EMEA petrochemical outlook cracking European petchems Asian petrochemicals market outlook, w/c Jun 25 – Asian petrochemicals market outlook aromatics olefins polymers - Arhive
EMEA petrochemical outlook EMEA petrochemical outlook cracking European petchems
H2 2018
Source : www.platts.com/petrochemicals
Contents
Foreword 2
Will light cracking help European petchems retain margins, despite US imports? 2
Long US supply to shift global methanol trade flows, Asia remains tight 5
Anti-dumping duties, EC investigations to drive European styrene 7
Europe addresses the paraxylene question 9
Supply length and marginal exports point to weak H2 for European MTBE 10
European PET crunch extends to Q4 as PTA challenges persist 11
Post-election polymers market stability could prove illusory for Turkey 13
Special report: Petrochemicals EMEA petrochemical outlook
© 2018 S&P Global Platts, a division of S&P Global Inc. All rights reserved. 2
FOREWORD
New global supply will continue to set the tone for European petrochemicals in the second half of the year while economic fences being built across the globe bring trade flow uncertainty.EMEA petrochemical outlook cracking European petchems
The long-awaited cracker and methanol capacities in other corners of the world are finally starting up and are already sending ripples to Europe.
The impact translates far and wide: from delays to counterintuitive run rate decisions to further scrutiny of contract price mechanisms, massive inter-regional price gaps and deterioration of producer margins.EMEA petrochemical outlook cracking European petchems
Amid the turbulence however opportunities are emerging. Ineos’ announcement that it plans to build a propane dehydrogenation plant and the first new cracker in Europe for two decades shows that the company is looking to catchthe wave of cheap feedstock gas.
Trade flows will continue to shift as major economies pursue ever more protectionist policies. The Trumpadministration’s latest round of proposed tariffs on Chinese goods includes a long string of petrochemicals, both raw materials and items made from plastic resins, with the US-China trade war showing no sign of abating.
Styrene looks to be first in line for trade flow upheavalon the European horizon. New trade routes will establish in the second half of the year as a result of China’s antidumping duties on styrene imports from South Korea, Taiwan and the US.
Higher EU exports to China and a surge in EU imports of US and South Korean volumes are expected, notwithstanding significant logistical challenges.
The European paraxylene market is also set for fluctuating trade flows amid a regional demand hike downstream.EMEA petrochemical outlook cracking European petchems
Some see potential for Europe to flip from net exporter to net importer of PX following the restart of Indorama’s Sines PTA plant in Portugal.EMEA petrochemical outlook cracking European petchems
It is unclear for now whether the plant’s feedstock needs can be met by local production alone, but there’s no doubt that the region’s PX supply surplus will subside.
Longer term, burgeoning environmental consciousnessis contributing to fundamental change in European plastics.EMEA petrochemical outlook cracking European petchems
The first six months of 2018 witnessed a torrentof company commitments to reduce the use of singleuseplastics and increase recyclability of and recycledcontent in packaging.
Although it is unlikely that any major switches will happen in the second half of this year, the pressure is mounting.EMEA petrochemical outlook cracking European petchems
—Anna Crowley, Bao Ying Ng and Maria Tsay
Olefins and feedstocks
Will light cracking help European petchems retain margins, despite US imports?
- Crackers to continue maxing light cracking amid gas/liquid divergence
- Co-products tightness to outweigh ethylene length in run rate decisions
- Butadiene may change course as Asian maintenances end
European olefins and polymers will be driven by US shale in the second half of 2018. And, the impact will be two-pronged.EMEA petrochemical outlook cracking European petchems
Firstly, long-anticipated supplies of polymers, manufactured from shale gas in the US, are expected to finally hit the European shores over the next few months.
Such imports have been awaited by the European petrochemicals industry for more than a year and are likely to dent into profits of companies on this side of the Atlantic.
Secondly, as European petrochemical producers face stiffer competition from overseas they are likely to choose cheaper feedstocks in an attempt to preserve their margins,especially if the oil prices continue to be firm.
Hence, light cracking will continue to shape European olefins marketsover the next six months.EMEA petrochemical outlook cracking European petchems
Together these two trends will probably mean that there will be too much ethylene available in Europe, while the supplies of its co-products, such as propylene and butadiene, will be chronically tight.EMEA petrochemical outlook cracking European petchems
Despite maximizing the use of cheaper feedstocks, steam crackers in Europe will continue to operate on significantlynarrower margins compared to the past few years.
The snug supplies of co-products however are likely to prevent crackers from reducing run rates in an attempt to manage swelling ethylene stocks, and other regions, Asia in particular, will serve as an exhaust valve for the European C2 surplus.
With little to suggest a change in the region’s olefins pricing mechanisms, it is possible that spot and monthly contract prices will continue to diverge, as the former closely tracks the markets’ fundamentals and the latter is used as a hedge against the feedstock price fluctuations.EMEA petrochemical outlook cracking European petchems
Cheaper means lighter Crude oil prices have seen a considerable increase earlier this year, with Brent futures breaching the psychologically important $80/b mark in May and approaching it since.
More expensive crude pushed oil products, including naphtha, higher.
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