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EMEA: The week ahead in petrochemicals

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EMEA: The week ahead in petrochemicals

London — OLEFINS: The European propylene market looks fairly bullish this week on theback of light feedstocks usage, maintenance works at refineries andhealthy offtake, with spot prices expected to remain at a premium to thecontract price. Supply of ethylene remains ample in Europe, with double-digitdiscounts to the monthly contract price on spot volumes in sight after theEuropean June ethylene contract price settled Eur63/mt higher month-on-month.While expectations had been bullish for June, the magnitude of the increasecame a surprise to many market participants. Butadiene prices in Europecontinues to be supported by the strength of export markets, while demandremains robust in Europe and other regions alike.

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POLYMERS: The weakness of the euro against the dollar has lessened theattractiveness of the European polyethylene market for exporters from otherregions. This is reducing the length seen previously in parts of the PEmarket, while the much firmer June contract price for feedstock ethylene isset to push PE prices higher. The polypropylene market looks set to remainbalanced-to-tight in June on the back of good demand and declining imports.Meanwhile, availability remains extremely tight on polyethylene terephthalateamid the persistent drought on feedstock PTA as the force majeureremains in place at BP's plant in Geel, Belgium. Some PET producers arecurrently unable to meet their contractual obligations to customers, which isexpected to now remain in place for at least a few months. Styrene-butadienerubber prices have risen in response to the rise in the butadiene contractprice and amid a lack of competition from imports. However, tire demand isexpected to drop in the second half of the year following normal seasonalpatterns. Polystyrene and acrylonitrile-butadiene-styrene prices are alsoexpected to rise on the back of higher feedstock styrene costs in June.

AROMATICS: The European benzene market remains long with prices hovering inthe high $800s/mt range, while spot arbitrage opportunities to export areshut. Meanwhile, toluene fundamentals remains strong amid export interest tothe US, although domestic chemical demand in Europe remains weak. Mixedxylenes supplies are lengthening amid persistent demand weakness, and asarbitrage opportunities remain difficult to work. Meanwhile, marketparticipants are looking forward to developments in the paraxylene andorthoxylene contract price negotiations for June. With higher spot pricesglobally and a rise in feedstock costs, expectations for the June styrenecontract price have been bullish. However, fundamentals are expected to remainbalanced as Trinseo is shortly expected to restart its Bohlen unit in Germany.

METHANOL AND INTERMEDIATES: Signs of tightness remain in the methanol marketamid planned turnarounds in Europe, talk of delayed vessels and shrinkingimports. Acetic acid remains in tight supply as BP's Hull, UK plant is stillin turnaround. Vinyl acetate monomer imports into the EU will now carry a 5.5%tariff as the duty-free quota for the year has been reached. Chlor-alkali inthe Mediterranean is long at present, amid a drop in demand from Turkey. Thelength is expected to remain through the summer as demand is expected to dropoff from Italy and Spain through the summer holidays.

--Sam Hashmi, sam.hashmi@spglobal.com--Shashank Shekhar, shashank.shekhar@spglobal.com