C O N T E N T S

ETHYLENE AND
DERIVATIVES

Ethanol

Ethanolamine

Ethyl Acetate

Ethylene

Ethylene Glycol

Ethylene Oxide

Polyethylene

Polyvinyl Chloride
 S&D Outlooks - Ethylene and Derivatives
ETHANOL
Q4 2018 - Market Review
Supply
EUROPE
Supply moved from long to tight during the fourth
quarter. This was due to pressure from high liquidity
and resulting lower fuel ethanol prices and production
margins in the second and third quarters and early in
the fourth. As a result, two UK plants stopped
production, and some with multiple production lines
decreased output. Combined with a poorer sugar crop
and limited tanker space in ARA ports, this also saw an
uptick in import-reliance for markets like the UK.
Demand
EUROPE
It is normal for demand to fall slightly between the third
and fourth quarters. Some competition was seen from
biodiesel in mixed-fuel mandate countries, like
Germany and the UK, due to higher margins for
suppliers. Double counting could also have dampened
real-volume consumption in countries like the
Netherlands, sources said. But this merely slowed
growth rather than decreasing consumption of fuel
ethanol in most cases.
Q1 2019 - Market Outlook
Supply
EUROPE
Supply levels from domestic European fuel ethanol
producers could waver dramatically in Q1 2019. If plants
continue at Q4 production levels, domestic supply is
likely to remain tight while providing import
opportunities for players competing for Latin American
material. But if UK plant Ensus starts up within the
quarter, particularly if coinciding with higher import
volumes, the market could also lengthen.
Demand
EUROPE
Demand for fuel ethanol is expected to be higher in
some EU countries in Q1 year-on-year, due to higher
mandates. More double counting in countries like
Spain, the Netherlands and Italy could reduce real
volumes consumed but increase the value of waste and
so-called third generation ethanol. Demand could also
be dampened slightly in some countries with mandates
spread across different road fuels, like Germany. This is
due to higher margins for biodiesel suppliers recently
an the potential for a more regular domestic European
supply of biodiesel this year.
ASIA
Supply of anhydrous fuel-grade ethanol was ample in
Q4, with corn harvest in the US continuing at levels
similar to the previous year. Hydrous ethanol supply was
briefly interrupted due to logistical issues during a
trucker strike in Brazil and then followed by heavy rains
there but the harvest/crush season resumed at healthy
levels. The harvest crush season ended in Q4.
ASIA
Demand decreased as the Philippines, the main export
destination for US fuel-grade ethanol in southeast Asia,
increased requirements for blenders to purchase locally
produced ethanol under a quota system before they
can import any material. US-China trade war also
eroded demand for fuel ethanol shipments from the US
to China as the latter imposed stiff tariffs for US ethanol.
ASIA
Supply of anhydrous fuel-grade ethanol is expected to
be sufficient with corn harvest in the US continuing at
levels similar to the previous year. Hydrous ethanol
supply also expected to be stable despite the end of the
Brazil harvest/crush season with alternative cargoes
available from Pakistan and as refiners continue to
favour ethanol production instead of sugar due to low
prices of the sugar globally.
ASIA
Demand for fuel-grade ethanol imports into the
Philippines is unclear especially as the Philippines
government has been actively trying to support the
domestic ethanol industry, which could possibly result
in reduced ethanol imports. With China-US trade
tensions expected to ease, US exports of fuel ethanol to
China could resume but no sign yet of any change in
current status. China buyers have been sourcing for
alternative suppliers of ethanol, such as South America
to meet demand.
US
Supply of US fuel ethanol continued to increase, Increase
modestly, as the autumn crop harvest came in and
producers averaged just above 1m bbl/day. Robust
supply levels of fuel ethanol led to poor economic Constant
margins, with plants in the Midwest reportedly slowing
down. Industrial ethanol supply tightened up, with
reduced production at a plant in Illinois reported due to
Decrease
an unexpected outage. Other producers in the region
had to go on sales allocation due to high demand.
Mixed
US
Demand for industrial ethanol was robust, with
heightened demand for antibacterial and cleaning
agents, and bottling season well underway also.
