The ethylene price is Europe is increasing due to tight spot availability and robust demand. Cracker run rates remain high and no production issues were heard. The propylene market is expected to tighten in the first quarter on growing ACN and PP demand.
OLEFINS
The European market could be around 300,000 mt shorter of propylene in 2018 than in 2017 because of debottlenecking averages of around 5,000-10,000 mt a year for each PP plant.
The rise in European butadiene prices in late December and early January is continuing to influence market sentiment, with export opportunities having reduced market length. Market participants expect strong demand in Asia to be one of the key factors driving prices.
AROMATICS
Benzene trading could be thin as arbitrage opportunities remain shut, even though there is a slight backwardation. Toluene and mixed xylenes’ fundamentals are bearish as buying interest from the chemicals segment is thin, increasingly leaving the gasoline blending pool as the main outlet for spot volumes.
Paraxylene and orthoxylene market participants are awaiting further clarity on the settlement of January European contract prices. A combination of a bullish upstream complex and production issue in Asia is expected to support styrene prices this week.
In the downstream polystyrene industry, negotiations on the GPPS contract will continue. Pre-buying of GPPS in December has dampened buy interest in PS in January, but a continued bullish outlook for styrene in February and March may strengthen sellers’ negotiating positions for January.
POLYMERS
PE markets in Europe are stable, with demand expected to increase in the coming weeks as buyers return and begin the usual high levels of ordering at the start of a New Year.
The European HDPE market is already tightening due to reduced Middle Eastern exports hitting the European market. PP market expected to be bullish on a pick-up in purchasing following the end of the holiday period.
A continued bullish outlook for styrene in February and March may strengthen PS seller positions for January prices. An open import arbitrage in the ABS market could minimize monthly price increases in the ABS market.
The European SBR market is tightening because of open Asian arbitrage opportunities as China is building stocks ahead of the Lunar New Year holiday.
Sellers are expecting a rebound in PET demand during Q1, while Asian PET is also expected to lend further support to European prices on higher Asian demand and rising feedstock prices.
The divergence between European and Turkish PVC markets is set to widen in the coming week on increased trading following the New Year break. Turkish PVC prices face upward pressure as they recover from the October/November lows.
METHANOL AND MTBE
THE MTBE factor looks likely to remains stable this week as seasonal demand for octane boosters remains low. European methanol markets continue to be bullish on bullish Asian markets, with higher crude oil prices having helped improve the cost competitiveness of the Chinese methanol-to-olefins plants. INTERMEDIATES
Sentiment in the European MEG market is bullish, with strong demand for both anti-freeze and PET expected to continue, while import economics are turning difficult.
Sentiment is expected to turn more bearish in NWE and the Mediterranean, with imports expected to rise after an EU-wide mercury ban.
A number of fixtures have been heard to the UK and Continent region from the Black Sea and Egypt.
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