Americas petrochemicals outlook, w/c May 14 – US spot toluene prices rose 14 cents last week to close Friday at 299 cents/gal in an extremely tight market – Americas petrochemicals outlook - Arhive

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Americas petrochemicals outlook, w/c May 14

Houston (Platts)-

Americas petrochemicals outlook US AROMATICS: US spot toluene prices rose 14 cents last week to close Friday at 299 cents/gal in an extremely tight market.

Sources pointed to reduced extraction as a driver behind the tightness, as reformate spot prices were near just a 2-cent premium to the blend value, which was last estimated at near 255 cents/gal. Toluene’s blend value was last estimated at near 258 cents/gal.

The benzene-toluene spread narrowed to just 3 cents, putting hydrodealkylation margins deep in the red at near negative $188/mt.

TDP and MSTDP margins were also negative at near minus $95 and minus $24.50/mt, respectively. In xylenes, mixed xylene prices also gained on the back of tight supply. Prompt spot MX prices rose 13 cents on the week to close Friday at 294 cents/gal FOB USG.

Demand from paraxylene was muted amid supply constraints which pushed paraxylene values sharply higher. Sources said an unplanned compressor outage by a major paraxylene producer pushed pricing higher and spot values were assessed at $985/mt FOB USG.

The prompt-spot PX-MX spread was roughly $30 lower on the week as mixed xylene prices rose, finishing Friday at near $88/mt, according to S&P Global Platts data.

US PVC: US export polyvinyl chloride prices could inch up from $805-$815/mt FAS Houston this week as global market participants await June offers from a major Taiwanese producer, often seen as a bellwether for pricing direction.

Market sources said they expected those offers to be anywhere from flat to as much as $20 higher than May settlements, reflecting higher crude prices, which in turn lead to higher naphtha prices, the main ethylene feedstock outside of North America.

However, US spot ethylene prices ended last week at 11.75-12.25 cents/lb FD USG, the lowest level since Platts began publishing spot pricing in 2004, reflecting a supply glut amid high cracker operating rates while derivative plant rates lag behind.

A strong contingent of US market players is pushing for PVC pricing under $800/mt FAS Houston given weak demand, particularly in key global markets such as West Africa and the Middle East.

However, last week a producer was heard to have fixed small cargoes at $830/mt FAS Houston for late May, testing higher pricing leading into June price negotiations.

Global demand for caustic soda remained strong despite the continued reduction of rates at Norsk Hydro’s Brazilian alumina refinery in Alunorte, the world’s largest, and uncertainty over sanctions on Russia’s Rusal, a major buyer of US caustic soda.

Olin CEO John Fischer noted that while there was the possibility that 600,000 mt/year would no longer be shipped to Alunorte or Rusal, if the US maintains those sanctions, that was a small quantity in a global market of 80 million mt.

US PE: US polyethylene export participants are keeping a close eye on oil prices, noted improving availability for some grades was being partially offset by rising oil prices that could potentially increase global pricing floors.

Polyethylene stocks in the US and Canada saw significant gains for the second consecutive month in April, as production outpaced total sales by almost 401.6 million lb, preliminary data released late last week by the American Chemistry Council showed. That comes on top of a 421 million lb gain in March.

Despite rising inventories in the US, sources on the sidelines of the NPE show in Orlando, Florida, said last week that US producers seemed hesitant to cut prices further, as there were expectations among some that pricing in naphtha-dependent regions like Asia and Latin America — key destinations for US resin — could face upward pressure.

In the domestic market, sentiment about May pricing was mixed, with some sources saying that decreases were warranted given higher producer inventories, while others noted that stability in spot pricing and continued good demand could result in a rollover for at least one more month.

Domestic pricing was stable in both March and April despite announcements by producers looking to raise contracts by 3 cents/lb. Producers were again seeking a 3-cent/lb increase in May, with one producer — Dow Chemical — also having announced an additional 4-cent/lb increase for June, according to a letter obtained by Platts.

US PP: There were growing expectations that US polypropylene contracts would move higher in May, likely through a combination of higher monomer prices and margin expansions, sources said this week on the sidelines of the NPE show in Orlando.
Multiple sources suggested a total gain of 4-5 cents/lb could be digested by the market, though some producers would likely seek more — particularly if strong propylene demand pushes monomer contracts to the higher end of market expectations. Expectations for May propylene contract settlements have been talked at up 2-4 cents/lb by market participants.

A significant portion of PP contracts in North America remain on monomer-plus formulas. Domestic demand was said to be good, and with producers running at low rates in recent months, there was little spot product in the market, sources said. Spot export polypropylene remained virtually non-existent this week, with one trader source suggesting it could be well into the third quarter before US producers would be in a position to offer competitive resin for sale outside North America.

LATIN POLYMERS: Buyers in key South American markets enter the week still looking for lower prices on spot import polyethylene cargoes, although recent gains in crude pricing and the related pressure on Asian and Middle East PE prices has started to dampen that optimism, sources have said.

Buyers in Brazil can expect to pay between Real 100-300/mt (around $28-$83/mt) more for Braskem PE and around Real 300/mt more for Braskem PP after the local producer implemented a price hike in the domestic market due to recent currency devaluations and firming global prices, a company analyst said.

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