The drop in crude oil and petrochemical costs gave buyers more bargaining power last month.
In January, L/LDPE prices fell by more than the €27.5/tonne reduction in monomer costs. LDPE prices were down €50/tonne while LLDPE prices fell €60/tonne. In February, LDPE producers were able to retain a small portion of the €70/tonne reduction in the ethylene contract price but had to pass on the full cost decline for larger orders. LLDPE prices fell in line with the lower ethylene cost.
The sharper decline in LLDPE is due to good availability from local producers and growing imports due to relatively higher European prices. Meanwhile, LDPE film is somewhat shorter, but still sufficient to meet demand. Injection moulding material is even shorter due to production issues at the Versalis LDPE line in Ferrara, Italy.
Demand was normal, although buyers were reluctant to buy additional volumes without being offered further price concessions.
In the first half of January, demand was lively, and producers offered price discounts in line with the €27.5/tonne reduction in the ethylene contract price. However, on the continued fall of crude oil and naphtha, demand dried up and producers offered steeper price rebates to stimulate sales. Overall, blown film prices were down €55/tonne with blow moulding and injection moulding prices down €35/tonne.
In February, HDPE prices fell by slightly less than the €70/tonne reduction in the ethylene contract price. Producers managed to pocket more of the cost reduction for the tighter blow moulding grades.
Material availability is more than sufficient to meet demand while availability of injection moulding and blow moulding grades has been supported by imports.
Falling petrochemical prices have curtailed demand since mid-January with buyers ordering only sufficient for their immediate needs.
During early January trading, PP producers managed to limit price rebates to the €50/tonne fall in the propylene contract price on lively demand. However, falling crude oil and petrochemical prices made buyers more cautious and producers had to offer discounts for homopolymer grades over the monomer cost reduction to encourage sales. Copolymer injection grade prices however fell by only €45/tonne.
In February, price cuts were just less than the €60/tonne reduction in the propylene contract price across all grades.
Availability was at normal levels with more than sufficient material to meet demand with some sellers running down excess stock levels. Supply could however start to shorten with major plant maintenance programmes scheduled this month.
European demand remained steady after the dip in order activity mid-January. There were reports of growing export opportunities to North America.
PS producers called for a price increase of €20/tonne in January, despite the styrene monomer (SM) reference price settling €20/tonne lower. Their cause was assisted by tight styrene monomer supply at the start of the year. On average, most deals were settled between a rollover and a €10/tonne rise.
In February, the SM reference price fell €50/tonne on better availability. By mid-month, sellers were passing on only part of the cost decline with contracts settling down around €40/tonne on average. The premium for high-impact grades remained at €85/tonne, despite a €60/tonne fall in the cost of butadiene.
Material availability has improved and is now close to normal. There are also reports of a growing volume of imported material.
Following a lively start to the year, demand cooled from mid-January as converters anticipated lower prices ahead.
PVC sellers were largely unable to improve their margin position in January as intended. They had hoped to retain a larger slice of the proportionate cost relief from the €27.5/tonne decline in the cost of ethylene.
However, after a bright start to the year, expectations of lower ethylene prices slowed re-stocking. PVC buyers were holding out for lower prices, before they replenish inventories. While stocks are low, converters were buying only what they needed for immediate production.
By mid-February, producers managed to restrain the downward trend to around less than half the proportionate reduction of €35/tonne in ethylene costs. However, buyers were expected to push for more generous price concessions during the remainder of the month.
There were no major supply restrictions from local producers and imports to Europe were scarce, especially from Mexico.
Bottle-grade PET prices fell in January on lower contract prices for paraxylene (PX) and monoethylene glycol (MEG), two key feedstocks for PET, and continued over-supply. The European January PX contract price settled €40/tonne down compared with December with MEG costs also lower. PET prices fell €30-40/tonne, in line with the proportionate impact of the raw material cost reduction on the PET cost base.
February PX and MEG contract prices had not settled at time of writing, but both feedstocks were expected to fall. Indications were that PET prices were falling €20-30/tonne by mid-month.
The PET market was slow to pick up after the holiday season, but converters began restocking by mid-month. However, as the month progressed the downturn in crude oil prices persuaded many buyers to limit order intake to meet only their immediate needs.