Cumulative US motor gasoline demand was relatively
flat year on year. Fuel ethanol represents about a 10%
market share of domestic gasoline demand.
US
Fuel ethanol production is projected to slow down, as
several plants in the Midwest have reduced rates or cut
workforce. Supplies will in turn be reduced. Industrial
ethanol supplies will likely remain constant heating into
the first quarter due to steady production levels.
US
Fuel ethanol demand will be slightly higher, boosted by
reduced pricing in retail fuel levels that benefits
consumers. Steady downstream demand in the
industrial sector will keep demand mostly stable.
 ETHANOLAMINES
Q4 2018 - Market Review
Supply
EUROPE
European ethanolamines supply was reduced during
Q4. This was linked to upstream ethylene oxide
(EO)/ethanolamines maintenance turnarounds,
unplanned issues such as Sasol's force majeure on EO
and its derivatives and Rhine-related issues that
impacted on production at BASF in Ludwigshafen,
Germany. Even though ethanolamines supply was
reduced, general availability was not an issue because
demand was not strong during the quarter for seasonal
and other reasons.
Demand
EUROPE
Demand was largely flat to softer in Q4 for seasonal
reasons and due to year-end working capital/inventory
considerations. On top of this, economic and political
uncertainty weighed on market sentiment. However, a
few suppliers said their order intakes were reasonable
or better-than-expected during the quarter, which they
attributed to supply constraints at others.
Q1 2019 - Market Outlook
Supply
EUROPE
European ethanolamines availability in Q1 will depend
on the amount of re-stocking activity that takes place.
Rhine water level developments, production reliability
and upstream cracker turnaround preparations for the
spring are also likely to play a part in derivative
availability.
Demand
EUROPE
European ethanolamines demand is likely to pick up
during Q1, lifted by re-stocking activity and prepara-
tions ahead of the spring high season for certain
sectors. Some stock-building may take place in the UK
amid Brexit uncertainty. A fragile economic outlook may
dilute market activity.
ASIA US
Ethanolamines supply in Asia was mixed amid feedstock No US Report.
fluctuations. China’s final announcement for
antidumping duties (ADD) on imports in late October
brought about shifts in trade flow. Affected suppliers
were more interested to sell volumes outside of China
instead. In China, operating rates were capped in light
of high local inventories and curbed ethylene oxide (EO)
margins. Domestic supply was boosted especially when
some producers sought to clear stocks before the
year-end holidays.
ASIA US
Demand for ethanolamines in Asia was largely softer in No US Report.
Q4, partially on feedstock weakness. Local demand in
China was sluggish owing to the winter season and
year-end destocking activities. Meanwhile, import
momentum picked up slightly after the antidumping
duty (ADD) proceedings as Chinese buyers could
account for the confirmed rates in their cost
calculations. Spot buyers in southeast Asia typically
procured on a need-to basis, whereas import sentiment
in India was tepid with the falling rupee.
ASIA US
Regional availability for ethanolamines is set to be No US Report.
roughly stable and adequate in Q1. A slight uptick is
possible given that some glitches heard previously in
southeast Asia are said to have been resolved, but some Increase
manufacturers may decide to keep operating rates low
or produce other ethylene oxide (EO)-derivatives.
Constant
Decrease
Mixed
ASIA US
Spot demand for ethanolamines could stay tepid with No US Report.
fluctuations in Q1. In China, some downstream sectors
may remain inactive during winter but certain users
may restock more before and after the Lunar New Year
break in early February. Consumer activity in southeast
Asia and India would occur on a hand-to-mouth basis.
 ETHYL ACETATE
Q4 2018 - Market Review
Supply
EUROPE
Availability of ethyl acetate (etac) improved in the final
quarter of 2018. Major producer INEOS returned to
typical levels of spot activity during September
following a maintenance turnaround, resulting in
greater domestic supply. Additional imported volumes
from Asia which were exported while INEOS had a
limited presence in the spot market also contributed to
lengthening supply once the producer had returned to
normal activity.
