POLYMERS US polyethylene prices are expected to remain stable in the week that started Sept. 21 based on limited to no offers, sources said. Few PE grades are available as the marketplace is “horribly tight and every single major pulled out of exports,” one trader source said. Market participants continue to discuss notional pricing even […]
Sep 21, 2020
US polyethylene prices are expected to remain stable in the week that started Sept. 21 based on limited to no offers, sources said.
Few PE grades are available as the marketplace is “horribly tight and every single major pulled out of exports,” one trader source said. Market participants continue to discuss notional pricing even though offers are limited and are unable to sell in the competitive overseas markets.
Meanwhile, in US polypropylene, the market is expected to continue to manage inventories amid tight supply from suppliers. Pricing is expected to remain firm in the short term for spot exports. Platts assessed the homopolymer injection Sept. 16 up 1 cent at 53.5 cents/lb ($1,179/mt) on a FAS Houston basis on talk of increased pricing. ExxonMobil Chemical Company will increase the price of its polypropylene products by 3 cents/lb as of Oct. 1, the company told customers. Braskem Americas Total Petrochemicals & Refining USA and Formosa Plastics USA have announced a 4 cents/lb increase in the price of its polypropylene products as of Oct. 1.
Domestic butadiene contracts are expected to be nominated at an increase during the week, sources said. Spot Choctaw ethylene is expected to continue stable to higher amid cracker outages and maintenance.
US export PVC prices were expected to remain at a nine-year high of $1,045-$1,055/mt FAS Houston in the week with no incremental volumes seen available amid two ongoing force majeures. Formosa Plastics USA declared FM for US PVC on Aug. 14 after an extended upstream chlor-alkali turnaround left ethylene dichloride stocks depleted. Westlake Chemical declared FM on PVC and upstream VCM on Aug. 31 after Hurricane Laura caused widespread damage in Lake Charles, Louisiana, where the company operates a complex that houses 46% of its chlor-alkali output and 38% of its VCM production. Other producers have had to turn away Formosa and Westlake customers seeking export and domestic volumes. Upstream, spot EDC availability also was expected to remain largely nil with output either designated for downstream PVC production or contract sales.
Recent strength seen in prompt mixed xylenes prices is expected to continue during the coming week as production outages on the Lower Mississippi River and Lake Charles, Louisiana, continue to squeeze already-tight supply. The historic number of tropical storms forming in the Atlantic Ocean have impacted some refineries on the US Gulf Coast, including Citgo’s Lake Charles refinery, a key producer of US aromatics. Latest projections show most of this lost capacity returning in mid-October at the earliest. Toluene prices, on the other hand, have not seen as much of a boost from the shutdowns, with almost no demand for spot volumes, a picture which should remain the same through the winter barring further production issues.
Continued trading toward the October benzene contract price should boost liquidity, though demand for benzene has been constrained due to another hurricane-related outage at Westlake Chemical’s styrene unit in Lake Charles. Potential imports from Europe, where two styrene producers have turnarounds this autumn, would further increase supply. Renewed interest in exporting US styrene to India, Turkey, and especially East Asia should provide strength for prices heading into the next week.
US methanol prices are expected to hold to the previous week’s high level, with price support heard from increased buying activity ahead of Q4 domestic methanol contracts. Additional price support is expected to come from a planned maintenance period at a Trinidadian methanol production facility, which could see imports into the US limited in coming weeks. Demand has also been heard to be rebounding for end-use derivative products of methanol.
For US MTBE, prices are expected to be stable to higher on the week, with increased export demand for barrels into Mexico and Latin America. Increased demand for US barrels has also been heard in Northwest Europe, where blenders are increasingly turning to US volumes for gasoline blending to export to West Africa in a crude-for-products swap program. The return of production at Indorama’s Port Neches, Texas, facility following power outages associated with Hurricane Laura could add downward pricing pressure to spot MTBE with the return of some supply to the market.
Latin polymers are expected to see stability for the second consecutive week in the imports markets of Brazil and the West Coast of South America. The foreign exchange rate started the week unfavorable to the Brazilian Real, reaching 5.42/$1 on Sept. 21. Domestic prices are expected to be unchanged for the week – but expected higher for October, while sources continue to report lack of availability of some products in the domestic market of Brazil. Polypropylene prices are expected to be stable to slightly higher on the week, following small increases coming from Asia and Middle East – Brazil and the West Coast of South America imports mostly come from Asia and Middle-East if compared to the US. In the WCSA, spot import polyethylene prices are also expected to continue highly attached to the US movements on the week, therefore expected to be unchanged or slightly lower on week, depending on the availability of products in the market.
