www.platts.com/petrochemicals Petrochemicals special report July 2017 EMEA petrochemical outlook H2 2017 CONTENTS Foreword 2 Chinese MTO plants hold key to long methanol markets 2 Ethers markets set for short summer, long winter 4 Demand, tight supplies paint bullish picture for benzene, toluene 6 Welcome return to ‘normality’ for styrene, styrenics? 7 Turbulent times ahead for NWE PET producers 9 US imports, global surplus extend European polymer downside 11 Asia cracker TAs, tighter rubber may propel NWE butadiene exports 12 Imports, improved supply to rebalance oxy solvent markets 14
Transcript
www.platts.com/petrochemicals
Petrochemicals special report
July 2017
EMEA petrochemical outlook H2 2017
CONTENTSForeword 2
Chinese MTO plants hold key to long methanol markets 2
Ethers markets set for short summer, long winter 4
Demand, tight supplies paint bullish picture for benzene, toluene 6
Welcome return to ‘normality’ for styrene, styrenics? 7
Turbulent times ahead for NWE PET producers 9
US imports, global surplus extend European polymer downside 11
Asia cracker TAs, tighter rubber may propel NWE butadiene exports 12
Imports, improved supply to rebalance oxy solvent markets 14
Special report: Petrochemicals EMEA petrochemical outlook H2 2017
European industry continues to benefit from a prolonged golden age for naphtha crackers amid low oil prices. Petrochemical revenues have grown versus oil-based income as US, European and Asian cracker margins remain strong. S&P Global Platts Analytics’ latest oil price forecast indicates that Dated Brent will average around $49/barrel this year, supporting margins in naphtha-based regions for now.
But despite healthy margins, Europe remains under threat from rising imports for derivatives like polyethylene. Increased polyethylene imports over the past decade have already put pressure on European polymer producers to diversify into higher-value applications and specialty grades.
Rising global supply will continue to set the tone for the balance of the year in olefin and polymer markets as trans-Atlantic shale shipments gather momentum across the feedstock chain, from gas to resin, with three European producers now receiving direct cargoes of US ethane and a wave of new downstream supply still to come. High density polyethylene in particular is expected to feel the impact of US capacity growth as three additional plants start up in North America over the next six months.
Europe’s converting industry looks well placed to benefit from cheaper pellet prices in a regional spot market that increasingly reflects these global dynamics — pricing at a widening discount to traditional contracts, at an ever narrower premium to US and Asian peers and raising questions on long entrenched monthly contract settlement mechanisms.
In the aromatics and solvents markets, the recent bullish tide appears to be ebbing, signaling a less eventful second half of the year after a highly volatile start to 2017. European prices hit record highs earlier in the year as domestic production dwindled and imports were diverted to other regions.
Domestic supplies of products such as styrene, methanol, acetone and isopropyl alcohol are now replenishing. Imports have started to return to the region as buyers take advantage of a stronger euro, while the usual summer slowdown offers an opportunity to restock.
Sub-$50/bl crude oil is also weighing in. With waning confidence in OPEC’s ability to counter-balance strong oil production elsewhere in the world, petrochemical players see little incentive to buy molecules for storage.
Longer markets may in turn hold the key to possible price upside down the line. Continuous hand-to-mouth purchasing and reluctance to hold inventory would prove problematic in the event of unexpected production disruptions.
Perhaps the only bullish market on the immediate horizon is benzene. Delays in new paraxylene and benzene start-ups in Asia and the Middle East may help sustain the prevailing fundamentals balance and support higher prices.
CHINESE MTO PLANTS HOLD KEY TO LONG METHANOL MARKETS
� Asian consumption retains potential for uptick
� New 1.75 mil mt/year US plant due on stream by 2018
� Middle East unlikely to re-divert to Europe
European and global methanol markets are currently looking down the barrel of a long market for the second half of the year with only one type of consumer able to reverse the situation.
Chinese methanol-to-olefins plants with their huge consumption capacities could, in theory, alter supply and demand fundamentals.
This is looking increasingly unlikely to happen, however, during the second half of 2017 as MTO plants struggle to compete with low crude and naphtha prices.
Weak olefins prices are seriously calling into question the economics of converting methanol to olefins.
Lackluster demand in Asia has also raised the prospects of Middle Eastern producers, seen as swing suppliers between Asia and Europe, diverting Asian material to European markets.
By the end of the year global methanol markets could be suffering from oversupply with new production set to commence in the US and Iran.
MTO prospectsUnlike H1, market sources are not anticipating strong demand from Chinese MTO plants during the remainder of the year.
However, European producers remain hopeful based on some bullish indications.
Asian MTO margins are expected to remain positive in H2, with a modest rise in methanol prices expected late in the third quarter, according to regional industry sources.
The start-up of a 180,000 mt/year ethylene oxide unit in July will enable China Jiangsu Sailboat’s MTO plant, with 830,000 mt/year of olefins production capacity, to hike its operating rate by 20%, spurring additional methanol demand of up to 500,000 mt/year, a company source said.
A new 100,000 mt/year downstream ethylene vinyl acetate unit is also slated to start up “soon,” likely requiring the MTO plant to run at full rates, but no firm schedule has been set, the source said.
Special report: Petrochemicals EMEA petrochemical outlook H2 2017
Four of the five MTO plants in east China are expected to be operating normally in H2. The fifth, Fude Changzhou, with an olefins production capacity of 330,000 mt/year, was shut in Q2 for economic reasons and is expected to remain shut for most of Q3 and perhaps longer, industry sources said.
Southeast Asia methanol prices may see an upside from late Q3 due to turnarounds and improved demand following Ramadan, end-users said. Three of the four major plants will be down by early Q4.
The Brunei Methanol Company is planning a month-long shutdown of its 850,000 mt/year plant in September, while plants in Indonesia and Malaysia are scheduling maintenance in October, sources said.
The MTO conversion ratio is 3:1. Production costs for the more downstream products of polypropylene and polyethylene are estimated at $150/mt.
The MTOs were envisioned during a time when crude was comfortably above $100/b. Things are different now and they are struggling to come to terms with decreasing olefin prices and narrow margins”, one source said.
Double-edged swordDue to Asian MTO plants’ ability to dictate global prices based on their consumption volumes a new-found volatility is expected in methanol markets.
