Resin prices up on rising feedstock prices
HDPE edges higher as over-supply eases
Producers targeted price increases of €30/tonne in the HDPE sector in December but notations failed to show much upward development during the first week of the month. By mid-month however, HDPE prices were increasing between €20-30/tonne. Blown film grades, which had fallen the sharpest in November, rebounded strongly in December.
The over-supply position of recent months was receding and stocks were low during the month. There were also limited volumes of imported material in Europe.
Demand is stronger than expected as those converters who were low on stock ordered additional volumes. There is also an element of pre-buying as ethylene costs are expected to rise in January and producers are likely to announce sizable price increases.
Lively order intake lifts L/LDPE higher
L/LDPE producers tabled planned price increases of €30/tonne for December. This was largely viewed as a tactical manoeuvre given that the monthly ethylene contract price had only risen €7/tonne.
During the first week of the month prices managed a firm rollover, but notations started to climb by mid-month. Demand is stronger than expected and the over-supply situation has eased. Imports are down due to rising prices in Asia.
LDPE film grades are trading €20-30/tonne higher than in November, while LLDPE are up €10-20/tonne. LLDPE availability is longer than for LDPE and sales were somewhat weaker.
Nevertheless, order intake is very lively with converters short on stock. There is also an element of pre-buying as ethylene is expected to show a sizeable rise in January. Some producers placed an order stop on L/LDPE during the second week of December as they were sold out.
PP edges up on stronger demand
PP producers just about managed to recoup the increase in C3 costs in December with notations rising €10/tonne. Demand was better than expected as those converters that had held back from purchasing in November, in the belief that prices would fall, returned to the market. There is also an element of pre-buying as notations are considered likely to rise sharply in January.
Stocks at producers are at historic lows and there are limited volumes of imported material arriving in Europe. Middle East product is being shipped to Asia where prices have been rising in recent months.
PS better balanced after production cuts
Producers' calls for price increases of between €40-50/tonne in December have not not accepted by PS buyers. Notations moved €35-40/tonne higher, which was just a little higher than the €33/tonne increase in the monthly styrene monomer cost.
The PS market is in much better balance following significant production cutbacks, which are making price increases easier to achieve. Producers claim, however, that their margins are nowhere close to what they should be.
The shut down of Total's Gonfreville, France, plant has had a noticeable impact on incremental demand for other PS suppliers, who have reported meeting their order targets for December by mid-month. In January, PS producers are expected to announce sizable planned price increases.
PVC still under pressure
PVC producers opted for differing approaches to pricing policy in December. Market leader, Ineos ChlorVinyls announced a staggered planned price increase of €75/tonne, with an additional €25/tonne to be paid for December orders and the balance paid on January contracts.
Some suppliers were initially looking for an extra €30/tonne while others were resigned to settling for a roll over.
Given that ethylene costs had increased by just €7/tonne in December, which equates to an increase of €3.5/tonne on PVC costs, sellers soon adjusted their price stance and had to fight hard to resist any downward price movement.
While there were a few reports of small price gains for higher quality grades, many converters are seeking price reductions of up to €30/tonne. Given the weak demand levels and continued pressure from cheaper imports from the US and Mexico, sellers are finding these calls hard to resist.
Stronger sales underpin PET gains
PET prices again followed the upward movement in feedstock costs in December, supported by better than expected demand and lower volumes of imported Asian material.
Paraxylene, the key feedstock for PET resin, settled €60/tonne higher at €740/tonne, following on from the €65/tonne November hike. Producers were taken by surprise at the sharper than expected rise in feedstock costs, having originally called for price increases of €50/tonne from 1st December.
Producers have adopted a strict price policy and successfully implemented price rises of €45-50/tonne. This is just sufficient to cover the impact of higher paraxylene costs on PET production. Margins therefore remain under strain, rendering PET production unprofitable for many suppliers.
European PET demand was surprisingly lively in December. Converters low on stock have been forced to order additional volumes to meet pre-Christmas customer orders. Many buyers had postponed orders from Asian suppliers in the expectation that prices would fall and had to replenish their stocks from local PET suppliers. European PET import volumes were lower as Asian PET prices are rising faster.