OLEFINS
Europe’s ethylene market is balanced, with few deals in the spot market and stable fundamentals keeping sentiment steady. The drop in the price of crude oil of recent weeks is expected to put downward pressure on contract prices at the end of the month. Propylene is expected to ease amid downstream outages at Feluy in Belgium, Gonfreville in France and Botlek in the Netherlands. The butadiene March CP negotiations are expected to get underway in the week and there is some expectation that agreements will be reached within the week. Market participants in Europe are awaiting the return of Asian players, following the Lunar New Year break, for indications of how post-holiday demand develops. Europe is a net exporter of butadiene.
POLYMERS
Polyethylene supplies in Europe are balanced, verging on long, with plentiful supplies reported. Many buyers are said to have stocks remaining after strong buying at the end of last year, meaning spot deals have not been as plentiful as expected at the outset of the new year. Polypropylene is expected to remain relatively tight, following recent outages and after the rise in feedstock propylene’s CP. In European PET, participants will be eyeing the impact of Equipolymer’s planned four-week shutdown in March, the fall in Asian demand because of Lunar New Year and the rising price of feedstock MEG and PX, which are all expected to continue lending support to the spot. Demand remains firm in the EU and resin production is scarce. European PVC markets are expected to remain balanced to tight despite the recent uptick in demand during February. Turkish markets face similar tightness as they continue to look for material from the modestly tight European markets.
AROMATICS
European benzene will remain bearish this week amid several outages in downstream styrene in both Europe and the US. Market fundamentals will remain tight in the European styrene market after the US’ Cosmar last week extended its force majeure to mid-April. BASF’s Ludwigshafen plant in Europe is expected to start maintenance works shortly, which will keep European supply snug. The polystyrene industry will be following styrene developments closely polymer contracts are finalized. Offers from Asia for styrenics may pick up as the Chinese market returns from Lunar New Year celebrations. As for toluene and mixed xylenes, the arbitrage from Europe to the US Gulf Coast remains wide open, which will lend support to both products in Europe as chemical demand has been largely lackluster since mid-January.
OTHERS
MEG supplies in Europe are abundant despite a demand boost for anti-freeze after a recent cold snap. The market is currently balanced. Many players are said to have full tanks as the market anticipates a cooling off in buying with peak seasonal demand for anti-freeze easing in the coming weeks.
The Northwest European caustic soda market is expected to remain steady next week amid firm demand and the gradual return of output at Kem One’s Lavera. Participants will continue to eye Mediterranean prices as a flurry of imports from Iran, northwest Europe, Romania and Russia pressure prices further.
Demand is expected to remain stable in the European SBR market, while a pick-up in Asian demand is likely following the Lunar New Year holiday. A veil of uncertainty remains over Asian demand as large quantities of material shipped prior the holidays first need to be consumed for orders to resume.
The European oxygenated solvent markets are likely to remain muted, with no significant changes to supply and demand fundamentals predicted in the coming week. Butyl acetate markets are the only ones facing some tightness amid significant exports out of Europe.
–Thordur Gunnarsson, thordur.gunnarsson@spglobal.com
–Edited by Jonathan Fox, jonathan.fox@spglobal.com
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