“If the prices are low and MTO margins improve then it makes sense for them to buy — but then once they start consuming markets become shorter and prices go up. But then, higher prices eat into MTO margins,” a source said, adding, “It’s a double-edged sword.”
European prices opened Q4 2016 at Eur212/mt (then around $237/mt) FOB Rotterdam, by the turn of the year prices had crept up to Eur319/mt.
Then, during Q1, global prices started hitting multi-year highs on expectations of Chinese MTOs buying chunky volumes of methanol following the New Year and Chinese New Year celebrations.
A number of production issues at key global plants squeezed the already limited supply.
Asian spot prices hit a near three-year high of $382/mt CFR China in mid-February.
A week later, the rising Asian prices sent the US spot price to a two-and-a-half year high of 130 cents/gal ($433/mt) FOB USG and shortly thereafter, European spot prices peaked at a nine-year high of Eur406/mt ($360.50/mt) FOB Rotterdam in early March.
However, a few weeks after Chinese Lunar New Year holiday it became clear that MTO demand was not going to materialize, largely as a result of the higher prices negatively impacting margins.
Since then, prices have largely headed in one direction and by mid-April
European prices had declined to below Eur300/mt.
“I think this is a new-found norm for methanol markets. The volatility is likely to stay with us for a while with large cycles every two quarters,” another source said.
The declining methanol price curves have closely followed bearish olefin moves.
New supply for long marketsOn their own supply and demand dynamics, European and US markets are balanced, however, bearishness in Asian markets has meant that global fundamentals are long.
“We are in a long market and unless MTOs start buying up the extra volumes then it’s hard to see how the situation can change for the rest of the year,” a source said.
“The interesting thing is that according to our calculations current global consumption capacity outstrips the total production capacity,” the source added.
Significant extra supply is expected to come on stream during the latter end of Q3 in the US thanks to NatGasoline Methanol’s 1.75 million mt/year Beaumont, Texas plant.
“Work is progressing on schedule and we expect the plant up before the end of the year”, a source close to the company said.
“The majority of the product from the new plant is highly likely to be placed within the US. However, this might leave some extra material from the Caribbean which will need to be shipped somewhere else, likely Europe”, the source said.
ASIAN METHANOL PRICES DICTATE GLOBAL SENTIMENT
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
Likely turnarounds at other major producers in the US as well as reports of a US-based producer with a long term shortfall in supply could end up keeping any extra material as a result of the new plant in the region.
Extra material from Iran continues to be promised but remains elusive with no clear indications of whether the supply will come online before the end of the year.
East-West playMiddle Eastern suppliers continue to be uniquely positioned as swing suppliers able to supply both Asian and European markets.
Market participants have been speculating on the possibility of extra material from the Middle East ending up in Europe if Asian demand continues to remain weak.
However, most sources were skeptical of any significant changes to the supply dynamics and routes until at least 2018.
“The netbacks to Asia or Europe from the Middle East are near enough the same but it’s much easier to offload larger quantities in Asia,” a source said.
Another source questioned the ability of most Middle Eastern producers to be flexible enough to make changes.
“They [Middle Eastern producers] have a meeting at the start of the year about what they are going to do and just stick with it,” the source said.
Indeed, during Q1 European markets were at a premium to Asian markets yet no significant volumes of extra material from the Middle East were reported to have ended up in Europe.
Nonetheless, import volumes into Asia have clearly dropped over the last six months.
European ethers markets are expected to limp into 2018 amid a weak energy backdrop, strong imports from Russia and the seasonal change of gasoline to winter specifications.
The only major bullish indicator for European MTBE markets in the second half of the year is the ongoing open arbitrage to the US Gulf as well as Latin American countries.
Further gasoline export potential to the West Coast of Africa could help lift MTBE markets, however, regulatory changes to gasoline specifications by some African states has left uncertainty around the timing and implementation.
Declining methanol feedstock costs of MTBE are a minor bearish indicator, however, this does not extend to ETBE markets where feedstock ethanol has remained firm throughout the year.
In addition to the feedstock bearishness for ETBE, demand is not expected to increase with no expectations of regulatory changes requiring a greater volume of renewable fuel content.
Summer, crude and gasolineThe seasonal increase in demand for octane boosters from gasoline blenders has failed to live up to expectations amid crude’s weakness and is likely to set the tone for the remainder of the year.
The double effect of the summer gasoline specification change to higher octane levels and the overall surge in driving over summer was expected to cause an uptick in demand.
“It’s [demand] been disappointing. The driving season has been OK but crude’s weakness has really had an impact,” a source said.
Despite, efforts from OPEC and Russia to cap production and support crude prices, the ongoing increase in US production has seen prices remain weak.
Gasoline has been heavily impacted by crude’s weakness even though it has shown some resilience. ICE Brent crude was at end-June at an eight-month low and its third dip of the year.
During crude’s first dip to just above $50/b in early March, gasoline declined to a low of $476/mt for Eurobob physical
CHINESE METHANOL IMPORTS DROP AMID LACKLUSTER DEMAND
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
barges FOB AR. During the second slump to below $49/b in early May, gasoline did not drop below $498/mt and despite crude, most recently, dropping below $46/b, gasoline continued to hover above $480/mt.
“The summer driving season has limited the overall impact negative impact from crude on gasoline,” another source said, adding: “Summer will soon be over and before long gasoline will change to winter specifications. MTBE is likely to take a hit.”
Other sources agreed on the bearish outlook for MTBE as long as the energy backdrop remains weak.
West Africa playCurrent uncertainty surrounding the ongoing sulfur cap in West Africa’s gasoline markets, which has been eroding levels of supplies from Europe, could end up providing a boost to European MTBE markets during the latter half of the year.
However, for now, the uncertainty has led to a softening in demand for MTBE over the summer from WAF market blenders.
“There’s definitely been a drop off in demand because of the uncertainty around the WAF specification changes”, a source said.
Ghana and Nigeria have been signaling to the markets for several months their intentions to heighten the specification requirements of their imported gasoline from July.
Ghana’s National Petroleum Authority confirmed near the beginning of June the long-awaited shift to a lower sulfur cap on its fuel imports effective from July 1.
Nigeria is yet to announce an official decision even though previous statements have said the change in the specification should be expected from July.
The lack of certainty surrounding this move has meant there have been fewer arrivals of late, leaving the offshore market short of product, according to trading sources.
The new specifications could create new demand for octane boosters to meet the new requirements. However, West Africa’s ability to pay for premium grades continues to be called into question even though price increases are not expected to be unaffordable.