Demand
EUROPE
Demand for etac was generally within expectations in
the final quarter of 2018. Demand was quieter than
expected in September as buyers bought only
necessary volumes but good demand was seen in
October.The fourth quarter is typically a quieter month
for demand, particularly compared with the peak
demand from the coatings sector seen in July.End of
year de-stocking activity also contributed to quiet
demand in December, though this was within sources’
expectations for the time of year.
Q3 2019
Q1 2018 - Market Outlook
Supply
EUROPE
The completion of a expansion at INEOS’s Hull, UK plant
is set to result in 335,000 tonnes of capacity in 2019 - an
increase of 70,000 tonnes compared with Q1
2018.There is the potential for growth in import
volumes as well, though Europe may become a less
attractive export destination if increased domestic
supply results in downwards pressure on prices.
Demand
EUROPE
European demand for etac will rise during the first
quarter of 2019. Re-stocking activity will contribute to
an increase in demand during January and consump-
tion will increase during the quarter compared with the
seasonally low levels seen in December.
ASIA
Chinea largely maintained their operations rate at
stable level, while a southeast Asian producer ran in full.
While certain Chinese and northeast Asian producers
had turnarounds in Q4, there was largely no shortage,
as demand was slow. Importing markets in northeast
and southeast Asia had ample inventory, which added
pressure to local prices because of strong competition.
ASIA
Demand was slow in Asia with buying sentiment hit by
uncertainties in the global economy and declining
upstream prices. End-users took a cautious approach
and bought on a need-to-basis, amid ample supply. At
the year-end, some buyers preferred to keep their
inventory low and were sidelined. Some importers
delayed or skipped their usual monthly purchase amid a
downtrend and loss of margin, as they held sufficient
inventory.
ASIA
The supply is expected to remain stable to soft. A
southeast Asian producer is planning a turnaround at its
etac/butac swing plant in Singapore in end February for
a month. While turnarounds at Chinese plants were not
yet heard, operation rates at some plants might be
curtailed as part of environmental protection measures
to reduce pollution during winter.
ASIA
Demand is expected to remain subdued in Q1. Some
spot buyers may return to restock in early January but
otherwise, demand will likely slowdown as the Lunar
New Year approaches in early February. There is some
expectations that demand would pick up end
February/March as seen traditionally but uncertainties
in the global economy is clouding the demand outlook.
US
US ethyl acetate (etac) supply, which was tight in the
third quarter of 2018 because of a shortage of feedstock
acetic acid, improved at the start of the fourth quarter
once the upstream pressure eased. Later in the quarter, Increase
supply tightened again on production issues. Celanese
is running its plant in Mexico at reduced rates because
of a shortage of natural gas used to power the plant. Constant
Sasol put customers on sales control after delays in the
restart of its ethanol plant in South Africa.
Decrease
Mixed
US
Demand for US ethyl acetate (etac) was steady at the
beginning of the fourth quarter of the year, as the peak
construction season extended into November thanks to
a late end to winter and a growing US economy. There
was some decrease in demand later in the quarter, as
the end of the construction season and de-stocking for
the end of the year to minimise tax liability.
US
Supply of ethyl acetate (etac) is likely to increase near
the end of the first quarter of 2019 as Prairie Catalytic’s
new bioethanol-to-etac plant in Columbus, Nebraska is
expected to start up. It was originally expected to begin
producing material by the end of 2018 before some
minor issues arose, delaying production until late March
or early April.
US
Demand for ethyl acetate (etac) should be stable into
the first quarter of 2019, likely tracking the strength of
the US economy. Etac is used in paints and coatings and
can see demand rise in line with increased activity in
the construction sector.
 ETHYLENE
Q4 2018 - Market Review
Supply
EUROPE
European ethylene supply was very lengthy throughout
the fourth quarter despite ongoing technical issues at a
couple of crackers, planned maintenances and restart
delays at other sites. Low water levels on the Rhine
continued to impact derivative product flows, and
ethylene flows along the eastern ARG pipeline network
were also reduced due to production issues in the
region. European demand was soft but slowed further
as is usual in the run up to the year-end while the
ongoing uncertainty regarding the US-China trade war
also weighed heavily on demand overall. A softening
energy complex, and weak pricing in Asia limited export
potential but heavy double-digit discounts against the
prevailing contract reference prices persisted
throughout the quarter for spot volumes.
