London — The European petrochemical markets have seen a largely muted week as contract negotiations, particularly for ethylene and propylene on the olefins side, extended into July. This delayed activity in related downstream markets, with many polymer markets seeing limited bids and offers until a clearer price direction emerged.
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In the feedstock markets, which did see contracts settle, substantial increases were generally seen, driven largely by a continued improvement in the upstream energy complex.
However, markets heavily exposed to the transportation sector such as synthetic rubber or blendstocks, remained under heavy pressure, with the slow recovery in fuel demand keeping downward pressure on blending values of European aromatics prices in particular.
The following are the latest key facts affecting the European petrochemical and consumer goods markets:
-- The European methanol contract price for the third quarter was agreed at an 11% decrease from the second quarter.
-- Methanol spot prices are hovering around a 30% discount to the Q3 contract price, below the 40% discounts seen in the last week of June but still above 2020 commercial discounts.
-- The industry-settled European July ethylene contract price was delayed due to a lack of agreement.
-- The European toluene contract price for July was agreed at a 17% increase, with some fallbacks.
-- Polystyrene producers signal a contract increase for July, based on a rising spot market for feedstocks.
-- The ABS market remains steady as producers await upstream CP settlements.
-- European PET producers are looking to increase prices in July, in a bid to counteract lower sales volumes. Buyers, however, seem reluctant considering expectations of more stable feedstock PX and MEG contract prices in July.
-- The European propylene July CP settled at Eur705/mt, a near 11% increase from June due to a strong cost push from feedstock naphtha.
-- European acetone spot market prices have been rising, picking up 17% week on week June 30, supported by the higher feedstock propylene contract settlement and exports, amid higher prices overseas.
-- The July benzene contract was settled 29% above the June CP. Spot prices over the same period rose 31%, from the last day of May to the last day of June.
Infrastructure & trade flows
-- Despite the drop in the European methanol Q3 contract price, which hit its lowest levels since Q2 2016, producer margins are likely to remain healthy as methanol demand slowly stabilizes.
-- The 11% decrease in Q3 methanol contract prices provided the required support for MTBE production unit margins, while the narrowing gasoline to naphtha spread keeps pressure on MTBE producers.
-- Transportation costs in West Africa continue to increase amid competition for trucks from the fertilizer sector during the ongoing rainy season.
-- The butadiene arbitrage to Asia remains steady despite lackluster downstream demand in the Far East keeping pressure on export prices
-- The fall in the methanol Q3 contract price was largely anticipated by the industry amid weaker demand and supply length.
-- Xylenes demand is expected to continue on a contractual basis for July, with little spot interest.
-- Turkish polymer offers remain thin on the ground as the market awaits the feedstock settlement.
-- Q3 caustic soda contract price discussions have begun amid softer market fundamentals, with pressure remaining on spot prices.
-- European styrene sentiment continues to turn more bullish, with demand gradually recovering while run rates remain low. The upstream energy complex remains a major driver for higher styrene and feedstock benzene prices.