A further issue could arise if Ghana’s and Nigeria’s gasoline specifications end up differing with suppliers less willing to send product that cannot also satisfy Nigeria’s larger consumer base.
However, if these concerns are resolved then the increased demand for octane boosters as a result of the higher specification required and current shortness created following the uncertainty would likely provide support to MTBE markets throughout the remainder of 2017.
“I think these things are huge issues and will get sorted out and we will see an increase in demand from the guys that export fuel from Europe to Africa,” the source said.
Russian supply, US demandMTBE supply continues to be strong with no indications of any upcoming supply problems or bottlenecks.
Strong volumes from Russia are expected to continue to flow to Europe throughout the remainder of the year.
Russian imports of MTBE into Europe have significantly increased. During the first four months of 2016, a negligible 21.9 mt of product was exported to Europe from Russia. During the first four months of 2017, the number had shot up to 19,820 mt, according to Eurostat. The increase has largely been driven by previously sporadic sellers into European markets like Russian major Sibur. The company is expected to export 50,000-60,000 mt/year.
Even as more Russian material flows into Europe, the arbitrage to the US Gulf and Latin America from Europe remains open as the US Gulf spot price continues to be assessed as a netback to Europe plus freight, offsetting the bearish supply effect.
This year several large cargoes have been heard moving from Europe to the Americas during 2017 with the largest being a 34,000 mt vessel bound for Venezuela.
“There’s no reason for the exports [to the Americas] to stop for the remainder of the year,” a source said.
ETBE dynamicsEuropean ETBE markets are expected to remain relatively muted despite reports of a recent pickup in demand in Belgium and Scandinavia.
Supply remains stable with demand moderately well matched. The expensive nature of ETBE means only the very minimum required by law is used.
CRUDE PLAY DICTATES GASOLINE AND MTBE MOVES
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ICE Brent at London MOC Mo01 (right)
MTBE FOB ARA-Europe(left)
Gasoline Eurobob FOB AR Barge (left)
Special report: Petrochemicals EMEA petrochemical outlook H2 2017
“There is no news of any regulatory changes on ETBE which will mean blenders being forced to buy more renewable octane boosters so, fundamentally, we won’t see any changes during the remainder of 2017,” a source said.
The number of players looking at ETBE markets had declined during the first part of 2017. Several blenders told Platts they were no longer looking at ETBE due to its expensive nature.
ETBE’s premium over MTBE has continued to remain high largely due to tightness in feedstock ethanol markets resulting in higher prices. The premium has fluctuated from a low of $165/mt to a high of $219/mt. As of late June, it stood at $181/mt.
Ethanol prices have remained high throughout the year and are thought likely to remain at similar levels amid ongoing tightness and disappointing harvests. Ethanol spot prices peaked at Eur664/cu m (about $754/mt at current exchange rates) FOB Rotterdam in February and following a dip to just above Eur530/cu m in April have remained stable at around Eur570-580/cu m.
DEMAND, TIGHT SUPPLIES PAINT BULLISH PICTURE FOR BENZENE, TOLUENE
� Delayed start-ups in Asia to support NWE benzene
� Strong downstream demand in Europe sustained into Q4
� Firm benzene market, TDI ramp-up to support NWE toluene
Robust downstream demand and a balanced-to-tight European market could see strong benzene margins sustained throughout the third quarter of the year and possibly the fourth. Bullish benzene could boost toluene prices during the same period by potentially providing support if TDI feedstock demand in Europe fails to materialize as expected.
The year 2017 has so far been a bumper year for benzene producers, although the middlemen on the trading side have had to deal with severe volatility in the spot market. Another factor supporting European benzene will also be the mismatch in start-ups of new benzene capacity in Asia and the Middle East on one hand, and increasing downstream capacity in China on the other, leading to a tightness in global supplies. For toluene, tight supplies along with consistent demand from benzene producers are two factors expected to keep prices supported.
Tight Q1 sets NWE benzene up for strong H2The second half of 2017 is likely to remain in similar territory to the first half, at the very least throughout the third quarter. H1 caught many by surprise, as benzene premiums to naphtha were much stronger than seen in 2015 and 2016.
Unexpected Q1 styrene outages in the US, high benzene exports from Europe during Q4 2016 and benzene production difficulties in Europe in Q1 set the European market up for a strong start to 2017. As workable benzene arbitrages into Europe have remained shut since early Q2, Europe has had to rely on its own supply.
A globally depressed naphtha market has helped keep supplies of benzene feedstock pyrolysis gasoline ample in Europe for most of the year to date. Producers who shut down their steam crackers for maintenance in Q2 were in many cases able to keep their benzene extraction units running by purchasing pygas from the spot market. The traditional switch from naphtha cracking to lighter feedstocks in Europe has occurred somewhat later than usual, relieving tension in the pygas market well into the summer months. In late May and early June however, concerns among market participants regarding pygas availability started to surface, as length in the market accumulated in Q1 was slowly but surely being consumed.
Traders expect the strength in European benzene to be maintained toward Q4, as downstream demand for derivatives styrene monomer, MDI and cyclohexane is seen as robust in Europe. The bullish sentiment is also supported by the expectation of continually closed arbitrages into Europe, but the region has historically been an importer of benzene.
Asia, Middle East push start-ups into 2018Another bullish factor for European benzene that could possibly sustain margins in Europe throughout the remainder of the year is the delay in new benzene capacity start-ups in Asia and the Middle East. As of December 2016, several benzene start-ups were planned in Asia.
Vietnam’s Nghi Son refinery had planned to expand production by 240,000 mt/year in the second quarter, but that start-up has been pushed to the first quarter of 2018. The Petro Rabigh project in Saudi Arabia, which was expected to be completed at the end of Q2, has also been pushed to Q1 2018. The planned capacity for Petro Rabigh is 424,000 mt/year. Saudi Aramco’s phase 2 of its benzene unit in Ras Tanura was scheduled to start up in Q4 2017, but has been pushed back one year. All in all, out of the 2.1 million of new benzene capacity planned to start up in 2017 in the Middle East and Asia, at the moment it looks like a third of that — 700,000 mt/year — will come on stream.
On the other hand, China is still expected to bring on stream plenty of downstream plants this year, requiring
Special report: Petrochemicals EMEA petrochemical outlook H2 2017
up to 1.94 million mt/year of benzene, far outstripping new capacity.