Demand
EUROPE
European ethylene demand was soft during the fourth
quarter. At the start, this was partly due to the logistic
challenges impacting product flows in and out of
derivative units in the Rhine area, but later on a weaker
upstream market, the traditional year-end working
capital considerations and bearish sentiment on the
back of the US-China trade war uncertainties, all had a
reducing effect on demand levels.
Q1 2019 - Market Review
Supply
EUROPE
European ethylene supply is long but preparations by
producers and consumers alike to cover the start of a
fairly heavy cracker maintenance season could reduce
the surpluses currently being seen. Similarly, any
firming in upstream crude and naphtha could support
improved pricing and demand in Asia and therefore
also encourage export opportunities. Demand is
traditionally higher in the first quarter than in the
previous one so in theory the supply and demand
balance should tighten up as it progresses through the
January to March period, and then the planned
maintenance turnarounds will get under way in earnest.
Demand
EUROPE
European ethylene demand is expected to pick up in
the first quarter as is usual following the year-end
de-stocking period but players are cautious amid
opposing factors. Preparations to cover a fairly heavy
cracker turnaround season could heighten demand on
the one hand but on the other, there could be
detrimental impacts from new US polyethylene (PE)
capacities amid a backdrop of general demand
uncertainty regarding the US-China trade war.
ASIA
Prices fell in the fourth quarter to levels last seen in
September 2015, as year-end destocking activity by
producers, shutdowns at several regional and Middle
East downstream plants, as well as weak downstream
conditions led to a supply glut. Bearish crude oil futures
due to a slowing global economy added to the bearish
undertone.
ASIA
Demand in the leading China market was bolstered by
reduced domestic supply, downstream capacity
expansion and healthy ethylene oxide (EO) margins.
Several Chinese producers cut output at their
methanol-to-olefins (MTO) units due to poor margins
on the back of high feedstock methanol costs and
following large declines in regional ethylene prices,
which made imports a more attractive option.
ASIA
Supply could remain ample amid downstream
turnarounds and following a capacity expansion in
South Korea. Several producers in southeast Asia will be
in a long position as their downstream units and
customers will take their plants off line for maintenance
in the first quarter. South Korea’s Lotte Chemical is likely
to increase its exports in line with higher production at
its expanded Yeosu cracker that reached full operations
in early January.
ASIA
China’s downstream activity will slow down in the
second half of January and the first half of February,
amid the Lunar New Year lull. The outlook for March will
depend on the health of the China economy, which is
uncertain due to the ongoing US-China trade tensions.
Import demand will see some support from a 200,000
tonne/year standalone ethylene oxide (EO) unit that
commenced commercial operations in late December.
US
US ethylene supply decreased in the fourth quarter
amid several outages, including two crackers which
were offline for economic reasons and two crackers
which had turnarounds. Lower crude oil prices, which
encourages usage of heavier cracker feedstocks, also
limited ethylene production during the quarter. Heavier
cracker feedstocks produce less ethylene when cracked.
A previously idled cracker began start-up procedures
late in the quarter, although full production was not
expected until 2019.
US
US ethylene demand was steady through much of the
fourth quarter and increased late in the quarter amid
new downstream capacity. Ethylene demand has
expanded during 2018 as new downstream polyeth-
ylene (PE) capacity has ramped up and PE production
rates in the fourth quarter remained well above the
prior year. A new PE unit began commissioning
activities late in the quarter and was expected to begin
production before the end of the quarter.
US
US ethylene supply is expected to expand in the first
quarter amid the start-up of several crackers. A
Increase
previously idled cracker began start-up procedures in
late 2018, with full production expected during the first
quarter of 2019. Three more crackers are expected to
start up in early 2019. If none are delayed, ethylene Constant
production in the first quarter would expand by about
3m tonnes/year. Comparatively, the US had added
about 3m tonnes/year of ethylene capacity in 2018. Decrease
Mixed
US
US ethylene demand is expected to increase in the first
quarter following the commissioning of a new
downstream polyethylene (PE) unit in late 2018, with
full production expected in 2019. Other downstream
units, including another PE unit, are expected to start
up at that complex following the start-up of a new
cracker in early 2019. Demand for US ethylene exports
remains limited due to limited export capacity, as the
US has only one small ethylene terminal.
