Prices continue downward drift
Western European standard thermoplastic buyers stood firm last month against producer demands to retain a proportion of the lower feedstock costs to bolster their profit margins. For the most part, converters achieved price concessions in line with the reduction in monomer costs.
PS follows costs down
In November the average of the three styrene monomer contracts settled down by €24/tonne at €1,088/tonne. This prompted producers to seek a margin improvement by announcing a price reduction of €15/tonne for GPPS and a higher premium of €140/tonne for high-impact (HIPS).
Buyers managed to win even larger price concessions with GPPS settling in line with the monomer reduction while HIPS was down by around €15/tonne.
Producers' attempts to curb production has not completely eliminated stocks of surplus material and there were still 'special offers' available.
Demand recovered last month as the recent downward PS price trend prompted converters to return to the market to replenish their dwindling stocks.
PP producers offered concessions of up to €30/tonne in early November contract negotiations in an attempt to retain some of the €55/tonne reduction in the monthly propylene contract price. They were, however, quickly persuaded to cut prices further with most deals settling down in line with the lower monomer cost.
Material was in good supply despite producers' attempts to trim output and there were plenty of 'special offers' available as sellers sought to reduce stocks.
Demand was at more normal levels last month compared with October. Converters returned to the market to rebuild their inventories but were only ordering what was absolutely necessary to meet their current order books.
L/LDPE down in line with costs
The €20/tonne reduction in the November ethylene contract price was much lower than expected. Producers, with the exception of one asking for a rise of €100/tonne, were initially targeting a firm rollover. However, buyers were looking for price concessions, and with producers wanting to reduce their stock levels before the end of the year, L/LDPE prices were settling in line with the lower monomer cost during the first half of the month.
Material availability was good with the outages at Polimeri Europa and Dow and production cutbacks at Ineos' Grangemouth and Cologne plants not causing too much disruption to supply.
Demand in November was reported to be slightly better than during the very poor October month. Some converters looked to top up their inventories as the lower than expected fall in C2 was interpreted as a signal that prices may not fall significantly before the year end.
HDPE buyers win concessions
HDPE producers initially targeted a price rollover last month to bolster their under-pressure profit margins after the November C2 contract price fell by €20/tonne. Buyers were having none of this however, especially with plenty of special spot deals and low-priced imported material available. Consequently, sellers had to give way and HDPE prices dropped in line with the lower monomer cost. Blown film grades under-performed due to availability of cheaper imports, while blow moulding and injection moulding grades also faced growing price pressure.
Suppliers had no problems matching the low levels of demand despite production cutbacks undertaken by most producers.
Further downward price pressure was expected towards late November as producers looked to sell-off surplus stock before the end of the year.
PET lower as feedstock plunges
European PET feedstock took a sharp downturn last month with polymer notations following suit. The November paraxylene contract price settled €90/tonne lower at €1,120/tonne, which was not as much as expected, while the monoethylene glycol contract price settled down €83/tonne at €1,053/tonne. The PET cost base is estimated to have fallen by €80/tonne as a result of these lower costs.
European PET producers were unable to prevent notations from dropping in line with the reduction in raw material costs. Producers' stock levels remain on the high side, demand is weak and competitively-priced imports are available as Asian markets continue to soften.
While PET producers have trimmed back plant operating rates in response to lower demand, availability remains plentiful. On the other hand, converters are behaving cautiously in view of the uncertain economic environment and are only ordering sufficient volume to meet their current limited requirements for material in the low season.
The much sharper fall in Asian PET prices is an indicator that a further reduction in European prices is likely.
PVC rollover plans fail
In view of their extremely depressed margins, PVC sellers sought a price rollover last month. They hoped to retain the proportionate €10/tonne cost reduction brought about by the ethylene cost declining by €20/tonne. With no sign of any improvement to demand and plenty of material available, producers had little option but to bow to buyer calls for price concessions.
Notations in northern Europe were trading down between €20-30/tonne by mid-month with prices down by at least €40/tonne in the weaker Spanish market.
While PVC producers have trimmed back output in view of continued low order intake, their stocks remain higher than they would like. There were some reports that a number of 'special offers' may be available late November as producers seek to reduce inventory levels.
Building sector demand for pipes and cables remained weak but window profiles are faring somewhat better. European ex-port opportunities are limited due to much lower prices elsewhere.