Looking at European benzene compared with its feedstock naphtha, margins have been strong for producers. In the first six months of the year, the average benzene premium to CIF naphtha cargoes stood at $423/mt, well above the industry estimate of $200-$250/mt needed to break even economically.
The average margin of 2017 so far is well above 2016 and 2015, which stood at $280/mt and $234/mt respectively. Some European market sources point out that benzene margins should likely revert to their historical $250-$300/mt level later this year, but if Chinese downstream demand is not satiated by Asian or US benzene, there is only one last place to fill that demand.
Strong benzene, TDI ramp-up to support NWE toluene The long-awaited start-up of BASF’s 300,000 mt/year TDI plant in Ludwigshafen, Germany, will also support European demand for toluene. The plant, which had to shut down in Q4 due to a reactor failure, is currently running on its backup reactor and will do so until the end of 2018 when a new main TDI reactor will be installed. Run rates at Ludwigshafen are however expected to remain robust until then.
If the expected TDI demand for toluene in Europe fails to materialize in the second half of 2017, benzene converters are likely to grab available volumes to fill demand in Asia.
The first six months of 2017 marked a change in European toluene fundamentals compared to the two previous years.
In 2015 and 2016, global gasoline markets went through a period of near unprecedented rallies, and gasoline blenders were the highest bidders for aromatics such as toluene and MX, as both chemicals are well suited for gasoline blending due to their high octane level. As a result, the two chemicals were priced near parity throughout 2015-16. At the beginning of 2017, however, the two went their separate ways.
A globally strong benzene market increased demand for toluene-to-benzene conversion, but owners of such conversion plants had seen negative margins for the two preceding years. A more balanced gasoline market, as well as a bearish paraxylene market, pushed MX prices downwards while benzene converters scrambled for toluene for benzene conversion.
This trend will continue, as more PX volumes will accompany most of the new benzene volumes to come out of Asia in the second half of the year.
WELCOME RETURN TO ‘NORMALITY’ FOR STYRENE, STYRENICS?
� Traditional trade routes set to return, working US-EU import arb
� Benzene to give styrene direction
� New POSM Middle Eastern capacity may rock the boat
� Polystyrene producer margins to recover on improved demand
Market conditions in the second half of the year are expected to return to “normality”, with the traditional trade flows returning in styrene and a more stable relationship with feedstock benzene to emerge. This follows a first half in which European styrene and styrenics markets were overwhelmed by volatility as unexpected outages at US styrene units led to extreme bullishness in the market, sending global styrene prices to multi-year highs.
A more stable H2 in the styrene market will support downstream styrene margins amid a firmer demand outlook for polystyrene compared with H1. Nevertheless, styrene and styrenics producers will see more import competition as a stronger euro encourages buy activity from outside of the EU.
STRONG BENZENE PREMIUM TO NAPHTHA
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HEALTHY BENZENE CONVERSION MARGINS IN 2017
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
Spotlight shifts from US Late 2016, all eyes were on the Asian styrene market as sellers sent styrene to Asia in anticipation of the major turnaround season which was scheduled for the first quarter of 2017. However, as 2017 unfolded, the US market stole the limelight as unplanned turnarounds in the US led to global styrene prices reaching multi-year highs. Sentiment turned bullish and the US became the highest priced region. This led to a rare reversal in trade flows, with the US market receiving styrene parcels from Asia and Europe. The US is structurally net long and is the major supplier of styrene to Asia, which is structurally net short.
However, the traditional trade flows returned in May-June as European traders made the most of Europe’s open import arbitrage from the US. US producers enjoyed healthy output levels and were heard “capable” of exporting parcels to Europe and Asia.
This is expected to continue in H2 as scheduled plant shutdowns globally are anticipated to be significantly fewer than in the first half of the year.
In Europe, Versalis is expected to have a turnaround in September-October at the smaller line of its Mantua petrochemical complex. Versalis is integrated downstream and most of its styrene is for captive use. Sources say that the impact on the European market will be minimal. BASF is expected to have a turnaround at its Ludwigshafen unit which is expected to tighten the market temporarily, but the timing is unknown.
Benzene drives styrene Feedstock benzene will be a key driver of styrene in H2, sources said. In H1, the spread between benzene and styrene rocketed to $500-600/mt, triple the industry estimated break-even level of around $150-200/mt. Styrene prices disconnected with benzene as European styrene looked toward the US and Asia for direction.
The main driver will remain price fluctuations in other regions. But the narrower spread with benzene will mean that styrene will become more sensitive to benzene movements. The spread fell to just above $200/mt in
May, and a more stable relationship is expected to be maintained in H2.
“The spread should narrow [from H1],” a trader source said.
A styrene seller said that there was room for margins to increase to above break-even levels in H2, but this will depend on where US product will find a home. He added that if Asia was able to receive US material, then European styrene producer margins may rise. However, if incremental US volumes move to Europe instead, European prices and margins will be under pressure.
Middle East PO start-up — a spanner in the works? Sadara’s start-up of propylene oxide production in Saudi Arabia in late Q3 may upset the styrene market balance, according to sources. Sadara is a joint venture developed by Dow Chemical and Saudi Aramco.
Sadara operates a petrochemical complex in Jubail designed to produce a range of specialty petrochemicals, including polyurethanes, propylene oxide, propylene glycol, butyl glycol ethers, amines and polyolefin elastomers. PO is an intermediate product for the production of other chemicals, with end-uses such as synthetic lubricants and flame retardants.
Sadara is a “big question,” a second trader said. Indeed, higher propylene oxide production may pressure run rates downwards at European propylene oxide styrene monomer (POSM) units.
Operating rates for POSM are determined by the product with the healthier margin, a styrene seller source said.
Sadara’s new PO capacity could have two opposing effects. It may lead to higher styrene production in the Middle East, boosting global supply and dampening prices. Or it could lower run rates at POSM units in Europe as global PO lengthens, which could tighten European supply. It will also depend whether extra styrene will be exported to Asia or Europe.
“It will depend on netback opportunities,” a third trader said.
PS demand – the only way is up Downstream polystyrene demand is expected to recover in the second half of the year, following volatility and high styrene prices in the first quarter leading to a slump in downstream polystyrene demand, with consumption volumes falling in double digits. In Q2, demand improved and uptake is expected to remain firm in H2, bar the seasonal summer lull, sources said.