 ETHYLENE GLYCOL
Q4 2018 - Market Review
Supply
EUROPE
In the final quarter of 2018, there was continual pricing
pressure in the monoethylene glycol (MEG) market and
supply was ample despite the upstream EO turnarounds
in Europe. August, September and October saw an
increase of US and Middle East imports, increasing
availability in Europe. The latest downtrend gathered
momentum from November and was seen to be one of
the toughest months for sellers. December was also a
month with lower demand and good supply due to the
Christmas holidays.
Demand
EUROPE
European ethylene glycol (EG) demand was mixed
depending on end use. Some felt monoethylene glycol
(MEG) demand from the anti-freeze sector could have
been better due to the mild winter in Europe. Typically,
PET demand is seasonally low in winter as demand
strengthens in warmer weather, encouraging bottled
water consumption. Diethylene glycol (DEG) demand
was disappointing for most of 2018. Tri-ethylene glycol
(TEG), export demand to the US was solid in 2018 but
demand from the gas drying sector dwindled at the end
of the year.
Q1 2019 - Market Review
Supply
EUROPE
In the monoethylene glycol (MEG) market, most sources
are expecting a rather stable market in the first quarter
of 2019, but are braced for more pressure from imports
into Europe coming around February or March time.
Europe is a net importer of glycols but the increased US
production capacity has created future oversupply
concerns. Another line of thought is that European
supply could be balanced around March or April 2019
as there is a heavy European cracker turnaround period
in spring. Depending on how many local glycol and
ethylene oxide (EO) units are impacted, this could
reduce domestic supply and counterbalance the fresh
imports arriving from the US.
Demand
EUROPE
European monoethylene glycol (MEG) demand is
mostly expected to increase in January on re-stocking
activity after the Christmas break. In the anti-freeze
market, temperatures have been mild, so some are
sceptical that demand will improve. For diethylene
glycol (DEG), the outlook for next year is not very
optimistic and some are less confident compared to the
MEG market. Larger consumers of DEG are waiting to
see how downstream demand pans out in 2019 as there
has been less of a need to secure extra volumes outside
contractual obligations. TEG demand is also likely to
improve on restocking activity after Christmas.
ASIA
Import volumes into the key market China in Q4 were
lower, as compared to Q3, because of shutdown at
major MEG plants in the middle east and northeast Asia.
Regional production rates were also likely tuned down
because of narrower margins. The impact from the
decrease in imports, however, were softened by a
further increased in China domestic MEG production.
ASIA
China MEG consumption was lower in Q4, as compared
to Q3, as downstream polyester rates saw a decline. The
fall in demand was gentle as the reduction in polyester
operating rates were minimal. Average combined
polyester operating rates in Q3, were slightly above 82%
while operating rates were around 81.9% in Q4.
ASIA
Import volumes into key market China are likely to see a
slight uptick after new capacities come onboard. Saudi
Arabia's Yansab has completed its de-bottlenecking in
December 2018 while Lotte Chemical's 700,000
tonne/year MEG plant in US is expected to start
commercial production by January 2019. Domestic
production rates in China, however, may see a decline
because of the long Lunar New Year holiday in February.
ASIA
Demand is expected to slowdown in February because
of the Lunar New Year holiday. Polyester operating rates
are expected to be lower as some plants shut down for
the holidays. Early re-stocking can be expected in H1
January although it will be unlikely to lend support to
prices because of weak sentiment over China's near
term economic conditions.
US
US ethylene glycol (EG) supply outweighed demand as
consumption was slow on seasonality and market
fundamentals turned bearish. Product was also
available due to a slowdown in exports to Asia amid Increase
unattractive economics and ongoing tariffs. China
implemented 25% tariffs on imports of US material on
23 August as part of the second wave of tariffs. Major Constan
glycol producers in the US include Eastman Chemical,
Huntsman, Indorama Ventures, LyondellBasell, Nan Ya
Plastics, Shell Chemical and MEGlobal.