The PVC market in Latin America is expecting to see higher prices considering higher prices in Europe and Asia, reflecting on imports to mostly to Brazil, reported tight on material. The WCSA is mostly attached to the US, which reached a nine-year high of $1,050/mt FAS Houston last week. Product is still unavailable in most of the markets – very limited availability from the US for exports, which could continue to drive prices higher. In Mercosur, spot pricing new list was already expected for September bookings for several weeks now, but distributors reported not receiving new prices due to almost none product availability in the market. In Argentina, prices are expected to remain stable on the week while some distributors are already anticipating a possible increase for October.
Nov 05, 2020
Times are uncertain for the petrochemicals industry. Volatility in upstream markets has trickled downstream, lockdowns imposed across the globe to control the coronavirus pandemic have caused huge disruption to demand, traditional trade flows, and life as we know it. Many parts of the petrochemicals industry have been particularly hard hit, while at the same time, the need for medical equipment has opened the door to new opportunities for some.
Global economies have been rocked, and petrochemicals industry pre-covid demand and activity seems a distance memory while the world braces for potential further lockdowns and restrictions.
Join us for the S&P Global Platts European Petrochemicals Virtual Conference, and hear key industry players their insights on how the sector is adapting to these turbulent times.
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Sep 21, 2020
The propylene market in Asia is poised to strengthen further this week amid unplanned maintenance in the region. Given the recent price hike for propylene feedstock, China’s Tianjin Bohai has reduced its propylene term supply to 80% for September and allocated the supply to its downstream swing plant. Hebei Haiwei was reported to be planning to shut its 500,000 mt PDH plant for turnaround in mid-October, which pushed up last week’s trade levels.
Sentiment in the Asian ethylene market are mixed as October-arrival supply remains tight, leading to a strong interest for more prompt cargoes. However, the outlook for November-arrival cargoes is likely to be bearish on expectations of the re-opening of the US-Asia arbitrage window, and an increase in supply from Taiwan and Japan.
One of the key producers in South China started its new cracker on Sept. 20, while market sources are closely monitoring China’s domestic supply situation.
The CFR ACN South Asia marker hit a near six-month high of $1,150/mt on Sept. 15, amid support from the strength in the downstream ABS market and tight spot supply in Asia.
The spread between CFR South Asia and CFR Far East Asia had narrowed to zero on Sept.15, from $105/mt on Aug. 18.
The CFR ACN South Asia marker is expected to gain traction this week as South Asian buyers compete with Far East buyers to secure the feedstock, which is already very tight.
Asian monoethylene glycol prices are expected to trend higher higher in the week starting Sept. 21 amid snug supply and improved buying sentiment due to increasing crude values. In plant news, China’s Hualu Hengsheng is currently running its 500,000 mt/year MEG line in Shandong at 40%-50%, while its other 50,000 mt/year unit was running at 80% after coming back online from maintenance in late August, market sources said.
Asia low density polyethylene markers are expected to remain firm as global LDPE supply has been limited with few new capacity expansions, market sources said. In addition, Thailand’s PTT will shut its 300,000 mt/year low density polyethylene unit at Map Ta Phut in late September, for 24 days of maintenance, a company source said. The company’s other polyethylene units — namely a 300,000 mt/year high density polyethylene unit, a 200,000 mt/year HDPE unit and two linear low density PE units with 400,000 mt/year of capacity each — at the same site continue to operate, the source added.
More paraxylene plants are expected to start up going forward, with China’s Sinochem Quanzhou scheduled to start up its new 800,000 mt/year unit in Fujian in October.
The global PX market has struggled with oversupply before and during the COVID-19 pandemic, which also affecting other aromatics markets such as feedstocks mixed xylene and toluene.
The CFR China styrene marker reached a six-month high at $694/mt on Sept. 18, and is likely to be rangebound this week, buoyed by tightness in dollar-denominated supply and limited feedstock ethylene. While shortage of storage space has eased, inventories are high in East China and may build up in the week starting Sept. 21, putting a lid on the rise in styrene prices.
