Market Study From Volatility to Stability — The European Chemicals Market
The Icis market outlook published by Reed Business Information takes a closer look at supply and demand expectations for Olefins, Polyolefins, Aromatics and TiO2 for Q3 2017.
Brussels/Belgium — It has been a challenging start to the year for a number of key petrochemical products. Some markets have moved from volatility to stability over the last six months, and players are questioning what the rest of 2017 may bring.
Icis has published a series of outlooks, examining supply and demand expectations for the third quarter.
At the beginning of the third quarter, ethylene and propylene markets are suffering from prolonged supply constraints caused by delayed restarts at crackers that had been offline for planned maintenance, as well as other unplanned interruptions caused by high temperatures earlier in the quarter as well as impacts of the outage at Shell’s Pernis refinery in the Netherlands.
Outage of Shell Pernis Refinery Has Significant Repercussions
Most units at Shell Chemical’s refinery complex in Pernis, the Netherlands, have been offline since the end of July after a power surge caused a fire at a power substation at the site.
The impact of the sudden loss of Europe’s largest refinery and neighbouring petrochemicals units is still being assessed, but with no restart expected before mid-August at the earliest, a spate of force majeures has already been declared, both by Shell itself and by market players dependent on Pernis for product.
Located in the heart of the Amsterdam-Rotterdam-Antwerp hub, Pernis is a lynchpin of petrochemicals production in the area, leading to a potential domino effect as producers struggle to find alternate supplies.
The Situation at the Beginning of Q3
- The market analysts expect that the prices for styrene remain stable during the third quarter, after volatility at the beginning of the year.
- The European benzene market has seen a steady flow of Indian material entering the region. Competitors, besides those from India, might become more active in the domestic market in the short term, because European prices remain higher than those in the US and Asia.
- European toluene demand strengthened at the start of the second half of the year, although any positive indications mostly relate to contractual volumes.
- The European mixed xylenes market has been recently faced with supply restrictions that have made availability look balanced to tight as some producers appeared not be able to offer any spot material ahead of August.
- Turkish polyethylene (PE) and polypropylene (PP) markets are still waiting for significant upwards price pressure. PE in particular is suffering from oversupply. PP is currently looking more balanced and there is expectation that upwards pressure could build in the coming weeks if demand increases.
- The upward price momentum in the European titanium dioxide (TiO2) contract market over the past year is continuing into the third quarter.