Decreas
Mixed
US
Demand tapered off in the downstream polyethylene
terephthalate (PET) sector. Demand from the antifreeze
and de-icing sector was seasonally normal, but did not
receive a significant boost due to milder than expected
weather. Downward momentum also came from Asia
amid softer economic conditions there. US prices can
take some direction from the Asian markets. As a result,
contract prices steadily decreased over the fourth
quarter.
US
Supply is expected to remain healthy as market players
discuss upcoming new capacity and the downward
pressure that it could exert on prices. Suppliers may
adjust their production later in 2019 to bring supply and
demand back into balance to avoid a supply glut,
especially in light of tariffs.
US
Seasonal downstream demand is expected to remain
slow, with the peak PET season picking up later over the
summer as the weather warms up and consumption of
bottled beverages increases. Mid-winter demand from
the antifreeze sector is a possibility, but is dependent on
the weather.
 ETHYLENE OXIDE
Q4 2018 - Market Review
Supply
EUROPE
European ethylene oxide (EO) supply was
balanced-to-tight in the last quarter of 2018. Supply
levels were manageable despite a busy EO turnaround
schedule along with Sasol’s force majeure on EO and
derivatives. October was the busiest month in terms of
planned maintenances and supply was tight outside
contractual obligations. Rhine water levels were also
very low which placed some pressure on truck
availability for some market players.
Demand
EUROPE
European ethylene oxide (EO) demand was consistently
robust for most of the year for certain better performing
EO derivatives and purified EO. There was a minimal
slowdown in activity during the summer months and
preparations for the heavy turnaround period were
made in advance of the third and fourth quarter of the
year. Supply and demand levels have been in a delicate
balance amid the planned turnarounds. December
activity was lower but in line with expectations due to
the festive holiday period.
Q1 2019 - Market Outlook
Supply
EUROPE
European ethylene oxide (EO) supply is expected to be
balanced in the first quarter of 2019 but could tighten
around the heavy cracker turnaround period in spring
2019. Additional supply needed to meet the growing
EO demand, which has led to several capacity
expansion announcements from European producers.
Demand
EUROPE
European ethylene oxide (EO) demand is expected to
remain healthy next year for certain better performing
EO derivatives. Short-term demand is likely to increase
in January on re-stocking activity after the Christmas
period. Demand for purified EO is also expected to be
good in 2019, which is driving the future production
investment announcements from INEOS, BASF and
Clariant.
ASIA US
No Asia Report. US ethylene oxide (EO) supply was healthy as
production was normal and downstream demand into
ethylene glycols and ethanolamines slowed down with
the end of high season. In general, the markets turned
bearish with seasonality kicking in and a bevy of
uncertainties weighing on business sentiment. EO
producers in the US include BASF, Dow Chemical,
Eastman Chemical, Huntsman, Indorama Ventures,
LyondellBasell and Shell Chemical.
ASIA US
No Asia Report. Demand tapered off in the downstream polyethylene
terephthalate (PET) sector. Demand from the anti-freeze
and de-icing sector was seasonally normal, but did not
received a significant boost due to milder than
expected weather. EO contract prices steadily moved
down due to lower feedstock ethylene prices. EO is
largely used to make monoethylene glycol (MEG), a key
feedstock for PET. EO’s secondary outlet is in
surfactants.
ASIA US
No Asia Report. Supply is expected to remain healthy as market players
discuss new capacity scheduled to come online later in
Increase
2019. Contract prices will remain under downward
pressure from lower ethylene cash costs as new crackers
start up. Sentiment is becoming increasingly cautious
due to a weaker energy and economic outlook. Constant
Decrease
Mixed
ASIA US
No Asia Report. Seasonal downstream demand is expected to remain
slow, with the peak PET season picking up later over the
summer as the weather warms up and consumption of
bottled beverages increases. Mid-winter demand from
the antifreeze sector is a possibility, but is dependent on
the weather.
 POLYETHYLENE
Q4 2018 - Market Review
Supply
EUROPE
Polyethylene (PE) supply in Q4 2018 was ample, as
demand faltered and the supply of imports increased.
