US OLEFINS
August olefins contracts may emerge next week as participants continue discussions for ethylene and propylene. For propylene, market sources have said the August contract could settle flat to as high as 3 cents/lb from the July contract price of 59 cents/lb. Some sellers were pushing for even higher prices in hopes of getting as much increase as possible ahead of a possible decline in September. Ethylene contract discussions have been thin. For ethylene, market participants said spot prices may not come down unless ethane prices continue to fall from last week's four-year high of 40 cents/gal. Ethylene spot levels were flat all last week at 16 cents/lb FD USG, amid a combination of high feedstock costs and ample supply. Also, Chevron Phillips Chemical's 670,000 mt/year Sweeny 24 cracker is scheduled to come back online this week, but sources have said the cracker could remain down for an extended period of time if the production economics are not viable.
US PE
There are strong expectations of September export polyethylene prices moving lower, though market sources have indicated the level of discount to be somewhat unclear. In some cases, traders have been heard selling below the current replacement cost in the export market in light of consistently lower bid levels in recent weeks. However, sources have said producers may be hesitant to meet the mid-40 cents/lb levels being sought for hopper cars for most resin grades. Market sources have noted that domestic contracts appeared to be headed toward a rollover, even as producers continue to push for a 3-cent/lb increase.
US PP
US polypropylene imports from South Korea are expected to continue arriving in the West Coast, but market participants have said this may not necessarily pressure prices lower because of continued tight supply. However, PP trade sources are still looking for further direction from the feedstock propylene market and August propylene contract discussions.
US VINYLS
Negotiations for September US export polyvinyl chloride prices are underway, with at least one producer having issued a fresh offer at $810/mt FAS Houston, a rollover of the August settlement. Buyers are expected to push for further declines amid lingering soft global demand and currency devaluations that have made imports of US material into some regions more costly. Market participants expected protracted talks through this week. Some of them expect buying to pick up when Muslim countries return from Eid holidays and Europeans return from summer holidays. The US and China each have imposed $16 billion in tariffs on each other's products last week amid escalating trade tensions, with China targeting a wide range of petrochemicals that no longer included PVC.
US BENZENE
US benzene prices are expected to continue to hover in the mid-290s cents/gal range this week amid ongoing negotiations for the September US contract. Early market prognostications put the contract settlement near 295-296 cents/gal, though it is unlikely the contract would settle until the latter half of the week. Demand was steady, with downstream styrene market being snug on the back of an unplanned outage in Europe. September styrene was expected to remain north of $1,300/mt FOB USG as a US producer was slated to go into turnaround mid-month.
US TOLUENE & XYLENES
US toluene prices are expected to remain elevated on continued strong Mobil selective toluene disproportionation margins and toluene disproportionation margins this week. Toluene blend values should continue to remain unattractive as summer driving season comes to an end, leaving little buying interest for Nitration grade toluene from gasoline blenders. Paraxylene prices are expected to continue to track a netback to the CFR Asia market, as the market continues to digest the latest developments of the Chinese tariffs on US paraxylene. US xylene prices are expected to remain strong with rising PX prices, and the September OX contract settlement talks are expected to begin toward the end of this week.
US METHANOL
Front and forward spot US methanol market structure is expected to continue to hold in a slight backwardation, ahead of September US methanol contract announcements due out from a US Producer. Contracts will be posted by the end of this week. Market participants expect contract to roll from August pricing of 144 cents/gal and 146 cents/gal by Southern Chemical Corp and Methanex, respectively.
LATIN POLYMERS
Brazilian PE buyers will be taking a cue from the local currency, with last week's softening killing any demand sparked by lower pricing, sources said. Buy interest overall is expected to remain weak as the market watches for further benefits for the region stemming from the US-China trade tensions, sources said. Similar sentiment was heard along South America's Pacific Coast, where buyers are paying close attention to linear-low-density and high-density grades that have seen sharp price declines in recent days. Low-density PE pricing, meanwhile, could be headed for a floor amid strong US demand, some sources said, with others expecting an "over-supplied market" to continue pressuring the import pricing lower.
LATIN AROMATICS
Market players in Mexico will be monitoring the restart of Alpek's purified terephthalic acid plant, which has been shut since a July 19 fire. The plant primarily utilizes imported feedstock paraxylene and is expected to restart by the end of August, a company spokesman said. Benzene pricing in the region is expected to fall this week as it tracks pricing in a well-balanced US market, sources said, adding that US imports are projected to decrease in September from the June-July levels.
