Direct ETP customers on longer contracts have been largely protected so far from rising feedstock costs, but price pressure is growing. Demand softened in the first quarter after a good start to the year. Production controls remain but supply is well balanced for standard grades, tighter for specialties.
ABS prices rose sharply during the first three months of the year as a result of a significant rise in all three components of the ABS cost mix (styrene monomer, butadiene and ACN). For Q1 as a whole, the combined rise in the ABS cost mix amounted to €300/tonne. Suppliers responded by announcing price increases ranging from €100-120/tonne in January and another price increase ranging from €150-200/tonne in February. By the end of March they had largely succeeded in pushing through price increases of at least €200/tonne across all grades.
Demand picked up at the start of the year as converters restocked and continued throughout Q1 at a lively rate. Order activity was particularly strong in northern Europe from automotive and consumer electronics sectors.
ABS producers were running their plants at close to maximum operating rates but stocks remained low and there were shortages for heat-stabilised and coloured grades. However, the return to normal production of ABS specialty grades at Styrolution's site in Ludwigshafen, Germany, helped to alleviate the tight supply situation. Imports were scarce as a result of higher Asian prices.
Polycarbonate producers' margins came under pressure in Q1 as a result of the rising raw material costs. In Q1 as a whole, the impact of rising phenol and benzene costs on the direct polycarbonate feedstock, bisphenol A, was around €250/tonne.
PC producers were to a large extent unable to pass on the cost rise to customers tied into long term contracts, but did however pass a proportion of the higher costs for freely-negotiated deals. They will be seeking to raise prices as contracts come up for renewal over the coming months and have indeed announced plans to raise prices by €250/tonne from 1 April.
Transparent grade material was generally available without delay but supply of more specialised grades was somewhat tighter. There were limited import volumes due to the weakness of the euro against the US dollar.
Phenol availability is tightening due to production problems and matters could worsen over the coming months as the large Ineos plant in Gladbeck, Germany, is due to undergo maintenance.
Overall demand was normal throughout Q1 with automotive performing better than most other sectors.
The impact of an explosion at Evonik's CDT plant in Marl, Germany, was being evaluated at the start of Q2.
Polyamide producers faced sizeable cost increases during the first three months of the year. Caprolactam, the base material for PA6 resin, saw an increase of €170/tonne, while the cost of adipic acid, which is used to produce PA66 resin, also soared. PA resin producers passed on some of the higher costs to smaller compounders and distributors, which raised notations at the top end of the price scale, but the large number of customers on longer-running contracts have not yet had to bear the full price increases.
Standard grade material availability was good during Q1 while some shortages were reported for specialty grades. Most PA feedstock, resin and compounding plants were running as normal.
Demand was very lively in the early part of the year as many converters replenished their stocks. Order intake for automotive sector parts was particularly strong along with electronics and electrical goods.
Faced with rising feedstock prices and a need to restore profit margins, PA6 sellers have announced plans to raise prices by €200/tonne from 1 April with PA66 sellers calling for at least an extra €150/tonne.
In January, PBT prices were unchanged from December levels but notations began to climb during February and March as key feedstock costs moved even higher. Paraxylene, for example, increased by over €200/tonne during the first three months of the year, while butanediol (BDO) and the alternative PBT feedstock, dimethyl terephthalate (DMT), also ended the quarter at significantly higher levels. The overall impact on the PBT cost base of cost increases during Q1 is around €140/tonne.
PBT producers lifted notations for their smaller customers and distributors, but those larger direct customers on longer term contracts have so far been spared paying any additional cost. However, direct customers are soon likely to feel the pinch as several PBT producers have already announced planned price increases of €150/tonne from April as a result of further expected feedstock costs increases.
Material availability was well balanced with market demand although PBT producers continued to operate their plants at reduced operating rates.
Demand was lively in January as converters restocked but has since slowed down to more normal levels. Automotive and E&E are the best-performing market sectors.
POM prices remained largely unchanged throughout the first three months of the year as the cost of methanol, the key feedstock, stood still. Producers mostly rolled over Q4 contract prices for their large direct customers in January with only those on higher prices obtaining discounts.
Supply was well balanced with market demand with no reports of European production outages. Homopolymers were readily available, but copolymers were in slightly shorter supply. Polyplastics' facility in Fuji, Japan, underwent scheduled maintenance work, which shortened Asian supply and in consequence, there was less material available for export.
As usual, demand was good at the beginning of the year as automotive suppliers stocked up with material. Demand from domestic appliance suppliers was also quite lively.
As a result of higher methanol and energy costs and tightening material availability, POM producers are likely to ask for higher prices during Q2, even for longer-running direct business. Indeed, one major global producer has announced planned price increases for polyacetal of €200/tonne, effective 15 April. The producer added that the hike could end up even higher for specialty grades.
PMMA contracts for larger direct customers and those sold through distributors remained largely unchanged during the first quarter. However a rise of €80/tonne for acetate, a key MMA feedstock in February and a further €100/tonne rise in March, started to put added pressure on MMA producers. As most European PMMA contracts are settled on a quarterly basis, PMMA price rises are on the cards in Q2.
European plants operated as normal during the first quarter with no reports of major production hold-ups or delivery delays. European Import volumes were low as Asian supplies were diverted to flat-screen monitor manufacturers, where demand is booming.
PMMA demand was lively in January as converters stocked up with cheaper material, but sales have since tailed off to more normal levels. The automotive sector is taking the lion's share of orders, mostly for manufacture of car headlamps.
With global feedstock costs rising and PMMA prices up in both North America and Asia, European PMMA prices are set to follow suit. Indeed, one European producer has already announced a planned price hike of €150/tonne from April.