Price volatility in H1 was the scourge of businesses as stock management became difficult as buyers constantly deferred orders.
US OUTAGES SEND GLOBAL STYRENE PRICES SOARING
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($/mt) Styrene FOB USG Styrene FOB ARAStyrene CFR China marker
Special report: Petrochemicals EMEA petrochemical outlook H2 2017
It was “very frustrating [due to] no visibility in market prices,” a general purpose PS converter source said, adding that he “hoped for price stability” in H2.
An EPS producer said that demand improved in May-June, and that the “only way is up” for the rest of the year, following an extremely slow start. Expandable PS is a styrene derivative which is widely used for insulation in the construction industry.
Chris Pappas, president and CEO of US styrenics major Trinseo said that May would see “a start of the return to normalized [circumstances]. [There will be an] overcorrection in May, leading to a normal situation in June,” he said. This trend is expected to continue in H2.
Producer margins were also under pressure in H1 as producers were unable to pass on hikes in styrene. Margins are expected to return to healthy levels as feedstock styrene stabilizes.
“Margins had been poor [in Q1],” a second EPS producer source said. “Margins [have] to be better, otherwise [it is] a disaster,” he added.
A second converter source said that he had only bought minimum quantities in the first half of the year, buying on a hand-to-mouth basis due to low stock levels. As a result, “we will see a stronger and healthier PS market during H2 2017,” he added.
However, a more positive outlook for H2 may be overshadowed by higher import competition amid a strong euro:dollar exchange rate and new players entering the market. The euro strengthened to $1.12, up from $1.05 at the beginning of the year. This will lead to higher volumes from South Korea — the largest supplier to the EU. Product from India, Middle East and Egypt is also expected to be boosted by the exchange rate.
The large unknown, however, is Iran, sources say. Iranian sellers have succeeded in increasing exports to the EU on the back of soaring domestic and foreign investments.
Latest Eurostat data show EU’s Q1 2017 imports registered at 2,775 mt, up from 2,550 mt and 794 mt in the same period of 2016 and 2015 respectively. As political relations between Iran and Europe improve, Iranian sellers will likely have better access to the European market at the expense of European sellers.
Styrene and styrenics market participants alike hope for “normality” to return to the market as huge price fluctuations in H1 challenged business logistics.
However, pending unknowns, such as upstream oil prices and a constantly changing political environment, may crash hopes for “normal” conditions to return. Forecasting the styrene and styrenics markets is “a million dollar question,” a source said.
� Spot buyers mull move to contract following H1 rally
� Imports continue to threaten spot sales
� High PIA prices set to eat into producer margins
Polyethylene terephthalate producers in Europe are set to face turbulence on sales in the second half of 2017, as the peak summer demand season edges nearer to a close and subdues spot appetite.
H1 upside in spot PET prices could see renewed interest among spot buyers to shift procurement practices to a contractual basis, while buyers with a bigger appetite are also contemplating diversifying procurement by increasing imports, the economics of which had substantially improved in Q2 as the euro appreciated against the dollar.
Changing buyer behavior may compound upstream pressure on European production margins from high feedstock costs, particularly on purified isophthalic acid.
The European PET battlefieldEuropean PET producers are set to face a rough battlefield ahead in Q3, as their spot offers continue losing competitiveness in the marketplace. Spot buyers now have a variety of options at their disposal, including feedstock-based contracts and spot imports from Asia.
With spot European PET prices hovering at or around four digit levels throughout this year and consistently at a premium to the contract market, most buyers had only lifted spot European volumes as a last resort and may increasingly look to contracts for domestic procurement.
GPPS MARGIN UNDER PRESSURE IN Q1 AS STYRENE REACHES MULTI�YEAR HIGHS
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
“I am looking to switch from spot to feedstock-based contracts on virgin PET, it can save us money,” said one buyer, who sources PET on spot from traders.
Proportions of contractual and spot sales vary between various PET producers, with no holistic weightings across Europe.
“Around 30% of my sales are on feedstock-based contracts, but I know others who have higher, at around 60%,” a PET producer said.
Spot PET prices in Europe have historically been stronger in H1 months, while the trend tends to be bearish in H2, according to S&P Global Platts data.
Eastern stormWith improving import economics amid a stronger euro, buyers are expected to gain more flexibility to cover H2 requirements outside Europe, ending the short-lived Q2 trend that saw many European producers being sold out for June.
Prices in Asia have consistently been lower than the European spot equivalent.
According to Platts data, the FOB NE Asia spot price in Q2 averaged at around Eur150/mt lower than the spot FD NWE level. The spread was wide enough to pay for freight and import duties, if applicable. But buyers preferred
to minimize logistical risk in their supply chains and sourced domestic volumes during the peak summer demand season.
That discount had widened to the Eur170/mt mark in May and June, which may encourage buyers to contemplate imports in the second half of the year.
“The main thing for European PET producers is to make sure feedstock-based contracts work cheaper than Asia, otherwise people will reduce their contractual offtake and cover their requirements through imports from Asia,” a second PET buyer said.
European PET producers are also faced with higher feedstock PX and MEG costs in comparison to Asia, together with higher labor costs posing a competitive disadvantage.
“I can understand why European producers are high [on prices], as they have to make conversion profitable from these PTA and MEG prices. Their costs including labor are higher than Asia, so of course they will try holding their ground [on prices],” a PET trader said.
The robustness of Asian producers together with reduced barriers to entries are set to intensify competition in the European PET market, which in turn would challenge the profitability of European PET producers.
“It is a very strange year. I do not think it’s going to be very profitable for [sellers of] plastics,” the PET trader said.
Tail wagging the dogPET producers in Europe have had an unlikely foe in recent months — purified isophthalic acid.
Accounting for only 2% of total raw materials, PIA has often been omitted from the pricing formulas of the PET contracts.
But soaring PIA prices have been eating into the production margins, and this could continue jeopardizing European PET profitability in the second half of the year.
PIA prices have shot up by nearly 250% since autumn to over Eur2,500/mt, according to market sources.
“PIA offers currently range between Eur2,500-2,800/mt ($2,790-$3,130/mt) FD and these prices are extremely high. The prime reason for the shortage is that there is just one producer in Europe. Prices have almost consistently risen over the past few months,” a second PET producer said.
“Sellers tends to price PIA at their liking and someone in need of a prompt cargo will have to pay that amount,” the second PET buyer said.
