Price hikes set to continue
Buyers of standard thermoplastics were faced with further price hikes in December as rising crude oil and naphtha fed through into polymer feedstock costs.
Buyers braced for sharp L/LDPE rise
L/LDPE producers asked for price increases ranging between €50-70/tonne last month in response to a rise in feedstock costs, continued tight supply and lively demand. Producers claimed that the €27/tonne rise in the December ethylene contract price was not enough as cracker margins had deteriorated further since the settlement and naphtha costs continue to rise. They predicted a further significant ethylene cost increase in January.
In December, L/LDPE prices increased between €40-50/tonne with prices rising at a faster pace as the month progressed.
Material availability remains tight and several producers had insufficient material to cover demand. Sales were unusually good with converters attempting to buy additional material to cover healthy order books. There was also an element of pre-buying in advance of anticipated price hikes in January.
Producers responded by asking either for much higher prices for extra December volumes or by closing their order books.
HDPE dig in to boost margins
HDPE suppliers took a hard line on pricing last month as they determined to improve their margins in the face of continued cost pressure. All HDPE product groups registered gains of between €30-40/tonne in December compared with the rise of €27/tonne in the monthly ethylene contract price.
Supply is tight with several plant problems and integrated producers lowering the C2 allocation to the less profitable HDPE sector. There were also limited volumes of imported material available from the Middle East with supplies being diverted to Asia.
HDPE sales were particularly good for the month as converters attempted to stock up to meet healthy ordering activity. Demand for food containers and packaging film were much better than expected.
Sellers closed their order books by mid-month to deter pre-buying.
PP producers responded to the €22/tonne rise in the December propylene contract price by announcing planned price increases of €30-40/tonne. Homopolymer prices moved €20/tonne higher while copolymer grades, where availability is somewhat tighter, saw gains of €25/tonne.
Material availability has improved and most plants are running as normal. However, there were still some delays on deliveries from plants in France and Belgium. Homopolymer supply was boosted by a growing inflow of material from the Middle East.
Demand was good with particularly lively order activity for injection moulding grades for packaging and healthcare products. Some producers had to close their order books by mid-month as they had sold out of product.
PVC hit by lower sales
PVC sellers met strong customer resistance to calls for higher prices last month. Producers asked for an extra €30/tonne in December. This was meant to cover, as usual, half of the monthly ethylene contract price increase for December, plus the ethylene cost rise from the previous month, which they had failed to fully recoup.
Buyers refused to meet their demands and a combination of lower sales and better availability forced sellers to backtrack, leaving PVC prices last month largely unchanged from November levels.
The severe winter weather saw a contraction in building sector activity and consequently orders from pipe and profile manufacturers were much less than anticipated. Demand for PVC cables, however, were reasonably robust.
Producers' stocks lengthened due to the declining demand and PVC plants were forced to adjust output in line with the lower incoming orders. Some producers were looking at export markets as a means of shifting any surplus stock.
PS matches cost rise
The average of the three styrene monomer contracts negotiated for December were settled €34/tonne higher than the November level, driven primarily by higher benzene costs. In response, producers called for price increases of €50/tonne.
While tight inventories and good demand meant that sellers were under no pressure to concede much in terms of prices, they were nevertheless prepared to forego margin improvement. Converters are facing growing pressure from their customers to limit any further cost pass-through. Producers are themselves concerned that higher prices could encourage imports and lead to material substitution.
Producers were surprised by the unusually good order intake for December. Food packaging led the way with XPS sales also lively.
Buyers ‘shocked' by PET cost surge
PET feedstock costs increased sharply one again in December following the triple-digit rise seen in the previous month. The monthly paraxylene contract price increased by €102/tonne with monoethylene glycol (MEG) costs up by €70/tonne. Meanwhile, the prices for purified terephthalic acid (PTA) recently moved up 26% in one week alone in Asia.
There is a shortage of PET feedstock in the market for all applications. This has been influenced partly by strong demand for polyester for textiles in China, resulting from a shortage of cotton due to the failure of crops in Asia.
European PET producers announced planned price increases of up to €100/tonne for bottle-grade material in December. Actual PET price development, however, tended to move in line with the feedstock cost rise of €80-85/tonne. Producers were prepared to forego margin gains to their regular customers who are having difficulty passing through the large price increases to their customers.
Post-seasonal PET demand was lower than would normally be expected for the final month of the year. Converters appear to be running down their stocks with price at such a high level.