Mixed results for latest price push
During May, there was wide variation in price development between the different classes of standard thermoplastics.
Within the PE sector, LDPE and HDPE blow moulding and injection moulding prices fell back by around €10/tonne as a result of good availability and a growing volume of imported material. In contrast, LLDPE was tighter and managed gains of €10/tonne.
Polypropylene prices went up by €10-15/tonne, compared to the rise of €23/tonne in C3 costs. PVC producers finally achieved solid gains with notations up by €30/tonne, following months of static prices and unsatisfactory margins.
PET and polystyrene both faced continuing cost pressures and posted price increases of €60/tonne and €35/tonne, respectively. There were few signs of a demand upturn last month. Converters are working as much as they can from existing inventories and only ordering additional volumes when absolutely necessary.
This month, producers will once again face strong resistance to their calls for higher prices.
Higher costs drive PS up
PS producers mostly adopted a disciplined pricing policy last month and succeeded in raising prices by more than the €28/tonne increase in the styrene monomer (SM) contract price.
PS price increases of €30-40/tonne were generally observed against an initial targeted increase of €65/tonne.
Order intake was weak in May as converters worked down inventories in anticipation of lower prices over the coming months. European PS demand for the year to date is around 12% lower than the same period last year.
PS sellers are increasingly concerned about the continuing high cost and volatility of SM and benzene prices. The restart of the SM plant at Maasvlakte, the Netherlands, will however lengthen supply.
Gains for PP
PP producers achieved gains of €10-15/tonne in May, compared with their initial price target of €40/tonne.
Producers had hoped to recover the €23/tonne increase in the C3 contract price and improve profit margins.
Nevertheless, while their efforts to raise European prices are being held up by demand weakness, they are achieving good exports volumes and prices to Asia.
The PP sector is showing good pricing discipline for the most part, but there were reports that one supplier was chasing volume in order to clear stock.
There is expected to be further upward pressure on PP prices this month as cracker output has been cut and propylene spot prices are rising.
LDPE drifts lower, LLDPE firms up
L/LDPE producers initially targeted price increases of €50/tonne last month to cover the €10/tonne rise in the ethylene contract price and to improve their margin position.
It soon became apparent, however, that buyers would not accept price hikes of this order. There were also reports circulating in the market that certain suppliers were pursuing a 'volume before price policy' to get rid of excess stock.
By mid-month, LDPE film grade prices had eased back by €10-20/tonne due to weak demand and good material availability.
LLDPE, in contrast, moved forward by €10-20/tonne because of tighter availability and lower price pressure from imports.
As a result, the price gap between LDPE and LLDPE narrowed with some market participants predicting that LLDPE prices could even pass low-density prices over the next few months.
Demand weakness persisted with converters refusing to buy much additional volume.
HDPE faces import pressures
HDPE sellers were targeting price increases of €50/tonne in May to bolster margins and recover the €10/tonne rise in the C2 contract price. Their plans were, however, quickly shelved due to good availability and weak demand.
Injection moulding grades slipped by around €20/tonne, with a plentiful supply of imported material available from the Middle East. And there were reports that Saudi Arabia's Rabigh Refining and Petrochemical Co is about to begin shipments of injection grade product from its new HDPE plant in Rabigh.
Blow moulding grades also slipped by €10-20/tonne, with local supply supplemented by Eastern European imports. Blown film prices held firm due to improving demand for food packaging.
For the most part however, converters are working off stock.
PET edges up following cost surge
Suppliers of bottle-grade PET resin announced planned price increases of up to €100/tonne in May to counter the impact of higher feedstock costs and lift their profit margins.
Paraxylene (PX) jumped by €90/tonne to €795/tonne last month on very tight supply. European PX producers have been running at reduced rates since Q4 2008 due to soaring energy costs and difficult conditions in the downstream PTA market, prompting a drop in PX demand.
In May, the impact of feedstock costs increases on PET production was around €65/tonne. Somewhat to their surprise, producers managed to achieve a good proportion of their price target, lifting notations between €60-70/tonne, on average.
Even higher increases were posted for those customers on lower-price contracts from the previous month.
The impetus for this latest price push from producers appears to have come from supply limitations from some producers, and a modest pick-up in demand for PET resin. Sales were still well below what would normally be expected at the time of year.
Converters were, however, starting to re-stock as an insurance against good summer weather.
Solid rise for PVC
The European PVC sector finally appears to be heading into more positive territory after several months of static prices and dwindling margins. The upturn in PVC prices is, however, being driven more by supply factors rather than higher local demand.
Import pressure is receding while at the same time, export opportunities to Eastern Europe and Asia are growing, thus tightening material availability for local buyers.
In May, European S-PVC prices saw gains of €30/tonne on average, against increases of up to €75/tonne that producers wanted.
Demand remained well below what would normally be expected for May but there were signs of a modest upturn in order intake from pipe and window profile manufacturers.
Supply is generally well balanced with the lower demand. SolVin will carry out maintenance at its PVC plants at Rheinberg, Germany, starting late May and running well into June.