Linear low density polyethylene (LLDPE) imports were
strong in volume, whereas high density polyethylene
(HDPE) volumes were lower. Weaker economic
conditions and lower crude and naphtha prices also
affected demand. Supply issues caused by low water
levels on the Rhine had little real impact by the end of
the quarter. Two cases of LLDPE force majeure in Europe
were called, but these had minimal effect on the market
in general.
Demand
EUROPE
Polyethylene (PE) demand in Q4 2018 was slow, due to
several factors. Weaker economic indicators in several
countries affected volumes, with southern Europe in
particular suffering. Lower crude and naphtha prices led
to expectations of a drop in ethylene, and hence PE,
contracts, so buying was done on a hand-to-mouth
basis. There was also an increase in the supply of
imports of some PE grades - notably linear low density
polyethylene (LLDPE) commodity grades - and this was
expected to increase in 2019, adding to pressure on
demand.
Q1 2019 - Market Outlook
Supply
EUROPE
Polyethylene (PE) supply is expected to increase with
the arrival of new imports from the US in the first
quarter. This could be tempered by a planned cracker
maintenance programme, which will curtail some
ethylene output in Europe in 2019. Overall, the situation
is unclear, as much depends on the level of demand,
and the uncertain economic situation.
Demand
EUROPE
Polyethylene (PE) demand is expected to be impacted
by fresh imports from new US capacity in particular in
the first quarter of 2019. Buyers have been expecting
volumes for some months, and Q4 2018 began to see
their arrival. A planned cracker maintenance
programme is expected to curtail some ethylene output
in Europe in 2019, so this could have an effect on
demand in the first quarter, as buyers ensure security of
supply.
ASIA
Local China supply increased as several plants resumed
production after maintenance shutdowns in Q4.
Southeast Asian PE producers were capable of ramping
up PE productions as ethylene prices fell sharply from
late September. Import supply in Asia was relatively
ample with increasing import offers due to year-end
destocking activities by overseas suppliers. Shipment
delays from Iran to Asia, following the re-imposed US
sanction in November, had limited effect on import
volumes in Q4.
ASIA
Overall demand for PE resins across Asia remained tepid
throughout the fourth quarter amid bearish market
sentiment on the back of market uncertainty
surrounding US-China trade tension. Additional 25%
tariffs on US cargoes had reduced demand from
Chinese importers in Q4 to avoid the risk of cargo
arrivals after December. Demand picked up slightly
towards the end of the year amid bottoming price levels
with some converters restocking before Christmas and
New Year holiday.
ASIA
Local supply in China is set to increase in Q1 as several
plants resumed production at the end of December.
Import supply from Iran to China could tighten amid
shipping restrictions due to US sanctions. There’s
expectation of a supply glut amid more import supply
from overseas producer although there is no expansion
plan in southeast Asia.
ASIA
Demand in China is expected to increase in Q1 amid
restocking before Lunar New Year holiday in early
February before it slows down during the long holiday.
Buyers in southeast Asia might continue to hold bearish
sentiment and thin buying appetite for imports amid
subdued end-product demand and competitive local
prices.
US
US polyethylene (PE) supply was long during the fourth
quarter as new plants that had started up in 2017
mostly reached normal operating rates in the second
half of 2018. No major plant issues were heard during Increase
the quarter, while inventory levels stayed high. Higher
export levels did not fully alleviate the effect of
additional supply from new capacity builds. Constant
Decrease
Mixed
US
Domestic demand for PE was healthy in the fourth
quarter, while demand from export markets faced some
headwinds as several emerging economies faced
economic difficulties. Exporters managed to move
larger volumes of material year on year, largely by
competing on price with material from other regions.
US
Supply levels are anticipated to remain long in the
North American market. Sasol’s new 470,000 tonne/year
LLDPE plant in Lake Charles, Louisiana will ramp up
rates after starting up late in the fourth quarter, while
additional new capacities are expected to come online
later in the year.
US
Domestic demand for PE will continue to find support
from healthy economic growth figures in the US. Export
sales will continue to rise as US producers increase their
export focus, although economic woes in some
emerging economies may depress prices. The pace of
purchasing from China following the Lunar New Year in
the first quarter will be closely watched as an indication
of sentiment in the world’s largest PE consuming nation.
