Thermoplastic prices drop
All classes of standard thermoplastics saw substantial price reductions in July as a result of falling feedstock costs and long supply.
PS up after cost surge
Polystyrene prices leapt in August following a surge of €125/tonne in the monthly styrene monomer contract price, driven by benzene. Producers announced hikes of €140/tonne for general-purpose grades and targeted an increase of €160/tonne for high impact PS. They achieved a rise of around €120/tonne for GPPS with slightly higher gains for HIPS despite the early August oil price slide.
PS is well balanced following lively summer sales and careful production controls which have reduced surplus stock levels. In addition, a number of PS plants will be down for routine maintenance this month.
Demand was more subdued than usual with converters buying only when necessary to meet current production needs.
Slow PP orders
PP producers would have been satisfied with a price rollover last month to bolster profit margins after the €15/tonne decrease in the August propylene contract price.
Most early settlements were on a rollover basis but buyer sentiment changed dramatically during the second week of the month because of the economic turbulence in the US and Europe. Order intake slowed with buyers only purchasing what was absolutely necessary and PP prices dipped along with crude oil and naphtha.
The price downturn was however restricted by earlier actions taken by producers to control production and trim stock levels. There were also opportunities to export any surplus material to Asia where prices were rising.
Buyers resist planned L/LDPE hikes
L/LDPE prices fell by slightly more than the €95/tonne reduction in ethylene costs in July, despite producer attempts to retain some of the cost reduction to improve margins.
Last month producers initially called for an ambitious price rise of up to €100/tonne after the August C2 contract price settled €30/tonne higher. Early settlements saw gains of €30-50/tonne but the global financial turbulence led to a sharp fall in crude oil and naphtha prices, which led some buyers to believe that polymer prices would soon follow suit.
Demand ebbed away as the month progressed with converters preferring to work off stocks that had been built up over previous months rather than paying the higher prices asked for by producers.
Sellers were under no real pressure to offload material as stock levels had been cut back over the summer but prices generally settled on a weak rollover.
Economic concerns stall HDPE market
HDPE sellers initially targeted price increases of between €50-100/tonne at the beginning of August to recover the €30/tonne rise in ethylene costs and improve their under-performing profit margins.
Early contracts were settled up to €30/tonne higher than July levels but sellers were soon forced to retreat on their plans during the second week of the month as the economic and financial turmoil led to a virtual standstill in buying activity by their customers. The slide in crude oil and naphtha prices persuaded converters to refrain from any additional buying and work from existing stocks as they expect ethylene and HDPE prices to fall in September.
By mid-August it appears that a weak rollover would be the most likely scenario for the month as a whole.
Roller coaster ride for PET prices
Having seen many months of rising prices followed by three months of falling prices since May, PET resin prices rose once again last month. The PET price volatility is largely explained by sharp movements in the key paraxylene (PX) feedstock.
In July, PX prices dropped by €85/tonne and bottle-grade PET responded with a €50/tonne decline. The situation reversed last month with PX costs rising by €100/tonne and monoethylene glycol (MEG) costs rising by €4/tonne. PX supply tightened in August and there was higher demand for polyester fibre in China. The combined impact of feedstock development on the PET cost base was a rise of €60/tonne.
PET producers managed to claw back only €30-40/tonne of the cost increases. Converters have plenty of stock and are taking a cautious approach to buying any additional material given the growing economic uncertainties. In addition, the patchy summer weather in northern Europe held back demand for beverage bottles.
PET producers have responded to the demand slowdown by trimming plant operating rates to control inventory levels. Asian imports have slackened since late July as prices there increased.
Sluggish sales hamper PVC
PVC producers sought price increases of up to €30/tonne in early August to compensate for the €15/tonne rise in ethylene costs and to add a small margin improvement. While some early deals settled slightly higher, sellers were soon forced to backtrack on their calls for price increases following the oil price slide and economic uncertainties of the second week of August.
Demand was generally weaker than would normally be expected in August, especially in southern Europe and central and eastern Europe. Some converters decided to run down their stocks rather than commit to buying additional volumes given the prospect of lower prices in September. Those who needed to buy pushed for price concessions or at least a rollover.
Material availability is good with virtually all plants operating as normal and inventories for most suppliers are long. The Ineos facility at Schkopau, Germany, was the only PVC plant undergoing a maintenance turnaround last month.