NWE SPOT PET LOSES COMPETITIVENESS TO CONTRACTS, ASIA
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Europe vs Asia
Spot vs contract
SEASONAL DOWNSIDE AHEAD ON SPOT PET?
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
There is only one producer of PIA in Europe, Indorama, with a capacity of 220,000 mt/year. Although Indorama is expanding its European PIA capacity by around 100,000 mt/year by H1 2018, supplies are set to remain tight in the meantime.
Typically formulas in PET contracts reflect 60% of the PX contract price and 35% of the MEG contract price. Additionally, a producer mark-up of around Eur175/mt is levied, depending on the quantity procured and location of the buyer, which determines freight costs.
“It is only a small part of the PET [production] chain, with around 2% of material used. But not one that gets priced in our feedstock based contracts,” the first PET producer said. “PIA prices went up and we lost Eur20/mt because of that. If it goes up more, we will lose further.”
US IMPORTS, GLOBAL SURPLUS EXTEND EUROPEAN POLYMER DOWNSIDE
� European polymer imports keep rising
� US capacity to come on online in H2
� Spot purchasing, relative to contract, set to grow
Rising demand amid static domestic polymer capacity expansion is expected to increase Europe’s reliance on imports in the second half of 2017 while global capacity expansion will likely contribute to bearish sentiment surrounding European polyethylene and polypropylene prices.
New US high-density polyethylene plants expected to come online in the third quarter will boost that region’s surplus supply, with increased export volumes resulting in further downward pressure on global spot prices and potentially prompting European buyers to look from the contract to the spot market to take advantage of cheaper imports.
All eyes on the US, Middle EastEuropean polyethylene imports have soared 39% since 2014 to 3.2 million mt in 2016 and are projected to grow further by the end of 2017.
The import trend shows no signs of slowing over the medium term, with nearly 4.5 million mt of PE capacity expansion scheduled to come on stream in the US between now and 2020.
Additional capacity in Asia, amid a drive towards self-sufficiency, will result in additional US and Middle Eastern volumes available for export to deficit markets.
Data from Platts Analytics shows that Western Europe will continue to be a net importer of PE to cover the regional deficit. Europe will need to source just over 1 million mt of HDPE alone in 2017 to balance net HPDE trade.
“With substantial PE volumes coming on stream in the Middle East, and the US, they will need to find a home. Inevitably this product will be offered into Europe, as both regions have net surpluses, and this will add bearishness to European PE prices in 2018 and beyond,” according to Platts managing analyst Hetain Mistry.
PE imports are set to rise across the grade slate, however high density and linear low density, in particular, will be most impacted by increasing foreign volumes. Capacity expansion projects in the US and Middle East will focus on HDPE and LLDPE and will further increase the regional surpluses.
The Middle East will remain the largest global exporter of PE as a result of the region’s growing surplus, with capacity expansions serving to maintain its position as the largest supplier to Europe. Iran will take the lead on capacity expansion while Saudi Arabia will remain the region’s largest producer.
On the LDPE import front, Iranian LDPE expansion could further contribute to increased European LDPE imports from the Middle East. Iranian LDPE capacity is expected to increase by 28.5% over 2016 to 1.28 million mt by the end of 2017, according to Platts Analytics.
Polypropylene imports are rising in similar vein to PE, dominated by volumes from the Middle East with Asian supply increasingly eating into the Middle East’s European market share. European imports have grown 38% since 2014, to just over 1 million mt in 2016. Europe will continue to play a significant role as an export destination market, due to the relatively few additional European PP project announcements beyond what is needed to keep up with demand. The US will likely see initial surplus growth through 2019, as announced capacity expansions come online.
HDPE capacity expansions herald buyer move to spot?Three additional US HDPE plants are expected to come online in the second half of this year, amid growing European demand.
Chevron Phillips Chemical is expected to start up two LLDPE/HDPE swing lines with a total capacity of 250,000 mt/year each. ExxonMobil also plans to start up two LLDPE/HDPE swing lines with a capacity of 325,000 mt each, while Ineos plans to bring online an HDPE-specific plant with a nameplate capacity of 460,000 mt/year in H2.
The additional plants will add pressure on US prices, which, in turn, will add pressure to European HDPE spot prices.
European converters hope to be customers of this new wave of cheap supply. As North America cements itself as a net exporter, this might further disconnect European spot and contract prices, with European polymer imports primarily done on a spot basis.
European HDPE spot prices for injection grade are moving closer to spot prices in Asia and the US, having fallen around 20% since 2014. At the end of May, European HDPE prices were at $1,304/mt FOB NWE, compared with $1,279/mt FAS Houston and $1,090/mt FE Asia.
HDPE contract prices, on the other hand, carry a larger premium to spot prices in Europe and globally. Contract mechanisms include volume rebates and additional bonus for guaranteed supply.
In an increasingly global market, the level of Europe’s import volumes will be dependent on pricing dynamics in Asia and South America.
“[Producers] will start to export to Europe to gain market share and that will impact prices but [the impact on European prices] will be dependent on global prices. US material will flow to Asia, South America and Europe. Middle Eastern producers will send material to Europe but how much will depend on net backs [from Asia],” said one producer.
New trade flows patterns could see a change in buyer behavior emerge over the medium term.
European buyers looking to capture global price dynamics amid growing capacity and cheaper production costs elsewhere may increasingly turn their attention to spot procurement.
In a recent poll by S&P Global Platts, webinar delegates were asked by when they expected European polymer contract volumes to shift to spot. The majority of respondents (85%) anticipated a volume shift in 2018-20 with a small minority polling for 2017 (7.7%) and a similar number expecting no change (7.6%).
ASIA CRACKER TURNAROUNDS, TIGHTER RUBBER MAY PROPEL NWE BUTADIENE EXPORTS
� Plant maintenance scheduled in H2
� Natural rubber may turn tighter
� Europe structurally long for butadiene
The second half of 2017 has begun on a somber note for European butadiene with the monthly contract price recording its steepest drop in settlement for this year. The July CP was settled at Eur825/mt ($937/mt) FD NWE, a massive Eur400 lower than June.
