Buyers of standard thermoplastics last month once again refused to accept suppliers' calls for sharply higher prices. Polymer producers, citing a need to improve margins, tabled planned price increases that were far ahead of the movement in feedstock costs. Indeed raw material contract prices for February were barely changed from January levels.
Buyers were in no mood to accept L/LDPE producers' calls for a price rise of up to €70/tonne in early February trading, especially as the ethylene contract price had settled unchanged against January. Consequently, most contracts were settled on a rollover basis. Towards the end of the month however, the mood began to change as crude oil prices pointed upward. With the expectation that L/LDPE prices would rise sharply in March, converters returned to the market and accepted price increases of over €10/tonne.
February L/LDPE sales were reported to be lower than in the previous month once converters had restocked. LDPE availability was more than sufficient to meet demand despite production cutbacks. LLDPE material was also balanced.
Demand is expected to increase this month as converters stock up in advance of the spring season.
HDPE sellers tabled a planned price increase of €70/tonne in February despite the C2 contract price remaining unchanged. These rather ambitious plans were soon dashed as converters resisted producer calls for higher prices. Contracts were mostly settled on a roll-over basis during the first two weeks of trading. However, when it became apparent that crude oil prices were firming producers managed small price gains of €10/tonne towards the end of the month.
Supply was more than adequate to meet demand, despite polymer and cracker plant outages, as converters had refilled their inventories in January. Competitively priced imported material was also available.
Demand for blown film and injection moulding grades was solid. In contrast, demand for blow moulding material was weaker than would normally be expected. Producers are hoping for demand to increase as spring approaches.
Following the €10/tonne increase in the February C3 contract price PP producers announced planned price increases of €40/tonne to bolster profit margins. They were unable to achieve their targets during the first half of the month with notations settling on average some €10/tonne higher than close of January levels.
Demand was somewhat quieter than in January when many converters had built up sufficient stock.
LyondellBasell announced force majeure for PP from its two plants in Tarragona, Spain, on 8 February as a result of insufficient propylene feedstock supplies, caused by the inability of BASF Sonatrach PropanChem (BSP) to deliver the necessary raw material. While material availability is more than adequate at present, there are growing supply concerns ahead, especially as Shell's cracker at Moerdijk is due for a planned turnaround that will last into April.
PS producers planned to leave prices unchanged in February in an effort to improve profit margins following the €40/tonne reduction in the styrene monomer contract price. Converters, however, pressed hard for concessions and producers were forced to concede price reductions of €30/tonne for GPPS grades at the lower end of the price range. The premium for HIPS remained at €115-120/tonne following a rollover in the cost of butadiene.
Demand was weaker than expected in February as converters adopted a wait and see approach with prices at such lofty heights.
There are now signs that PS prices could soon be on the rise once again. Spot styrene monomer and benzene cost are rising and supply may become tighter as there are planned maintenance turnarounds at several major styrene monomer production plants over the next two months.
PVC producers were insistent on price rises last month despite another rollover in ethylene costs. Sellers tabled planned price increases ranging between €30-50/tonne in an attempt to improve their under pressure margins. Converters were unsurprisingly not impressed with the calls for higher prices at a time when costs had remained unchanged. However, those buyers who needed additional material had to pay an extra €20/tonne in February.
Demand was generally less lively in February after converters had refilled inventories in January. The cold winter weather also put a brake on orders from suppliers to the construction industry.
Material availability was good with most plants operating as normal. Vestolit's maintenance of VCM and PVC facilities at Marl, Germany continued into mid-February. Shin-Etsu meanwhile, will shutter PVC production for maintenance from mid-March to mid-April at Pernis, the Netherlands.
PET suppliers once again asked for price increases of €50/tonne last month despite a rise of just €20/tonne in the cost mix. The European paraxylene contract price settled €15/tonne higher in February with monoethylene glycol costs up €37/tonne. However, a combination of weak demand and over-supply restricted the price rise to no more than the increase in the cost base.
Demand continues to soften due to the cold winter weather and depressed economic climate. Buyers are also adopting a cautious approach to inventory management with prices at such high levels.
While most European PET producers have cut plant operating rates to around 70%, excess supply remains a crucial issue. A number of new large scale PET plants in Asia and the Middle East are now on stream which puts added pressure on older European facilities.