Standard thermoplastic prices fell sharply for the second month in a row in May.
L/LDPE producers said that they did not intend to pass on more than €30/tonne of the €100/tonne reduction in the cost of ethylene last month in a bid to improve margins. Not surprisingly, converters were hoping for even larger rebates. Early indications were however that L/LDPE contract prices were being settled €70/tonne lower than close of April notations.
Demand saw a steady improvement during the first third of May despite many public holidays. With upstream costs showing an upward trend buyers expect that polymer prices could well have bottomed out. With this in mind converters are taking the opportunity to replenish stocks with suppliers of agricultural beverage film leading the way.
Supply was good but there are signs of tightening following the continuation of force majeure at Shell Nederland Chemie in Moerdijk, the Netherlands.
HDPE sellers hoped to retain as much of the €100/tonne reduction in the May ethylene contract price as they possibly could in order to bolster their under-pressure profit margins. However, demand was not as strong as anticipated and material availability was not a problem. In the first third of May blown film and blow moulding prices were trading down by around €70/tonne with injection moulding grades down between €70-80/tonne.
There was an upturn in demand from building industry suppliers for injection moulding material but order intake for blown film and blow moulding was below expectations. Producers were hopeful that demand would improve towards the end of the month provided upstream costs continued to firm.
There was more than enough material available from local suppliers to meet demand although most plants were operating at reduced rates.
PP producers were not prepared to pass on the full €80/tonne reduction in the May propylene contract price to converters. Instead they offered rebates of €50-60/tonne citing a need to improve profit margins. In the first third of the month buyers saw PP prices drop by about €60/tonne with slightly larger rebates for those converters who had paid higher prices in the previous two months. However, as upstream petrochemical feedstock costs moved upward, producers halted plans to make more generous price concessions.
Material availability was good with most plants running as normal, although there were reports of shortages for certain grades. Demand was reasonable for the season with food packaging and consumer goods suppliers ordering at a brisker rate. However, the many public holidays in Europe soon put a brake on any upward sales momentum.
Following the €11/tonne fall in the styrene monomer contract price one major supplier called for a PS price rise of €10/tonne. However, this proved unrealistic in view of already high prices and the unfavourable demand situation. Most early transactions were settled €10/tonne lower in line with the monomer reduction. The premium for high-impact grades remained at €110-115/tonne.
Demand was generally in line with expectations at a low level. The position was not helped by the number of public holidays during May across most European countries. There was however healthy demand for food packaging and foodservice disposables.
PS plants continue to operate at reduced rates in view of the low levels of demand, but there were no reports of supply shortages. However, maintenance turnarounds at styrene monomer plants could lead to feedstock tightness during early summer.
The €100/tonne reduction in the May ethylene contract price implied a €50/tonne saving in the PVC cost base. PVC producers wanted to hold onto as much of the ethylene reduction as they could. The market leader quoted a price reduction of €20/tonne but some other players were prepared to see prices slip by €30-35/tonne. In early trading most smaller contracts were being settled around €30-35/tonne lower than in April. Few larger contracts had been settled.
Demand continued to show some improvement in May as the building season got into full swing. Producers were hopeful that converters to the building industry would at last start to refill their inventories, especially as upstream cost developments point to rising feedstock costs this month.
Supply was more than ample to meet demand and most plants were operating as normal.
Following two months of tumbling prices, bottle-grade PET resin stabilised in early May trading. Paraxylene, the key PET feedstock, rolled over in May while it was widely expected that MEG would also be settled on a rollover basis. PET producers responded to the feedstock price stability by calling for a price rollover. During early May trading most contracts were settled on this basis while a few were settled slightly lower.
Demand was much stronger last month as a result of better weather and the start of the bottle-making season. With rumours that upstream cost could turn upward in June, there was a feeling that converters could seek additional material towards the end of the month.
Supply was not a problem, despite many producers trimming production. There were however reports of rising import volumes.