Upward price spiral continues
European standard thermoplastics prices continued their upward price spiral last month.
L/LDPE sellers pass on full cost rise
Following protracted discussions, the March ethylene contract price was eventually settled at an increase of €60/tonne. L/LDPE producers reacted to the feedstock cost rise by announcing planned price increases of between €60-80/tonne. Buyers reluctantly had to accept the increases and prices settled up on average between €60-70/tonne depending on the starting price level.
Feedstock availability was still being restricted, with most cracker plants being operated at reduced rates due to the high cost of naphtha. In addition, annual cracker maintenance was being undertaken at Dow in Terneuzen and Sabic in Geleen, both in the Netherlands. The force majeure on an LDPE line at Polimeri Europa's Dunkirk plant continued.
LLDPE supply improved last month with a steady inflow of Middle East material. While the high prices have curbed demand, there was lively order intake for LLDPE silage film from the agricultural sector and for food packaging.
HDPE producers manage margin gain
HDPE sellers sought price rises of between €80-110/tonne in March to compensate for the €60/tonne rise in the ethylene contract price and improve their flagging margins. They also wanted to narrow the gap between HDPE and LDPE. Producers pushed notations ahead without too much difficulty and prices settled on average €70-80/tonne above the level of the previous month.
Material availability remains structurally tight for HDPE, but there are variations between suppliers. At the same time, demand is good with a seasonal upturn in order intake for caps and closures, and food and pharmaceutical packaging.
With ethylene costs likely to rise even further, demand expected to grow and material availability expected to remain tight, it seems inevitable that converters will have to accept further HDPE price increases this month.
The March propylene contract price settled €80/tonne higher, partly in response to nervousness about the situation in North Africa and the Middle East but also due to continued supply constraints. PP producers asked for price hikes of €110/tonne but most were willing to accept increases at around the monomer rise.
Material availability remained constrained in March, although there was an improvement in homopolymer supply. Dow's Terneuzen and Sabic's Geleen steam crackers started their scheduled maintenance and Eni's Gela refinery and cracker are to undergo maintenance until early April. Several other unscheduled production issues also increased the pressure on supply.
Seasonal demand for food packaging and pipes was lively despite the high prices.
PVC matches cost rise
PVC producers struggled to achieve their price targets last month as a result of good supply and slack demand. They announced planned price increases of €100/tonne for March to compensate for higher costs and to recoup some of the margin lost since Q4 last year. Converters, however, stood firm and limited the price rise to around the €30/tonne increase in the producer cost base.
PVC sellers had more than sufficient material to meet the low demand and industry stocks are growing. Most plants are operating as normal, apart from the force majeures at Vestolit and Anwil which are still in place.
Several plants are, however, scheduled for maintenance over the next couple of months. These include Ineos Vinyls' VCM plant at Wilhelmshaven in Germany, Arkema's VCM facility at Lavera in France, the ShinEtsu VCM facility at Rotterdam in the Netherlands, and Solvin's PVC line at Taveaux in France.
PVC producers are hoping for a strong pick up in demand during Q2.
Modest gains for PS
The benzene price spiral eventually settled down with a rollover for the March contract price. Styrene monomer, on the other hand, faced continued supply shortages with the monthly contract prices closing €29/tonne higher.
PS producers responded to the cost rise by announcing planned price increases of €50/tonne, but most were content to accept a rise in line with the cost increase.
Demand remained weak in March, with converters holding off from buying for as long as they could in the hope that prices would eventually come down.
PS plants were running at lower operating rates in view of the slacker order intake. Producers were also keen to prevent inventories from swelling.
Feedstock shortages restrict PET output
Tight PET supply and growing demand for polyester fibres - the result of a cotton crop failure in Asia - contributed to a further rise in PET raw material costs last month. The paraxylene and MEG monthly contract prices for March increased by €40/tonne and €60/tonne, respectively. With good demand ahead of the bottle-making season, European PET producers pushed through price hikes of €100/tonne. That rise was €50/tonne more than the increase in their cost base.
There is growing concern among PET suppliers that buyers may consider using other types of plastic packaging, or switch to glass or aluminium packages, if raw material costs do not ease.
Material availability for the non-integrated suppliers continued to be restricted by the force majeure on PTA supplies imposed by BP at its site in Geel, Belgium. PET manufacturer Artenius declared force majeure for PET from all plants and its reduced PET output was allocated at rates between 65-80%. Novapet also ran the largest of its three PET lines in Barbastro last month at reduced capacity due to PTA shortages. The good news, however, is that BP resumed normal PTA production at Geel in mid-March.