Prices start downward drift
Western European standard thermoplastic prices appear to have reached their zenith for the year in September with notations drifting lower last month. Further price reductions are widely anticipated during the remainder of the year. However, with supply and demand in most polymer markets well balanced, the extent of any downturn will be driven by feedstock cost development.
In October, polymer producers had initially targeted price increases to bolster their profit margins. However, lower feedstock contract prices, improving availability and converters' reluctance to buy more than the bare minimum forced sellers to reduce prices.
Bottle-grade PET resin registered the biggest reductions with prices falling €70/tonne. Polystyrene was €30/tonne lower and polyolefins were down between €10-20/tonne. PVC prices managed a roll over in October.
The supply tightness experienced in recent months eased a little as several cracker and polymer plants returned to production. There is also evidence of growing volumes of imported material being attracted by high European polymer prices.
L/LDPE lower as demand weakens
A fierce battle between buyers and sellers is taking place over L/LDPE prices. Buyers are attempting to push notations much lower while sellers are determined to bolster their profit margins. Producers initially targeted a price roll over last month but were eventually forced to lower prices due to weaker sales. LDPE was €10/tonne lower with LLDPE down by €20/tonne.
The October ethylene contract price was settled down €15/tonne to €860/tonne due to lower crude oil and naphtha prices in September.
LDPE remains in short supply due to a series of planned and unplanned cracker and PE plant outages. LLDPE availability, on the other hand, is not as tight.
L/LDPE demand in October was lower than in the previous month, mainly due to seasonal factors. In addition, converters are seeking to minimise stock levels and are only buying sufficient volumes to meet their immediate production needs.
HDPE buyers force concessions
HDPE sellers were targeting a price roll-over for October but a combination of lower feedstock costs and slack sales forced concessions. Traders were also offering large price discounts to shift stocks in the belief that notations could tumble in November. Consequently, all HDPE classes saw price reductions of up to €20/tonne last month.
Producers maintain that HDPE prices are unlikely to fall sharply over the final two months of the year. Producer stocks are relatively low and supply remains tight due to plant shutdowns. In October, demand was much better than the same month last year but was slightly lower than in September.
A concern for HDPE suppliers is that high European prices have opened the arbitrage window for the US and Asian suppliers, which could lead to higher HDPE volumes.
Polypropylene producers originally targeted price increases of €50/tonne for October to rebuild profit margins. In reality, notations were forced lower between €10-20/tonne as a result of falling feedstock costs, better availability and subdued sales.
The October C3 contract price settled €28/tonne lower at €750/tonne. Buyers are anticipating further C3 reductions going forward and were only buying sufficient volumes to meet current production needs. De-stocking is taking place along the entire supply chain.
The supply shortages eased a little last month as several crackers restarted production following plant outages. Refineries, from which a lot of propylene is produced, will however continue to cut capacity well into Q1 next year.
Small margin gains for PS
After achieving a solid margin gain in September, PS suppliers initially targeted a price roll over last month to further improve profitability. However, lower feedstock costs, slackening demand and higher industry stock levels soon brought downward pressure on notations. The October benzene contract price settled €71/tonne lower at €505/tonne with styrene monomer down €45/tonne at €829/tonne.
By mid-month, PS prices were trading €30/tonne lower than end September, with further price reductions anticipated during the remaining two weeks of the month.
Order intake began quite well but started to dry up as converters reached the view that notations could likely fall further over the final two months of the year.
PVC supply tightness eases
Despite a decrease of €15/tonne in the October ethylene contract price, PVC producers initially announced planned price increases of €50/tonne last month. They point to a need to restore profit margins to more acceptable levels. However, a combination of de-stocking activity by converters and improving material availability soon put paid to these plans. By mid-October, PVC notations were largely unchanged from end September levels.
While supplies of certain speciality grades remain short, the situation was eased by the lifting of force majeure at Ineos ChlorVinyls VCM and S-PVC plant at Rafnes, Norway on 5th October. Arkema is also in the process of restarting its VCM and PVC facilities at Lavéra, France.
Also easing the supply situation, large volumes of PVC were anticipated to arrive in Europe from North America during October.
On the demand side, window profiles markets in Central Europe are showing the strongest performance, but overall sales are slackening as converters de-stock.
PET comes under pressure
Bottle-grade PET resin prices came under pressure last month as a result of weakening sales, rising imports and falling feedstock costs. As a consequence, notations were €70/tonne lower in October than in the previous month.
PET demand was much slacker in October as the beverage bottle producing season has come to an end. Buyers are also only purchasing sufficient quantities for their immediate production needs in order to minimise stocks. They are also holding out for lower PET prices during the rest of the year.
The relatively high European price levels are attracting additional import volumes from the Far East and Middle East.
The cost of PET feedstock collapsed in October. Paraxylene (PX) was down €145/tonne to €615/tonne with MEG also expected to settle significantly lower.
Material availability from local suppliers was good despite the production cut backs and plant idling that has taken place. In addition, Spanish PET producer La Seda has temporarily shut its 100,000 tonnes/year PET plant at El Prat de Llobregat, Spain, due to weakened demand. Equipolymers also took its Sardinian PET plant off stream for routine maintenance in September.