Plastic producers announced further price increases April, including an element for margin improvement on top of their higher cost base.
L/LDPE producers called for price increases ranging between €70/tonne and a rather ambitious €150/tonne last month following a rise of €40/tonne in the April ethylene contract price. While sellers maintained that they were determined to improve their 'unsatisfactory' profit margins, those converters who were in need of material pressed hard for concessions.
While some producers reported prices for the tighter C4 grades settling above the monomer cost increase, most LDPE deals were up in line with the cost rise.
Material availability continued to be restricted by several plant outages. These included force majeure on C4 at the Ineos plant at Cologne, Germany, and LyondellBasell's Purel PE lines at Wesseling, Germany.
Demand was fairly subdued last month. With prices at these high levels, many converters worked from stock while the Easter holidays also dampened order activity.
A €40/tonne increase in the April ethylene contract price prompted most suppliers to call for a price rise for all HDPE grades of €70/tonne. With prices at these high levels, converters who did not require any additional material refrained from buying and worked down inventories. Most of those converters in need of material refused to pay more than the rise in monomer costs.
Supply was balanced with the lower level of demand in April. There was little change to the supply situation with the force majeure for HDPE remaining in place at Total's Gonfréville site in France. Not much improvement in availability was expected from these sources during the second half of the month.
Polymer demand was not only impacted by very high prices and the Easter break, but end user demand was also subdued.
PP sellers responded to the €50/tonne rise in the monthly propylene contract price by announcing a planned price hike of €75/tonne in an attempt to improve their margins. Some producers reported that they had managed to push through price increases that were slightly ahead of the rise in monomer costs. On average, however, the consensus was that PP prices had increased more or less in line with monomer costs.
Material availability was balanced while polymer demand was negatively impacted by the Easter holidays. Those converters who had sufficient stock refrained form buying additional material.
The softening in upstream costs, including spot propylene, during the first two weeks of April, did not go unnoticed by converters. They hoped that the downward feedstock trend would possibly persuade sellers to soften their price stance later in the month.
PS producers initially set out to raise prices and so improve their profit margins at the beginning of April despite a reduction in feedstock costs. The monthly styrene monomer contract price fell by €34/tonne while benzene was also down by €37/tonne. However, converters were having none of this and sellers reluctantly agreed to drop prices.
For general-purpose grades, the price reduction was around €25/tonne but high impact grade prices shed only €20/tonne, reflecting a hike of €90/tonne in the April butadiene contract price.
There was plenty of material available with few production bottlenecks reported for general purpose grades. Styron's HIPS plant at Tessenderlo, Belgium, was however subject to maintenance.
PS demand was slower than usual in early April, but producers hoped for an upturn after Easter as they believed converter stocks would have to be replenished.
PVC sellers seized the opportunity presented by rising demand to push for much-needed margin improvement last month. Despite the proportionate increase in ethylene costs for PVC production amounting to only €20/tonne, one major PVC producer tabled a €125/tonne planned price hike with most other players calling for €70/tonne more. By mid-month, contract settlements were averaging around €60/tonne higher.
While volume off-take was somewhat subdued over the Easter period, order activity started to rise after the holidays with particularly higher seasonal demand for PVC from the building sector.
Industry stocks remained on the short side in April but have improved since the cold winter weather restricted production earlier in the year. There were however planned outages for maintenance at the VCM plants of Shin-Etsu at Botlek, The Netherlands, and Ineos at Rafnes, Norway, during the month.
European PET resin prices tumbled in April reflecting softening polyester markets in Asia and disappointing sales. The contract prices for paraxylene (PX) and monoethylene glycol (MEG), the key feedstock for PET resin production, both fell last month. PX prices fell by €38/tonne while MEG was estimated to have fallen by €50/tonne.
PET producers, while keen to hold onto as much of the cost reduction as they could to improve margins, were forced to lower notations in line with the reduced cost base.
With most PET plants running as normal, suppliers are sitting on relatively high stock levels. There is also plenty of material along the entire PET chain with converters also having more than enough stocks of both performs and bottles to meet current sales. Converters had also pre-bought PET resin earlier in the year.