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Americas: The week ahead in petrochemicals

Houston (Platts)--12 Sep 2017 1235 am EDT/435 GMT


Industry participants continue to evaluate the impact of Harvey on energy, petrochemical and logistics markets.


OLEFINS


Ethylene spot pricing closed the past week at seven-month highs.

Trading activity was beginning to pick up after thin activity stemmed from uncertainty surrounding the situation along the US Gulf Coast following the impact from Hurricane Harvey, sources said.

The storm affected more than 50% of US steam-cracking capacity, according to S&P Global Platts estimates.

Support from the outages continues to be partially offset by a lack of downstream demand, as many polymer plants were shut along the US Gulf Coast, including polyethylene, PVC and ethylene oxide and glycols plants, sources said. August contracts remained unsettled.

In propylene, spot polymer-grade propylene closed the past week at five-month highs as industry participants continue to evaluate the impact of Harvey on energy, petrochemical and logistics.

The upward pressure from outages continues to be partially offset, sources said, from downstream capacity -- particularly polypropylene and acrylonitrile -- with some also still offline due to Harvey-related impacts, thereby limiting demand for product.

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AROMATICS


US spot benzene prices fell week on week with prompt September values shedding 6 cents to finish the week assessed at 274 cents/gal DDP USG.

The market opened the week in a backwardated structure with October discounted to September by 2 cents. However, by week's end, values for both months were at parity.

Demand was characterized as strong from the downstream styrene segment which continued to see support from stronger styrene values in both Europe and Asia.

September styrene was said to be sold out and much of the market was focused on October, which rose 2.78 cents ($61.25/mt) to finish the week at 60.33 cents/lb ($1,330/mt) FOB USG.

The focus remained how forward month demand would materialize as forward-month inventories in East China were at a two-year low and CSPC was in the midst of a planned maintenance at its 700,000 mt/year unit at Huizhou. Still prices on a CFR China basis showed signs of softening, with Platts marker shedding $55 from Monday to Friday, closing the week at $1,410/mt.

In Europe, prices were also supported by supply constraints, with at least two producers heard undergoing maintenance activities in September.

The Platts European styrene marker shed $13.50 last week to finish at $1,380/mt on an FOB ARA basis.


US POLYETHYLENE


Domestic polyethylene prices were facing upward pressure as multiple major US producers announced mid-September price hikes on the heels of an August increase being heard accepted by the market in the wake of growing tightness in the aftermath of Hurricane Harvey. The storm resulted in roughly one-third of US PE capacity shutdown.

Chevron Phillips Chemical plans to increase US PE prices by 4 cents/lb on September 15, the company said Wednesday in a letter to customers.

ExxonMobil Chemical announced a similar increase late Tuesday, while a pair of producers -- Dow Chemical and Equistar Chemical -- had previously announced 4-cent increases for September contracts.

Market sources said there appears to be a good chance of a September increase going through, and there are expectations additional producers would eventually announce similar intentions.

Multiple sources said the impact of recent outages on domestic and export markets would be significant, in part due to talk that a number of end users and distributors were carrying lower-than-normal inventory heading into hurricane season, in part because of planned and unplanned maintenance before the storm.

Export offers were virtually non-existent over the past week, sources said, with some suggesting the export market was unlikely to see much resin before October.


LATIN AMERICA POLYETHYLENE


Buyers in key South American polyethylene markets should continue to encounter few, if any, US-origin offers in the wake of Hurricane Harvey battering the US Gulf Coast, sources have said.

Importers are expected to keep turning to the Middle East, Asia and even Egypt for resin while the US -- which has served as a preferred trader partner for much of 2017 -- restores production and logistics.

Regional producers Braskem and Dow have both increased September PE prices in the wake of US scarcity, company sources have confirmed. Braskem was reportedly splitting an increase of Real 300/mt (around $95/mt) into two phases, with the first cut-off falling on September 6, sources said.

Buyers who order after September 6 will encounter PE pricing that is Real 150 (around $48/mt) higher than customers who ordered during the first week of the month. In Mexico, Braskem Idesa will be limiting exports for the foreseeable future in an attempt to prioritize the demand of its local customers, a company official said.


METHANOL


Spot pricing opened last week Tuesday at a 4-and-1/2-month high of 102 cents/gal before softening 9.5 cents to close the week.

A number of trades were reported at levels up to 97 cents/gal FOB USG, according to sources, with five trades heard done.

In production news, the Clear Lake methanol plant owned by Mitsui/Celanese remained down in Pasadena, Texas, on Friday, according to sources. The plant suffered a process trip that caused it to shut after heavy rainfall associated with Harvey, according to a filing with the Texas Commission on Environmental Quality.




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