Mixed picture for prices
Resin prices were varied in September, as LDPE and PP copolymer grades edged higher, while PP homopolymers were down.
LDPE edges higher but LLDPE slips
L/LDPE producers were soon forced to abandon their target price increases of €40/tonne in September when the monthly ethylene contract price was settled up by only €10/tonne.
For LDPE, prices moved between a rollover to €20/tonne depending on the starting level. Converters were initially looking for a price decrease but supply is still tight and there are growing opportunities for producers to export material to North Africa and South America. Demand for LDPE has also been unusually strong in both August and September as converters are restocking as order books are strong.
Producers struggled to hold LLDPE prices at August levels last month with reports of some contracts being settled down €10/tonne. Producer stocks have improved over the summer and standard C4 grade material is available from various sources. LLDPE demand is better than expected for the time of year as converters replenish their inventories.
HDPE steady but margins shrink
HDPE producers soon abandoned their plans to raise prices between €50-80/tonne following the €10/tonne rise in the monthly ethylene contract price. Contracts in September were being settled at either rollover or a small increase. Producers remain concerned that prices are still too low and that the margin between C2 and HDPE has shrunk to an unacceptable level.
Blow moulding grades are well balanced while supplies of blown film and injection moulding are a little longer. Material availability could, however, start to tighten as several producers have shifted production to LLDPE in their swing plants because of the low margins for HDPE. There are also fewer supplies of lower-priced imports available because of sanctions against Iran.
Demand was at normal levels last month.
PP producers' hopes to end Q3 on a high note soon came to an end as converters dug in their heels to force price concessions after propylene settled down €10/tonne in September. Copolymer availability improved in late summer but still remains tight. Here, notations remained unchanged last month. Homopolymer supply is less tight and producers were more wiling to offer price concessions.
While local PP supplies are slowly recovering following the disruptions to production of the last few months, there are still some variations in the ability of producers to supply certain grades.
PP demand was lively in September as converters who had previously refrained from buying returned to the market.
Strong gains for PS
Polystyrene suppliers sought price increases for general-purpose grades of €50-85/tonne last month with one producer asking for an increase of €65/tonne for high impact grades because of higher butadiene costs. A combination of good demand and short supply enabled producers to meet their target prices achieving increases for GPPS in the order of €50/tonne. Given that the cost of styrene monomer settled €33/tonne higher in September, this represents a strong margin improvement for PS producers.
Industry stock levels remain very tight and availability was further hindered by maintenance work being carried out at BASF's styrenics plant at Antwerp last month.
Demand was good and several suppliers had closed their order books by mid-month.
Plant outages shorten PVC
Strong demand and supply tightness enabled PVC producers to achieve decent price and margin gains last month, despite only a €5/tonne rise in the cost base from the ethylene cost increase. Notations settled on average at around €20//tonne higher last month with wide variations reported between different suppliers.
There was generally sufficient material to meet the brisk demand last month. Several producers however reported planned and unplanned plant outages. Arkema declared force majeure for all PVC deliveries from its production facilities at Balan, Saint-Auban und Saint-Fons in France on 14 September. The company was unable to say when normal production can be resumed.
Vestolit declared force majeure for PVC and its feedstocks VCM and caustic soda on 1 September. In the first half of September, Ineos was carrying out routine maintenance on its PVC line at Schkopau, Germany.
Order intake continued on an upward trend with pipe and profile demand particularly good.
Unexpected surge in PET raws
The European PET sector was taken by surprise by an unexpected rise in feedstock costs last month after the reduction in August. Market insiders were anticipating a rollover to small increases but MEG was fully settled up €36/tonne at €791/tonne while the first paraxylene contract was settled up €65/tonne at €810/tonne.
PET producers were hoping to recover the full increase in raw material costs but had to settle for gains of €30-40/tonne depending on the starting level and when contracts were settled.
Demand was livelier than normal for the time of year with some element of pre-buying by converters in anticipation of rising prices later in the year.
Producers had sufficient material to meet the order intake with most plants reported to be running at full capacity. Some producers reported that they were sold out by mid-month.
Imports were stable at a relatively low level. The current euro-dollar exchange rate and anti-dumping duties continue to make Europe a less attractive market for exporters.
PET producers will continue with their policy of linking their price targets to the development in raw material costs this month.