Globally, market players are watching feedstock movements in the US. Recent developments in monomer costs have lead to expectations that American materials can return to a competitive position on the global markets as per Chemorbis. Shortages have led to skyrocketing propylene and ethylene prices in the US, limiting supplies of PE and PP to the export market. PVC supplies have seen no such limitations - large quantities of US PVC in the Chinese market are affecting May pricing in Asia. Ample quantities had been sold in April and material continues to be available in bonded warehouses during May negotiations. Asian players opine that lower ethylene prices and easing supplies in the region should affect availability of US PVC and prices by next month. These expectations have already affected sentiment in the PVC market, according to players’ reports from Asia. In Turkey, a buyer commented that they were looking for American PVC for their end products which will be re-exported and noted that lower offers were available for materials that will be newly shipped. A couple of Egyptian buyers have also reported receiving slightly lower US PVC offers over the past few days.
In the US ethylene market, spot prices have seen declines of over US$700/ton from the peak level seen in 2010, although last week saw a rebound of around US$154/ton in spot values. This downward trend in spot prices has led to a decrease of US$66/ton in the April contract price. Adding an estimated US$150/ton conversion cost and freight rates to spot ethylene prices indicates that US PE may become a competitive factor in the Asian market. Although PE offers are still limited, Asian players hope to see more supply from the US in the month ahead. In the US propylene market, a more dramatic fall was seen in contract prices this past week with a decline of US$264/ton for May contract figures. The decrease was expected after the trend seen in spot prices and after the recent extreme run up in polymer grade propylene prices. Spot propylene prices peaked in early April in the US and have declined since then by around US$400/ton with players expecting to see the downward decline continue.
Unlike PE, theoretical costs of PP based on spot propylene prices show the US has not yet moved into a competitive position. Players have reported offers for cargoes shipping out in June, but further declines in costs will be necessary to make US PP materials competitive against other origins. This hasn’t stopped players from speculating on when additional materials will be coming in the market along with to the new capacities coming onstream. Asian players are opting not to stock more than they need at this time.