Western European buyers of standard thermoplastics achieved small price concessions last month despite initial attempts by producers to hold prices at November levels and improve their profit margins. Sellers were, for the most part, prepared to bow to converter pressure in order to reduce any excess inventories before the end of the year.
L/LDPE producers sought a price rollover last month to support their ailing profit margins following a decline of Ã¢¬15/tonne for the December ethylene contract price. However, while a few early deals were settled on a rollover basis, producers were conceding more or less the full amount of the monomer cost reduction as the month progressed.
Material was well supplied with producers able to fully meet customer orders. Most plants were operating as normal since the restart of Polimeri Europa's facility at Dunkirk, France, but Ineos continued to operate plants at Grangemouth, Scotland, and Cologne, Germany, at relatively low rates.
December volumes were supported by converters buying material to achieve their year-end bonus entitlements. There is also a view that prices are bottoming out and producers are likely to announce price increases in the New Year.
HDPE producers were mostly successful in their efforts to hang onto a price rollover during early December trading. Given that the monthly ethylene contract price had settled Ã¢¬15/tonne lower they wanted a much-needed improvement to their under pressure profit margins. However, by mid-month there were signs that prices for standard grade material were crumbling towards the monomer reduction but specialty grades were holding up well.
Material availability tightened slightly last month and there were fewer special offers available. Several major producers reduced their operating rates while Total Petrochemicals called force majeure at their Antwerp site for blow moulding grades in early December.
Demand was at the usual low levels in the run-up to the Christmas period but some converters eyed the opportunity to rebuild their stocks with notations possibly set to rise in the New Year.
Converters refused to accept PP producers' calls for a price rollover last month after the December propylene contract price fell by Ã¢¬18/tonne. Instead, sellers reluctantly granted price concessions and notations slipped between Ã¢¬10-15/tonne.
Demand was livelier than would normally be expected for December as converters sought to meet their end of year bonus targets. Buyers also noted the upward trend in petrochemical markets and concluded that PP prices could have reached the bottom of the current cycle and start to rise again in January. In addition, growing demand from end-use markets, especially food packaging, meant they did not want to be left short of stock in the New Year.
Material availability was well balanced although several plants continue to operate at reduced rates. LyondellBasell PP lines in Berre, France, are still undergoing a maintenance turnaround.
PS sellers differed in their response to the Ã¢¬6/tonne rise in the December styrene monomer contract price. Some producers asked for a price rollover while another integrated supplier called for a price rise of Ã¢¬30/tonne.
However, by mid-month notations for general purpose PS (GPPS) grades were settling on the basis of a rollover against November prices. Meanwhile, the premium for high impact PS (HIPS) slipped by Ã¢¬10/tonne following a sharp decline of Ã¢¬200/tonne in