Feedstock cost pressures ease
Standard thermoplastic prices were relatively stable in October with very limited movement, either upward or downward, while feedstock costs moved very little in October.
L/LDPE under pressure as supply improves
L/LDPE producers were targeting a price rollover last month as the October ethylene contract price remained unchanged. However, given that the supply situation has improved markedly in recent months and demand is slackening, producers were under pressure to hold prices at September levels. LLDPE butene film prices slipped €20/tonne in early trading with LDPE film grades showing a weak rollover.
Most PE plants are now operating normally again following the series of outages earlier in the year. Borealis lifted the force majeure on LDPE from its plant in Schwechat, Austria and Ineos is believed to have lifted its force majeure on ethylene at Grangemouth, Scotland. LLDPE supply was swollen by a growing volume of competitively-priced imported material from the Middle East.
Ethylene availability could, however, be restricted by the annual maintenance underway on BP RP's cracker in Germany and Unipetrol's cracker in the Czech Republic.
Impending imports add to HDPE gloom
HDPE producers remain concerned about low prices and inadequate margins, but they were not able to do much about their position in early October. While a rollover in the October ethylene contract price relieved some pressure on margins, the possibility to raise prices was off limits. HDPE notations traded slightly lower during the first two weeks of October despite producers' attempts to maintain prices at September levels.
Supply was adequate for blow moulding and film grades, while injection moulding material was more widely available. Imports were not a major concern last month but there are expectations of a growing volume of imported material arriving this month.
Demand for HDPE beverage closures turned down in October with sales of blow moulding and film grades also seeing a return to off-season levels.
PP producers were prepared to be more cooperative on prices last month with better material availability and stocks.
There were some signs that ongoing demand would be less lively than of late. There was also less cost pressure on suppliers with the October propylene contract price settling €10/tonne lower. In early October trading PP notations were settling at around €20/tonne lower than September levels.
Supply is now much better balanced after the many outages during late summer.
As regards demand, there was a more normal seasonal order intake for consumer goods after the order boom of recent months. On the other hand, sales to the automotive and food sectors have picked up.
Margin gain for PS
One leading polystyrene supplier asked for a price increase of €30/tonne for GPPS and a premium for HIPS of €100/tonne in October, despite a fall in the styrene monomer contract price of €20/tonne against September. Producers were partially successful in their plans to raise prices with notations edging €15-20/tonne higher during the first two weeks of the month.
PS supply is tight and stocks fell sharply in October. BASF's polystyrene plant in Antwerp is, however, slowly returning to full production. The unsuccessful start-up of the group's HIPS production line, on the other hand, led to the force majeure in mid-September. While HIPS production has resumed FM will remain in place for the present.
Tight supply lifts PVC
PVC producers remain intent on improving margins further before year end and were talking about targeting a price increase of €50/tonne for October, despite the ethylene contract price remaining flat. A combination of tight supply and good order intake enabled PVC producers to push up prices by around €20/tonne during the first half of October.
PVC availability has been constrained by a number of production difficulties. Arkema called force majeure mid-September for PVC deliveries from its production plants in Balan, Saint-Auban and Saint-Fons – all in France – due to a shortage of VCM. Arkema was expecting to return to normal production during the first half of October. Vestolit also declared force majeure for PVC supply from Marl, Germany due to a shortage of VCM in September. In October, ShinEtsu will carry out annual maintenance on its VCM facility in Rotterdam, The Netherlands.
PVC sales are higher than normal with profiles being the best performing sector.
PET keeps pace with feedstock costs
As PET sellers did not achieve the price increases they wanted to fully cover a rise in raw material costs in September, given the late settlement of +€65/tonne for paraxylene (PX), they were keen to claw back as much as they could last month. Those customers who settled early in September with a lower price rise faced increases of between €30-40/tonne in October, while customers settling late in September with the full PX cost rise already factored into the contract price faced more modest increases.
The actual cost rise for PET producers was relatively modest last month. PX costs fell by €5/tonne with MEG €14/tone higher with the impact on PET costs amounting to just over €10/tonne. Over the last two months PET prices have broadly moved in line with cost development.
The European PET sector is well balanced with sufficient material available and most plants operating smoothly. There are still relatively low volumes of imported material available to European buyers. Demand, while better than this time last year, has however started to weaken with the end of the beverage bottle-making season.