Polymer prices vary in second quarter
In the first few weeks of Q2, there was a wide variation in European standard thermoplastic price development, depending largely on feedstock cost movements.
L/LDPE almost at a standstill
While some L/LDPE sellers had initially called for price increases of €50/tonne last month, most of the early contracts were being settled at less than the €10/tonne rise in the April ethylene contract price. In the case of customers currently on high price levels, producers were often prepared to settle on a rollover basis.
LDPE supply has improved following completion of maintenance work by Sabic at its plant in Wilton, UK and Polimeri Europa's LDPE lines in Dunkirk coming back on stream. LDPE demand was slower in April as converters retreated from the market as they had built up stocks and the Easter break makes April a short month.
In the LLDPE market, higher volumes of Asian imports were available as bearish sentiment is China continued to direct Asian offers to Europe and European prices are very attractive in the wake of a weakening dollar.
Shortages support HDPE rise
The €10/tonne rise in the April ethylene contract price prompted HDPE producers to call for price increases of €50/tonne to bolster their flagging margins. With material availability still tight and converters keen to secure volumes to meet growing orders, HDPE notations moved €20-25/tonne higher last month.
HDPE remains the tightest of the PE grades following the production cutbacks and plant outages in the last year. Ineos has however restarted HDPE production at its Lillo, Belgium plant.
There are signs of growing volumes of imported injection grades about to flow into Europe from Asia prompted by tight supply and high prices.
Demand for blown film for food packaging and construction is strong as many converters had to return to the market after drawing down stocks during Q1.
PP prices largely moved in line with the increase of €25/tonne in the propylene contract price in April. The PP sector is well balanced with sufficient material available to meet a very healthy order intake.
Producers are now running plants hard following the series of scheduled and unscheduled plant outages over the last twelve months. Meanwhile, Sabic resumed production of copolymer PP at Geleen, the Netherlands but left force majeure in place until stock levels have improved.
Imports remain negligible with most Middle East product being shipped into Asia.
European PP demand returned to pre-crisis levels in April, but should start to tail off towards the Easter break.
Buyers resist PVC hikes
PVC producers' insistence that significant price increases were needed to improve their under pressure margins were initially met with stubborn resistance by converters last month. Sellers called for an ambitious price rise of €60/tonne in April, but with a proportionate increase of only €5/tonne from ethylene costs buyers who did not have immediate requirements for material refrained from ordering. Only those buyers in urgent need for material agreed to pay an extra €10-15/tonne.
With order intake still subdued producers are more than able to supply current demand from stocks, despite several production issues curtailing production. Vestolit and Anwil are in force majeure and Arkema is unable to produce VCM at Lavera as a result of ongoing maintenance. SolVin also carried out maintenance on its PVC plant in Taveaux, France for about a week in April.
Ineos ChlorVinyls will carry out a five-year maintenance cycle on its VCM plant in Wilhelmshaven, Germany in May.
Sharp fall for PS
PS producers initially attempted to limit the price reduction to €55/tonne following the €88/tonne drop in the average of the three styrene monomer contract price settlements for April.
The actual price decline was however more marked with contracts being settled down €70-85/tonne.
Sellers had little option but to agree to the more sizeable discounts than they would have wanted. Producer stock levels increased during Q1 as the high prices dampened demand. There are also growing volumes of imported material from Asia being attracted into Europe by the high prices.
Demand was not as good as expected in April as converters delayed ordering in the hope that prices would soon fall.
Rollover for PET as costs fall
PET suppliers wanted a price increase of €30/tonne last month to further improve their margins but faced strong resistance from converters. By mid-month it looked as though a rollover was the best they could achieve. Converters were cautious about buying additional stock ahead of an expected reduction in prices this month and supplies were lengthening.
In addition, the monthly paraxylene (PX) and monoethylene glycol (MEG) contract prices both settled lower in April. The changes in the PX and MEG prices last month imply a reduction of €22/tonne in pass-through raw material costs for PET contracts.
The standard cost plus calculation did not however reflect the PET market in April. While BP had earlier restarted its PTA line at Geel in Belgium, Lotte Chemicals called force majeure on PTA from its Wilton, UK plant in early April. PTA tightened as a result and sellers widened their margins for those contracts not tied to PX prices. This added further cost pressure for the non-integrated PET producers.
If as predicted, feedstock costs fall further in May, then PET prices will come under renewed downward pressure.