The monthly contract settlements have dropped consistently since March suggesting low demand both locally and for exports. However, export trends have historically diverged sharply between the two halves of the year and Asian cracker turnarounds and tight natural rubber supplies may combine to turn things widely differently in H2, opening the currently closed Europe-Asia arbitrage and raising butadiene exports out of Europe to provide a boost to prices. Asian butadiene prices would need to widen to a $250/mt premium to FOB Rotterdam, from the current sub-$150/mt, to incentivize European
DISCONNECT BETWEEN SPOT AND CONTRACT HDPE PRICES
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
exports. Sporadic butadiene demand in Asia has in the past raised this figure above $950/mt.
H1, H2 historically differentJune and July usually act as watershed months for the butadiene market and around the end of June or early July prices tend to completely change the direction they assumed during the first half of the year. European butadiene prices and those in Asia tend to move up in unison based on when a majority of crackers in Asia would undergo maintenances.
In 2016, prices began rising from early June and had more than doubled by the time the year came to an end. Butadiene was assessed at $1,614/mt FOB Rotterdam December 30, a surge of 136% from $685/mt on June 1. By contrast, 2015 saw a steep fall between July and December.
A rise in prices on a FOB basis can only emerge from demand for exports.
The established trend over the past few years is that Europe tends to export higher volume of butadiene in H2. This has altered slightly over the past two years, with exports spilling over to H1, and according to data from EU statistics agency Eurostat, exports of butadiene out of Europe have been particularly pronounced in the period August-March.
In the period August 2016 to March 2017, Europe exported an average of 31,631 mt/month of butadiene most of it to Asia backed by a higher than usual number of crackers undergoing maintenance. This is more than 1.5 times higher than the volume of less than 20,000 mt/month it typically exports. December is usually one of the quietest months for petrochemicals trade, but in 2016, butadiene
traders were heard scouring for cargoes to meet prompt demand in Fareast Asia.
Several Asian crackers to undergo maintenanceCracker maintenances, especially the concurrence of multiple crackers undergoing maintenance in Asia, has been the prime booster for the C4s chain of petrochemicals from crude C4 to styrene butadiene rubber. Several upcoming cracker turnarounds may tighten Asian supply for H2.
Major Asian crackers undergoing maintenance include Taiwanese Formosa’s 1.2 million mt/year cracker at Mailiao and Japanese Mistui Chem’s 600,000 mt/year cracker at Chiba, Japan. The total butadiene capacity associated with these crackers is 695,000mt/year. There are five European crackers scheduled for maintenance in the second half of this year including Sabic’s Wilton cracker and Total’s Gonfreville. The butadiene capacity associated with these crackers adds to a total of 324,663 mt/year. Europe is expected to remain long on butadiene even with these outages and remain in a position to export.
Natural rubber may turn tighterNatural rubber supply and prices are key determinants of butadiene and styrene butadiene rubber price movements. Butadiene is primarily used for producing styrene butadiene rubber while the latter acts as a replacement for and is used along with natural rubber in the tire industry. Recent market news suggests that natural rubber may turn tighter in H2 bringing in support to the entire chain of C4s petrochemicals.
The latest forecast from the Association of Natural Rubber Producing Countries puts the world supply of natural rubber at 12.756 million mt in 2017, slightly lower than the 12.771 million mt anticipated a month ago.
The total global supply during Q1 2017 was short by nearly 600,000 mt and this deficit is anticipated to have widened to 700,000 mt by the end of June.
Natural rubber supplies in Asia have been heard tight for most of 2016 and 2017 because of a cocktail of factors including floods in largest producer Thailand and curtailments in production made since 2015 by rubber producing countries to prevent a glut of supply.
BUTADIENE MAINTENANCES SCHEDULED DURING H2 (mt/year)Company Location TA start Butadiene capacityLotte-Titan Pasir Gudang, Malaysia July 100,000Idemitsu Chiba, Japan September 60,000Formosa Mailiao, Taiwan Mid-August 90,000Mistui Chiba, Japan End-June 445,000Sabic UK Wilton, UK End-August 100,000Borealis Porvoo, Finland August-Oct 25,000Ineos Cologne, Germany Sep-Oct 79,663Total Gonfreville, France Sep-Oct 60,000Versalis Porto Maghera, Italy Sep-Oct 60,000
A RISE IN BUTADIENE PRICES PROPELS EUROPEAN BUTADIENE EXPORTS
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BUTADIENE EXPORTS OUT OF EUROPE (mt)Year H1 H2 % Change2015 77,993 128,307 652016 173,984 204,979 18
Special report: Petrochemicals EMEA petrochemical outlook H2 2017
But because of a drop in natural rubber prices since the last week of May on lower demand, the supply is likely to be revised down further by rubber producing countries.
During early 2017, a rise in butadiene prices in Asia had also pushed up downstream SBR and led to exports of the product out of Europe to Asia.
However, such an arbitrage is firmly closed now with Asian prices placed at levels below Europe. Europe generally tends to export butadiene instead of SBR as Europe is net long for butadiene, Asia is net short. The same is not true for SBR.
Europe in position to export In the case of demand for butadiene in Asia rising in the second half of the year, Europe has surplus available volume to export. About 310,000 mt/year of additional butadiene capacity hit the European markets in the second half of 2015, moving European butadiene supply to a surplus. Before the advent of this capacity production in Europe usually balanced out with demand.
Persisting availability of vessels is also seen helping traders negotiate cheaper freight rates resulting in steeper margins while making shipments to the US or Asia. Freight for shipping butadiene to Asia currently stands at $250-300/mt for a 5,000-10,000 mt cargo, down from around $350/mt for most of 2015 as the scope for higher and more consistent olefins supplies from Europe has brought in more gas carriers willing to negotiate freights.
European butadiene producers and traders are known to keep their ears to the ground for any signs of an arbitrage opening between Europe and Asia. They are likely to do so till the year comes to an end. They have been reluctant to comment on the market recently as they tried to balance current weighed-in markets in Europe vis-a-vis historical data that suggested a change in trend for H2.
One industry participant did look at the longer horizon, however. “Many parties are requiring volumes for next
year, there is more demand than normal,” one of the largest producers in Europe told Platts.
IMPORTS, IMPROVED SUPPLY TO REBALANCE OXY SOLVENT MARKETS
� Etac volatility to remain for time being
� BASF butac force majeure expected to be lifted
� Sasol to import regular volumes of MEK
European oxy solvents are expected to gradually return to balanced markets before the end of the year as improved European production is complemented with stable imports.
The supply dynamics are expected to be further helped along by better availability of feedstock ethylene and propylene.
