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The outages are tightening global markets which
were already suffering shortages of material
and rising prices. Problems with the global
container shipping system, plant outages plus
healthy downstream demand have caused
tightness, notably down the propylene and
polyethylene (PE) chains.

Propylene and PP are likely to be one of the
hardest-hit by the storms because the market
was already in turmoil.
 The coronavirus pandemic has reduced
demand for transport fuels, and led to oil
refineries closing or cutting production,
particularly in Europe and the US.

These closures had a knock-on effect on supply
of propylene and PP, leading to price spikes.
With US PP production capacity so highly
concentrated on the Gulf Coast, even
temporarily constrained productions
capabilities will have a massive effect on an
already tightly supplied market.

US propylene prices are at
10-year highs
and inventories are roughly
half of what they were a year ago. Consumption
has outpaced production due to reduced
propylene production over the last year.

PP inventories in the US hit seven-year lows in
late 2020, partially driven by rebounding
demand and partially driven by limited monomer
availability. Some PP production issues also
preceded this weather event.

The situation is less dramatic in PE.
Constrained supply and demand for packaging has
sustained global markets through the pandemic,
with logistics challenges and outages causing
shortages and price spikes in 2021.

With almost two thirds of US ethylene capacity
now offline, global PE markets are likely to
tighten further.

US methyl methacrylate (MMA) supply is also
expected to be
further constrained
thanks to the storm, as
Lucite has taken down its plant in Beaumont,
Texas. Severe constraints in feedstock acetone
continue to limit production. Due to high
costs, a producer is heard to be levying a
temporary acetone surcharge on orders starting
this month.

the Chinese New Year holidays coming to an end
from 17 February, demand is picking back up in
the world’s largest chemicals market.

ICIS reported today that a supply shortage and
improving demand after the holidays, supported
China’s polyolefins market, leading to a surge
in futures and spot prices.

Futures prices in China also rose sharply for
styrene, mono ethylene glycol (MEG), polyester
and polypropylene.

(Excerpt) Read more Here | 2021-02-18 09:51:00


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