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Aug 14, 2020
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Oct 13, 2020
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Sep 15, 2020
The company is increasing its focus on recycling by raising its stake in Austrian chemical company Borealis to 75% by the end of 2020, subject to regulatory approvals.
The two companies already collaborate on the OMV ReOil project at their shared Schwechat industrial site in Austria. Plastic waste is reprocessed into synthetic crude oil at the OMV ReOil plant, which is then used to produce feedstock for Borealis.
OMV currently holds a 36% stake in Borealis.
OMV aims to gain a significant market share in the joint olefin/polyolefin industries by increasing its expenditure, Spitzbart said.
The company aims to become a leader in polymers and in the recycling industry by obtaining a controlling majority in Borealis, he said.
Borealis is a major player in both virgin polymer and also recycling initiatives. The company is the co-founder of the project, Stopping the Tap on Ocean Plastics, or STOP, where it aims to create a sustainable waste management system to reduce ocean plastic, and has two recycling plants in Austria and Germany.
OMV sees fast growth demand in petrochemicals, particularly polyolefin, triggered by expanding packaging, automotive, and construction demand, Spitzbart said.
Oct 15, 2020
The S&P Global Platts 10th Annual NGLs Conference brings you timely information to help you understand the short and long-term outlooks on NGL supply, demand, pricing & trade at the global, regional and country level.
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Oct 05, 2020
Join our editors and analysts for an informative virtual seminar during EPCA as they connect the dots between downstream petrochemical products and their feedstocks and take a comprehensive view of emerging trends in geopolitics, macroeconomics and global markets.
The International Maritime Organization’s response to climate change in the shape of tighter sulfur emissions limits came into force at the start of 2020 with implications for the energy complex and petrochemicals, driving a move to lighter cracking and a rethinking of the feedstock slate.
Early trade routes for the new supply from North America following the region’s repositioning as a major exporter of polymers were disrupted by tariffs and protectionism before the US-China trade deal signalled renewed arbitrage opportunities and China’s increasing self-sufficiency. Where will new supply find a home in this increasingly challenging and uncertain operating environment?
Burgeoning environmental consciousness in relation to climate change and plastics use continues apace with Europe leading legislative efforts and 2025 commitments refocusing company strategy.
Brand-owners, governments and petrochemical producers are at the forefront of a global sea change, setting targets and taking voluntary measures to increase plastics recycling, including banning single-use plastics and overhauling packaging design.
Aug 13, 2020
The US recycled PET market has begun to open up again, following significant disruptions at the height of the coronavirus pandemic that led to nine out of ten bottle bill states forgoing their recycling commitments.
At its height, recyclers in California were reporting as much as a 70% drop in Grade A post-consumer PET bottle bale supply and many material recovery facilities (MRFs) across the west coast and mid-west region were either shutting shop or reducing production significantly.
Exacerbating this situation was a bearish virgin PET market. Virgin prices plummeted to $857/mt (around 39 cents/lb) on April 29, the lowest level seen since S&P Global Platts started assessing the product in February 2006 and nearly 42% below year-ago levels. This led many PET consumers to turn their backs on the recycled market.
With such low virgin PET prices and concerns over supply availability of recycled PET, many large food and beverage packaging manufacturers entered into six to 12-month contractual agreements with virgin resin producers.
“Supply is only a small part of the equation – with the decline in oil prices, virgin prices have had an unprecedented cost advantage in this market,” said Darrel Collier, executive director of the National Association for PET Container Resources. “From time to time virgin prices do drop below R-PET prices, but now we’re talking a 20-cents/lb type of difference. I’ve never seen that kind of delta before.”
As supply constraints in the R-PET market began to ease, this only exacerbated the dire situation.
In late May and early June, both shelter-in-place orders and the retail enforcement suspensions began to lift and the recycling sector saw a huge flood of deposit bottles as residents returned their hoarded recyclables. Therefore, as supply returned to, and even outpaced, pre-pandemic levels, demand for feedstock bales had significantly decreased as cheap virgin resin displaced clean flake.
And by July, with recycled volumes returning to the market and local processors unable to absorb the influx, prices for deposit PET bottle bales had dropped to a record-low of 9 cents/lb, nearly 53% from highs seen in late April, Platts data showed. Consumers, still eyeing cost saving measures, continued to opt for virgin resin.
Recyclers are fearful that continued deterioration of prices will render their trade completely uneconomical.
