Ethylene is long although the market is slightly more balanced since the spate of exports in April. The recent rise in naphtha prices has added a bullish dimension to the rest of the month.
OLEFINSThere are signs of tightness in the propylene market on upcoming planned turnarounds in Europe, light cracking and expected solid derivatives offtake. The European butadiene market remains tight, with demand from the US continuing to attract the attention of sellers and lighter cracking reducing the availability of upstream crude C4.
The reduction in crude C4 availability is continuing to reduce some European producers' capacity to respond to strong demand for butadiene.
POLYMERSPolyethylene prices are expected to rise this month, tracking the ethylene contract price rise and on bullishness caused by the seasonal pick-up in demand. However, demand has yet to grow substantially as market participants remain in wait-and-see mode.
After a quiet start to the month, buying of polypropylene is set to increase as most market participants expect propylene prices to rise in line with bullish feedstock propylene. As for PET, prompt availability remains tight, but offers have been reported for June/July delivery.
PVC price increases are still unlikely in Europe, despite efforts from producers as buyers are insisting increased upstream costs be absorbed into sales margins. Prices of imports into Turkey continue to fall under economic pressures that that weakened the lira against the euro and dollar.
AROMATICSToluene fundamentals remain supported by export interest to the US, while upside in the energy complex has pushed spot prices above the May contract price of $800/mt. Aromatics traders are awaiting news on the second settlement of the May PX European contract price.
The European styrene market is expected to be balanced because of a boost in imports from the US and robust demand. Downstream polystyrene demand is expected to be strong through May and June after a lackluster April. May-June is also typically a high demand period, especially for EPS.
Benzene is still globally oversupplied, but rising styrene run rates in Europe and a handful of refinery turnarounds could help rebalance the European market.
MTBE/METHANOLThe European methanol market continues to show signs of tightness, with trade flows, particularly in southern Europe, affected by turnarounds in the Middle East. Demand in Europe is relatively stable at a strong level.
Long supply and competitive pricing in alternative blending components point to a low factor against gasoline remaining the norm for MTBE. Pickup is unlikely in the market until stockpiles of reformates and mixed aromatics begin to clear.