Petrochemicals outlook in Americas for week ended August 5 as per SP Global Platts
US ethylene trade participants said they were looking ahead to July contract price settlements heading into this week. US ethylene prices are finding support, moving to a seven-month high of 19.50 cents/lb FD USG in the spot market last week, following a fire at ExxonMobil's Baytown, Texas, complex on July 31.
US polyethylene market participants are still looking to finalize domestic July contract prices this week. There were no contracts finalized last week as expected, but sources expect stable to lower July CPs based on ample supplies and weak global demand. However, recent strength in the feedstock ethylene market may lend some support to July PE CPs, according to some sources. US polypropylene market participants are skeptical that the Baytown fire will support spot prices due to ample inventory for both feedstock polymer-grade propylene and polypropylene. A propylene recovery unit was damaged in the blaze, and a polypropylene unit was shut as part of the ongoing investigation. Sources anticipate the unit will be shut for at least two weeks, during which time any assessment of the impact on the market will become clearer.
The Brazilian PE market started the week under further pressure from international prices, which could continue pushing CFR prices lower during the week, sources said. Currency exchange volatility is starting the week looking less favorable for the Real than a week ago, putting less pressure on domestic prices. High-density PE prices were dropped Real200/mt on Friday by domestic producer Braskem, while low density and linear low density PE prices were unchanged. The Brazilian polypropylene market is expected to be stable during the coming week. Braskem maintained its prices. In Argentina, the direction of domestic prices is expected to remain unclear during the coming week. Generally, prices in Argentina are changed in the last days of each month. However, the direction of the PE market has been unclear after an explosion at the BB 2 steam cracker at Dow Chemical's Bahia Blanca complex at the end of June. The company said the complex would be offline until the end of the third quarter, which could boost prices due to a lack of availability. Nonetheless, prices were unchanged for early August.
US spot export PVC prices could inch up this week after producers settled most August business at US$770/mt FOB USG, sources said. Prices are not strengthening and global demand remains weak, but producers largely stuck to the settled level, which is $30/mt lower than settlements for July volumes. US market participants maintain that global demand has yet to strengthen, from Asia to Europe to North Africa, and Latin American demand has retreated as well. In upstream action, ethylene dichloride prices were seen hovering in an assessed range of US$220-230/mt FOB USG, with market participants seeing that as the bottom of a 13.5% decline from a 2019 high of US$370/mt FOB USG on March 12. US spot ethylene prices ended Friday at 18.50 cents/lb FD USG, down 1 cent from Thursday, as market reaction to the Baytown fire subsided. Some units at the Baytown complex are running at reduced rates, according to the company.
US benzene prices are expected to remain steady this week following the settlement of the August benzene CP. The August benzene CP fell 13 cents to settle at 254 cents/gal. The lower CP should bode well for styrene producers who wrestled with high costs in July. Demand from the styrene segment is expected to be steady in the near term, although consumption should improve throughout the latter part of the year with multiple European styrene producers poised to carry out turnarounds. Supply-side conditions are unlikely to change, with benzene remaining contingent upon imports amid poor toluene conversion economics. Prompt spot toluene prices fell over the past week, however weakness in both benzene and paraxylene was expected to keep margins in negative territory. Mixed xylene prices were expected to remain soft on continued weak downstream demand from the paraxylene segment. US spot paraxylene prices were not expected to see much upside amid market length and waning seasonal demand along the PET chain.