 POLYVINYL CHLORIDE
Q4 2018 - Market Review
Supply
EUROPE
European polyvinyl chloride (PVC) supply was
somewhat lower quarter on quarter, although not tight,
with decreased availability via imports from the US
compared to Q3. There were also production issues at
the Marl Vesolit plant and in KEM ONE's PVC production
system in Europe as a whole. As a result, contract prices
trended upwards against feedstocks overall for the
quarter. The PVC price spread against ethylene costs
ended the year at a similar level to where it was at the
beginning of 2018, with prices falling against feedstocks
early in the year and rising in Q4.
Demand
EUROPE
European PVC demand was relatively strong for the
season in Q4 with sources not seeing a major fall off in
demand for December as a result of tighter availability.
Demand was also boosted in the UK as a result of
concern about securing supplies ahead of Britain
exiting the EU in early 2019. De-stocking did result in
lower sales in late December with many market players
also absent as a result of the Christmas holidays.
Q1 2019 - Market Outlook
Supply
EUROPE
European polyvinyl chloride (PVC) availability is
expected to increase somewhat in Q1 with the
production situation and availability at KEM ONE and
Vestolit improving in late December. The outlook for the
export market remains subdued so there is not likely to
be a large trade flow to Turkey and other major outlets
for Europe.
Demand
EUROPE
European PVC demand is expected to rise somewhat in
the first quarter in line with typical seasonal trends of
re-stocking after Q4. This trend will be tempered by
relatively high demand in December 2018, which may
result in lower re-stocking than normal. UK demand is
also expected to remain healthy with buyers aiming to
build stocks before Britain leaves the EU.
ASIA
In September, supply for carbide- and ethylene-based
PVC initially went long on cooling demand in China due
to the onset of winter. This changed when an explosion
at the end of November near a carbide-based
manufacturer caused 23 fatalities in Hebei province.
Another blast in Xinjiang on Christmas saw three more
deaths, and subsequent increased safety concerns have
affected production rates in the country. Other regions
in Asia continued to see healthy availability due to US
cargoes since the third quarter of 2018.
ASIA
The expected outcomes of the 90-day truce in the
US-China trade war were unclear, and failed to lift
market sentiments in Asia. In southeast Asia, some
resistance was seen from buyers in December
discussions for January-loading cargoes, largely due to
flat demand from the downstream construction
industries in Vietnam and Thailand.
ASIA
Increased safety concerns are likely to continue
affecting production rates in China, affecting supply. On
the other hand, other producers in northeast Asia are
generally able to meet the expected recovery in
demand for PVC in the first quarter of 2019.
ASIA
More demand is expected from the major import
destination of India in the early part of the year, which is
traditionally the peak season for agricultural PVC pipe
laying. Demand in other Asian regions is also generally
expected to improve after the Lunar New Year, which
takes place in early February. Tighter supply from China
may also see buyers in southeast Asia sourcing for
alternatives from other suppliers in the region.
US
Supply of US PVC during the fourth quarter of 2018
remained fairly steady as global markets cooled on a
chill from tariff worries and prices sagged for the second
half of the year in spot export markets. Slower buying in
Asia led the downtrend as new rules in India slowed
trade to that region and poor economies and political
instability in Latin America constrained trade to that
reliable customer of US material.
US
The end of typical construction season reduced
demand for US PVC during the fourth quarter. Most PVC
consumption is in industries that make construction
materials, including wiring insulation, siding, fencing,
decking, water pipes and architectural profiles. The
decrease in demand coincided with the expected
maintenance at plants during the winter season activity
lull.
US
US producers are likely to kick up production rates
during the first quarter to meet restocking activity
among compounders, processors and other
downstream users ahead of the 2019 construction
season. While there are some plant outages planned for
the quarter, those will most likely occur after February
and March export allocations are set and a two-month
Increase
lull comes before May construction season launch.
Constant
US Decrease
Demand will increase during the first quarter as makers Mixed
of products made from PVC restock resin to make their
own finished products ahead of the April-May
construction season start.