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Global Polymer Pricing Analysis



LDPE: US traders seeing limited volumes; „Resin supply remains limited throughout LatAm

Global Polymer Pricing Analysis



LDPE: US traders seeing limited volumes; „Resin supply remains limited throughout LatAm



LOW DENSITY POLYETHYLENE


Low Density Polyethylene


EUROPE


Low density polyethylene spot prices were flat this week on continued weak demand owing to the holiday period, market sources said.


Prices were assessed unchanged at Eur1,240/mt. Contract prices were also flat at Eur1,460/mt.


One trader said that the market was very quiet, and that although there were some urgent sales, people remained on vacation.


Total has lifted force majeure on polyethylene, polypropylene, and polystyrene supplies from its French plants, according to a letterto customers seen by S&P Global Platts August 23.


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"We are happy to inform you that all production lines are running and stocks have reached again a good level to support reliable deliveries to you. We are therefore lifting this force majeure and return to a normal supply performance from all plants," the letter said.


Total was not immediately available for comment.


Total declared force majeure on deliveries from all its polymer sites in France as the national strike and associated blockades of industrial areas of Gonfreville, Carling and Lavera were preventing it fulfilling contractual obligations in H2 May.


US


US low-density polyethylene export prices were assessed August 24 at $1,367-$1,389/mt (62-63 cents/lb) FAS Houston, up $55/mt week on week, as limited product availability amid production issues helped push prices to levels not seen since mid-2015.


Export resin was talked by market sources in the low-60s cents/lb range, with bagged resin heard offered Wednesday at 63.5 cents/lb.


Prices have edged mostly higher since mid-February, when prices were assessed at a 2016-low of $1,036/mt (47 cents/lb) on February 12, according to S&P Global Platts data.


Prior to this week, export assessments had not been at such levels since June 29, 2015.


LDPE, which has lower production levels in the US than either high density polyethylene or linear-low density polyethylene, has been talked tight most of the year.


Market sources said Chevron Phillips Chemical has been slow to return from a planned maintenance. The company could not be immediately reached for comment Wednesday.


Earlier this week, Equistar Chemicals shut its AB3 LDPE unit in La Porte, Texas, following an unexpected buildup of pressure in the reactor, according to a filing with the Texas Commission on Environmental Quality.


Also, ExxonMobil Chemical on August 23 informed customers that PE shipments and availability from two of its US Gulf Coast complexes could be hurt by recent flooding and feedstock issues.


The company said it was currently working to mitigate any shipment delays and production impact for all grades - including LDPE - at both its Baton Rouge, Louisiana, and Beaumont, Texas, facilities, according to a pair of letters sent August 23 andobtained by S&P Global Platts. However, both remained possible at each complex.


Tightness also has been felt in the domestic market, sources said, and there were strong indications contracts would move higher in September. Domestic producers - including ExxonMobil Chemical, Dow Chemical, Equistar Chemical, Chevron Phillips Chemical, Nova Chemicals, Westlake Polymers and Total - have announced 5-cent September increase, according to letters to customers.


August domestic pricing was assessed stable on the week at 75-76 cents/lb ($1,653-$1,675/mt) for delivered rail cars, as market sources continued to talk pricing stable from July, with producer and buyer sources heard settling at a rollover.


The tightness comes amid strong domestic buying and firming feedstock ethylene prices, sources said.


Spot ethylene was assessed Wednesday at 38.5 cents/lb FD USG for prompt-month deliveries, up 5 cents week on week and at the highest level since January 8, 2015, according to S&P Global Platts data.


The higher spot ethylene prices come as multiple producers were heard experiencing unplanned outages or preparing for turnarounds.


ASIA


Asian low density polyethylene prices rose this week as supply was expected to tighten with the producers reducing run rates or shutting operations for the G20 summit, which will be held in Hangzhou, Zhejiang province, from September 4-5.


Petrochemical plants in the surrounding cities have been asked to reduce production in order to ensure improved air quality during the meeting.


Looking further ahead, production margins for integrated producers are expected to remain healthy towards the year-end as outlook on naphtha was more bearish relative to PE, and hence the spread between naphtha and PE is expected to be positive.


For the year-to-date, production margins have been strong around $150-$300/mt, according to S&P Global Platts data.


However, participants expected PE prices to fall towards the end of the year as new PE plants were going to start up and demand was still weak.


In plant news, South Korea’s LG Chem will shut its 170,000 mt/year LDPE unit at Yeosu for a 10-day maintenance from October 20, a company source said. PetroChina subsidiary Lanzhou Petrochemical will restart its three polyethylene units from end-September after two months of maintenance, a source close to the company source said.


The company will take around a week to fully restart all three plants, beginning with the LDPE facility, according to the source.


The 360,000 mt/year high density polyethylene/linear low polyethylene swing plantconsisting of two lines has been shut since August 7, while the company’s other plants at the same site - a 170,000 mt/year HDPE dedicated plant and a 200,000 mt/year LDPE unit - were shut August 11 for turnaround.


LATIN AMERICA


The West Coast of South America low-density polyethylene assessment was flat on the week, assessed Wednesday at $1,375-$1,385/mt CFR basis, as market talk centered around continued tightness in the Americas, sources said.


LDPE continued to be considered the highest-priced resins out of the polyethylene grades, and buyers and sellers said availability remained an issue.


Market talk indicated increasing demand for heavy-duty grades throughout Latin America.


US-origin offers continued to be talked above the $1,400/mt level, and sentiment held that offers from the US could continue to increase in the short term.


Market players said Asia-origin material was beginning to make an impact despite high shipping costs.


Trading levels were talked at the $1,360/mt level, but sources said material from Asia was not expected to arrive until mid- to late October and the delivery times fell outside S&P Global Platts’ 20-40 day delivery window for LDPE resins.


In Brazil, the LDPE import market was assessed August 24 $10/mt lower week on week at $1,345-$1,355/mt CFR basis.


LDPE spot import resin availability was still described as tight despite competitive levels in the domestic market.


In production, Colombia’s state-owned Ecopetrol will shut its low-density polyethylene line at Barrancabermeja for maintenance August 24, a company spokesman said.


"Our Polyethylene Plant II in Barrancabermeja will undergo a 10-day scheduled maintenance beginning August 24," Ecopetrol spokesman Juan Guillermo Londono said.


Colombia, which has a long-standing deficit of PE resins, has a nameplate capacity of 60,000 mt/year of LDPE via state-owned Ecopetrol, S&P Global Platts data showed. The country’s PE shortage is 259,000 mt/year, according to Platts Analytics.


Ecopetrol’s Barrancabermeja plant typically runs at about 40% capacity, according to market feedback. The plant has been running near 90%, a source with knowledge of business operations recently said.


Ecopetrolmaterial was recently heard in the Brazilian market.


In the Mercosur, pricing was flat at $1,415-$1,425/mt FOT basis on offers at $1,540/mt CPT basis Paraguay.


Next commentary - LLDPE: Europe's holiday period impacts demand; US feedstock ethylene prices moving higher







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