Several of Europe’s oxy solvent products hit multi-year or even record highs as a result a supply shortages caused by often varying and multifaceted factors. Over the first four months of the year in particular oxy solvent markets faced significant tightness as the effect of declining imports into Europe was compounded by a year-on-year rise in exports over the same period.
Acetone to cool offThe acetone outlook for the second half of the year is set to be bearish as current supply restrictions are expected to slowly ease after the summer. However, three upcoming turnarounds in Europe might slow down the rate of the price decline.
European acetone prices surged to an all-time high since S&P Global Platts began recording them in 1994 of
STRONG EUROPEAN OXY SOLVENT EXPORTS ADD TO LOCAL SUPPLY PRESSURE
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EUROPE�ASIA BUTADIENE ARBITRAGES TEND TO OPEN IN H2
Eur1,375/mt (about $1,569/mt at current rates) FD NWE at the beginning of April as markets faced critical tightness due to several planned turnarounds as well as unexpected production issues.
Despite Europe commanding a substantial premium over the other regions, imports proved to be difficult and limited.
One European market participant who attempted to import material from the US told Platts no meaningful volumes for a shipment were available on the US spot market.
Material from Asia has been more readily available but due to the sudden and unexpected nature of the price increases, imports did not arrive until late May/early June.
The arbitrage from Asia continues to be open and regular import volumes are expected to arrive throughout H2, which should keep European markets well supplied.
“There is now a danger that Europe might turn long, after the recent crazy tightness, because of the imports leaving extra material around now that European producers are up again”, one market source said.
The large spread between Asian and European spot volumes is likely to mean ongoing imports until at least the end of the year and a global markets rebalance.
The Asian spot acetone price has been hovering just above the $700/mt market CFR SE Asia since mid-April.
Expectations of falling prices in Europe could theoretically diminish appetite to import Asian cargoes, which take at least six to eight weeks to arrive to Europe. However, still reduced run rates and upcoming outages in Europe are likely to cushion the price declines and this could support arbitrage interest.
Overall weak phenol demand has meant some producers have been operating at well below capacity, with most pegging run rates at 60% so far this year.
Several producers including France’s Novapex, Poland’s PKN Orlen and Ineos at its Gladbeck plant have upcoming maintenance work in August and September.
Novapex’s Roussillon plant has an acetone capacity of 115,000 mt/year. PKN Orlen’s Plock plant has an acetone capacity of 50,000 mt/year while industry heavyweight Ineos has an acetone capacity of 395,000 mt/year at its Gladbeck, Germany facility.
A mixed picture with upstream feedstock benzene and propylene prices is likely to balance any potential impact. Benzene is facing bullish indications for the second half of the year while propylene supply is expected to increase and put downward pressure on prices.
Seesawing etacThe majority of ethyl acetate market participants expect balanced markets throughout the remainder of the year though with similar price fluctuations to H1.
The European etac price has been seesawing throughout the year and is into its third downturn of 2017.
Prices have moved from a year low of Eur840/mt FD NWE to a year high of Eur1,030/mt.
The ongoing cycle has very closely coincided with Asian import material arriving to Europe. The imports have recently not been of significant enough volume to move prices on their own but they prompt dominant European producers to reduce their prices in a bid to maintain market share.
However, when the imports start running low, prices begin to increase.
Sharp declines in upstream feedstock methanol prices throughout Q2, following the multi-year highs in Q1, are expected to trickle down to etac feedstock acetic acid prices.
Feedstock ethylene is expected to be bearish too.
However, given the relatively restricted supply nature of European etac markets, the feedstock declines are not expected to have a significant impact on future prices.
“Significant moves in feedstock prices only come to Eur10/mt or so change in etac prices. It gives a direction more than moves the market”, a source said.
Butac supply gap to closeThe outlook for European butyl acetate markets is also quite bearish amid expectation of further imports and improved domestic supply.
Another of the oxy solvent products to hit an all-time high since Platts records began in 1994, prices peaked at
EUROPEAN Q1 OXY SOLVENT IMPORT DECLINES WORSEN TIGHTNESS
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Special report: Petrochemicals EMEA petrochemical outlook H2 2017
Eur1,500/mt FD NWE when Oxea, one of three European butac producers, declared a force majeure in February.
This added to BASF’s own force majeure from October 2016 and created desperate tightness in the market.
Prices continue to remain high at above Eur1,200/mt, however, market participants expect further significant reductions before the end of the year.
BASF is expected to lift its force majeure near the end of the summer season and markets are expected to rebalance with all the main producers back up.
BASF declined to comment on the timeline for lifting the force majeure.
Traders expect that the general range for butac prices by the end of the year will be in the Eur800s/mt region on improved supply and lower feedstocks.
IPA balance to improve on resuming US exportsIsopropyl alcohol fundamentals are expected to balance out before the end of the year but will remain volatile until then.
The last of the oxy solvents products to have hit an all-time high since Platts records began was IPA which peaked at Eur1,630/mt FD NWE in April.
Since then, prices have dropped to below Eur1,500/mt as the supply situation has improved.
The main reason behind the shortfall in European supply earlier this year was the reduction in imports from the US. As the market on the other side of the Atlantic remained strong, greater volumes of IPA were consumed domestically in the US and the flow into Europe thinned.
However, the roles soon reversed and European spot prices gained a premium over the US.
Since then, European IPA prices have eased off and are continuing to feel downward pressure amid good supply from producers and Asian imports as well as lower propylene feedstock costs.
Despite the decline, European IPA prices continue to enjoy a Eur200-300/mt premium over US markets as prices in the US continue to decline along with Europe.
Sasol to re-enter MEK marketThe only one of the European oxy solvent products where the outlook is evenly divided and uncertain is methyl ethyl ketone.
A lack of spot activity as well as the limited volumes and numbers of players involved mean MEK markets are more susceptible to minor changes in the fundamentals than most other products.
Prices hit a multi-year high of Eur1,390/mt FD NWE in April before seeing some gentle declines.
The supply situation over the next six months is expected to improve with regular shipments from South African petrochemicals producer Sasol, agreed a number of market sources even though the import volumes remain unclear.
“I’m not sure the import volumes [of MEK by Sasol] are going to be large enough to have an impact on market fundamentals,” one source said.
The imports come as the grace period afforded to Ineos following its purchase of Sasol’s European assets has expired.
Despite the minor improvement in supply, market sources are uncertain which direction MEK will take during H2 with some expecting the tightness to remain though at a reduced rate.
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