Engineering thermoplastic prices either softened or remained stable during Q1 2013 as producer margins came under pressure from high feedstock costs. Sharp price reductions for POM and PMMA, PA, PC and ABS down a little with PBT unchanged.
A sharp rise in styrene monomer costs persuaded some ABS producers to seek price increases of €50-60/tonne in January. However, subsequent reductions in the other two cost components, butradiene and ACN, as well as weak demand, severely restricted producers' ability to achieve their price goals.
The downward cost trend continued into February, but costs turned again in March, showing a cost mix gain of €40/tonne. Producers responded by calling for price increases of up to €60/tonne but they were largely unable to push them through as a result of poor demand and good availability. Indeed, there was even downward pressure on natural and black/white grades.
Demand weakened during the first quarter due to the challenging economic environment. ABS sales to southern Europe were unsurprisingly much slower than to northern Europe.
Most European ABS plants were operating at normal levels and there was more than enough material available. Asian imports continued, but volumes dwindled during the course of the quarter due to rising demand from China.
ABS prices are likely to come under growing pressure in April following a further slide in feedstock costs.
PC producers finally managed to push through small price gains at the top end of the range in January to compensate for the high cost of benzene and phenol. PC costs than fell significantly in February and producers were reluctantly forced to make price concessions, mainly at the lower end of the price range. Feedstock costs increased again in March but producers were unable to pass through quite as much of the cost increase as they had wanted due to slow order intake.
Following stock replenishment by converters in January, demand weakened in February and March. Slack demand from key end-use sectors and high prices were mostly to blame.
European producers continued to operate their PC plants at reduced rates to prevent surplus stocks appearing. There was nevertheless sufficient material available despite lower Asian import volumes.
One PC producer announced plans to raise prices by €300/tonne at the start of the second quarter. However, a fall of €62/tonne in the April benzene contract price will make it more difficult for producers to push through the price increases they seek.
Freely-negotiated virgin polyamide 6 prices came under growing downward pressure during the first quarter despite the continued high cost of caprolactam feedstock due to slack market conditions. Indeed PA6 producers were asking for price increases of €200-250/tonne. Prices for the longer-running order agreements on the other hand were more stable.
PA66 producers faced mounting cost pressure from adipic acid which increased each month during the first quarter. They attempted to raise prices for virgin PA66 and ready-to-use compounds by up to €150/tonne but in practice only managed to achieve very little in the way of price increases.
PA demand was in line with expectations during the first quarter. The automotive sector dominated sales but there was also lively order intake from the E&E sector.
Material was widely available with producers more than able to meet market demand without delay. There was an explosion at BASF's adipic acid plant at Ludwigshafen, Germany, which was off-line for over a week, but this did not unduly impede PA66 production.
PA producers plan to intensify their campaign to raise prices during the second quarter.
PBT prices were largely unchanged during the course of Q1 despite feedstock costs remaining at a high level. The Q1 BDO contract price declined by only €30/tonne to remain at well over €2,000/tonne. The PX/PTA chain continued to rise, while DMT, which is used as an alternative to PTA, also increased in January and February, before receding €6/tonne in March. PBT producers have so far had to swallow further erosion of their profit margins.
Demand picked up over the course of the last three months after a slow start to the year. E&E sector business is now quite brisk with also improving order intake from the building industry.
Material availability is lengthening despite production cutbacks from producers to control stock levels. Volumes of low-grade imported Asian material was also available.
PBT producers will no doubt be keen to raise prices during Q2 to prevent any further margin erosion. However, at the time of writing, no firm price announcements have been made by producers. There have, however, been calls by producers to lift the Q2 BDO contract price in order to protect profit margins.
Natural grade copolymer POM prices plunged by over €150/tonne during the last three months as a result of a growing volume of cheaper imported Asian material. European suppliers had no choice but to reduce their offer to compete. This means that their profit margins have been further eroded since methanol costs have increased by 10% over the Q4 2012 contract price. Homopolymer prices and the more specialised grades containing glass fibre-reinforcements and other additives, were able to resist the downward slide.
Following improved order intake in January as converters topped up inventories, demand tapered off during the course of the last three months. POM sales to consumer product markets were adversely impacted by the weakness in the European economy. However, automotive sector sales saw some improvement.
Material availability lengthened during the quarter due to the growing tide of basic imported copolymer material, despite producers making cutbacks to production.
POM producers would like to raise prices during Q2 to ease their under pressure margins. However, their ability to do so will be undermined by high import volumes and slack demand.
Contract prices for the longer-running agreements edged slightly lower in Q1 2013 compared with the preceding quarter. However, freely negotiated deals were sharply lower with notations plunging by over €100/tonne during the three-month period to end March. This came about despite a rise in the cost of propylene and MMA feedstock.
PMMA demand improved during the course of the last three months, following a slower than expected start to the year. The automotive and lighting industries along with sheet manufacturers for the construction industry were the best performing sectors.
Material from local producers was generally in plentiful supply while imports were lower than would normally be expected as a result of production issues at several Asian suppliers.
PMMA sellers tabled a planned price hike of €140/tonne effective 1 April to counter the growing supply tightness in the MMA market. However, the April propylene contract price settled lower, which could make it more difficult for suppliers to achieve the price gains they would like. On a positive note, there are clear signs that PMMA demand could be on a firmer upward trajectory.