in export

markets are canceling or postponing orders, unsure of demand strength over the next month or more when shipments would arrive.

**US refineries have cut operating rates as naphtha becomes a profitable feedstock and ethane margins hover near zero.

**Improved economics for naphtha and LPG feedslates could lead to increased preference by cracker operators, leading to higher propylene output and lower propylene prices.

**FG LA, a division of Taiwan's Formosa Plastics, has suspended major construction at its planned petrochemical complex in Louisiana in the interest of worker health and safety amid the pandemic. Site design work on the project continues.

TRADE FLOWS

**India's decision to lock down the entire country of 1.3 billion people as of Wednesday for 21 days has cut largely cut off US export

flows in the region as those from other countries in Asia and elsewhere seek other homes for petrochemical cargoes.

**Brazilian petrochemical producer Braskem could delay restarts of chlor-alkali and ethylene dichloride prices shut since May 2019 from the current May target amid coronavirus-related restrictions, extending the company's dependence on caustic soda and EDC imports.

**Brazilian petrochemical industries can work with no restrictions, exempt from a decreed 15-day quarantine in the Sao Paulo

state starting Tuesday.

**Closures of the Mexican and Canadian borders to non-cargo movements has led to long lines of trucks waiting to cross into the US,

but trade continues.

**Operations along the Houston Ship Channel and other major US ports that export resin, including Charleston, South Carolina, and

Savannah, Georgia, were normal.

PRICING

**The US domestic polyethylene terephthalate (PET) contract price fell 5 cents Wednesday to 49.5-50.5 cents/lb ($1,091-$1,113/mt), its lowest level since Platts launched the assessment in February 2006, based on a lower feedstock monoethylene glycol contract and stable upstream purified terephthalic acid (PTA) contracts.

**US export PVC prices fell $15 week on week Wednesday to $835-$845/mt FAS Houston based on deals heard done in that range as the market awaited fresh April offers.

**Weekly US export LDPE prices held steady at $937-$959/mt (42.5-43.5 cents/lb) FAS Houston, with railcar pricing talked tight at

40 cents/lb range.

**Weekly HDPE blowmolding prices were stable Wednesday at $717-$739/mt (32.5-33.5 cents/lb) FAS Houston, with railcar pricing

discussed at 30 cents/lb.

**Weekly LLDPE butene prices were flat Wednesday at $717-$739/mt (32.5-33.5 cents/lb) FAS Houston Wednesday, based on railcar values talked at 30 cents/lb.

**Weekly homopolymer injection-grade polypropylene prices rose $11 Wednesday to $1,047-$1,069/mt (47.5-48.5 cents/lb) FAS Houston amid tight supply and higher medical sector demand.

**CFR WCSA homopolymer PP prices fell $20 to $945-$955/mt, while the CFR Brazil marker fell $30 to $980-$1,000/mt.

**CFR WCSA PVC prices fell $50 to $855-$865/mt, and CFR Brazil PVC fell $40 to $855-$865/mt.

**CFR WCSA HDPE film prices fell $30 to $8250$835/mt, while CFR Brazil HDPE film prices fell $20 to $820-$840/mt.

**CFR WCSA LLDPE prices fell $20 to $805-$815/mt, while CFR Brazil LLDPE decfeased $20 to $800-$820/mt.

**CFR WCSA LDPE prices fell $30 week on week to $1,025-$1,035/mt, while CFR Brazil prices fell $10 to $1,010-$1,030/mt.

**US March spot polymer-grade propylene was flat at 18.625 cents/lb FD USG as contract pricing remained unsettled amid a bearish

energy complex and prolonged negotiations. Prompt refinery-grade propylene held at 10 cents/lb FD USG.

**Non-LST propane prices rose nearly 5% Wednesday to 26.75 cents/gal.

**Spot ethylene prices rose 0.25 cent from an all-time low to 10.25 cents/lb FD Mont Belvieu Wednesday, but the FD Choctaw price held at 9 cents/lb.

**Non-LST ethane rose 16% to 11.75 cents/gal, up 1.625 cents from Tuesday.

**US MTBE FOB USG increased 10.31 cents to 64.81 cents/gal, in line with higher gasoline futures and remaining at a 10.13 cent/gal premium to front-month NYMEX RBOB.

**US methanol FOB USG decreased 3 cents to 71 cents/gal for both front-month (March) and forward-month (April) prices, with an offer heard for April at 72 cents/gal FOB USG.

**US benzene prices rose 8.6%, or 9 cents, to 113 cents/gal DDP USG Wednesday.

**FOB USG spot styrene prices rose 10.6% to 18.82 cents/lb Wednesday, up from 17.01 cents/lb.

**March and April FOB USG toluene prices each rose 10 cents Wednesday to 106 cents/gal.

**March and April FOB USG mixed xylenes each rose 10 cents to 98 cents/gal Wednesday.

**Spot FOB USG paraxylene was flat on day at $520/mt.

**USGC standard naphtha barge prices rose 26.7% to 34.29 cents/gal, up from 27.05 cents/gal Tuesday. USGC light straight-run

naphtha prices rose 10.7% to 38.75 cents/gal, up from 35 cents/gal Tuesday.

**NYMEX April RBOB settled at 54.68 cents, up 10.31 cents from Tuesday.