“This is an extremely bad situation as the cost of processing is far greater than the value,” said a source. “The current regulations do not allow CalRecycle [California’s Department of Resources Recycling and Recovery] to make up the difference. This means recyclers and processors are going negative on a CRV Grade (PET) that they are forced to buy back from the public.”
For many in the market, the answers lie in government investment and mandates.
Without government mandates that require states, cities, or brand houses to incorporate a certain level of recycled content in consumer goods sold to the public, demand for recycled material is voluntary and dictated by companies with a “green” agenda. In 2019, there was a huge surge of public pledges from large beverage companies, such as Coca-Cola, Pepsi, and Nestle, to incorporate an ever-increasing minimum recycled content in their consumer goods, as well as a historic influx of recycling-focused legislation in Congress.
“Relative to meeting some of the 2025/2030 commitment of using minimum R-PET content, there has to be a lot more infrastructure investment in the recycling industry,” said Collier. “We’ve also got to start collecting more and push the plastics recycling rate above 30%.”
However, increasing the amount of material that is recycled and then actually processed is not an easy feat as the recycling sector faces a very cost-sensitive and volatile supply chain. When virgin prices hit a certain low point, the entire recycling value chain, all the way down to the bale market, feels the pressure.
The easiest way for the recycled plastics markets to retain profitability when compared to virgin is to lower raw material bale prices. When this happens, however, recyclers are no longer able to make a profit as costs of sorting and processing these bales are more rigid.
Because MRFs oftentimes have their own landfills on site, these sorting facilities have no choice but to landfill materials when the price of a bale gets too low, as landfilling fees are often cheaper than the cost of producing a bale.
“When I say we need investment, I’m talking MRF investment,” Collier added. “Not in what we call traditional reclaimers, the guys who buy bales and turn into pellet or flake, but MRF investment because [landfilling] has to stop.”
On the other hand, when the price of a bale gets too high, reclaimers, who are competing with extremely cheap virgin PET resin, then have a hard time selling downstream flake to end users – especially those in California who face even cheaper import resin prices.
Therefore, to end the vicious cycle, there needs to be a complete decoupling of the virgin and recycled plastics markets and demand has to stop being voluntary. For this to happen, more government action is needed, as well as more federal mandates requiring manufacturers to incorporate a certain amount of recycled content into their product offerings.
COVID-19 slowed the momentum of sustainability bills in Congress, amid concerns over shrinking government revenues, and as many recycled-content mandates were vetoed and plastic bags bans were suspended in the first half of 2020. But recycling is re-entering the national spotlight, as the pandemic has brought to light just how “essential” waste management and material recovery really is to the packaging supply chain, as well as to the ethical consumer.
In mid-June, the Plastic Waste Reduction and Recycling Act was introduced, joining other legislative pieces such as the Break Free From Plastic Pollution act and the RECOVER Act introduced in late 2019/early 2020. These acts include such proposals as a virgin resin fee, tax incentives for recycling businesses, and infrastructure funding.
Additionally in June and July, many individual states have approved recycling market support bills and contamination laws, resumed the modification of solid waste laws, and lifted single-use plastic ban suspensions, proving that the year 2020 still has the potential to be the once-predicted groundbreaking year for the recycling industry.
“In the long run, it does not help anyone for there to be less of a competitive market and less strength of recycling infrastructure,” a West Coast buyer concluded.
As the market nears the last few weeks of summer, when volume generation is typically at its highest and prices at their lowest, some recyclers are hopeful that the cooler weather will allow PET bale supplies to tighten, as people normally drink less in fall and winter months, lending much-needed support to prices.
In addition, because there is typically a two-to-three month lag between rising feedstock prices and those of their downstream products, recovery in upstream markets is expected to soon trickle down into the virgin PET market. According to Platts data, upstream paraxylene and purified terephthalic acid markets have risen in recent weeks on the back of higher crude prices, which have started to inch back up to pre-pandemic levels.
“Overall we expect contract polymer prices to peak in August or September,” said Rob Stier of S&P Global Platts Analytics. “Spot prices may peak this month. [We] already had big price moves from the lows set in April and May, so most petchems [are] in a two-plus month bullish price increase environment.”
Collier added that the expected increase in virgin PET prices will lead to improved demand for R-PET: “Let those who converted to virgin on a short-term basis come right back to R-PET.”
Most resin producers tend to base contracts on raw material prices. As a result, if this rise in virgin PET prices is realized, R-PET may once again become a competitive alternative.