Demand was quite good across the polymer markets in March but material availability tightened.
L/LDPE prices fell slightly during the first two weeks of March. Following a small €20/tonne reduction in the March ethylene contract price, producers targeted a rollover. Most early contracts were however being settled at around €5-10/tonne lower compared to price settlements of the previous month, despite solid demand and limited availability.
Demand was quite lively at the beginning of the month as firming oil prices led converters to believe that feedstock costs would soon bottom out.
Demand was however expected to fall during the Easter holiday period at the end of the month as most film producers operate at a lower rate.
Plant outages have limited availability of LDPE material and import volumes were at a lower level than seen in the previous month. LLDPE was more readily available with imports continuing to swell supply.
In March, HDPE producers were seeking a price rollover to bolster their profit margins after the ethylene contract price settled €20/tonne lower. However, most early contracts were settling €10/tonne lower compared with the previous month, despite low material availability and good demand.
Overall, material availability for HDPE grades were relatively short with blow moulding grades facing slightly tighter bottlenecks than blown film and injection moulding grades. A plant maintenance turnaround at a large Belgian plant has further exacerbated the supply situation. However, a steady supply of imported material continues to supplement local production.
As oil prices were on a rising trend, most converters sought to replenish inventories at the beginning of the month. Demand was however expected to weaken during the Easter holiday period later in the month, with most converters operating at reduced rates.
In early March, the PP sector was much steadier compared with the sharp reduction in prices seen in the previous month. The March propylene contract price was unchanged from February, which prompted producers to call for a small price increase to improve their margin position. Brisk demand and tightening supply permitted marginal price gains for contracts settled during early trading.
Offtake was quite lively late February into early March as converters sought additional material to rebuild inventories. Signs that crude oil prices, and hence feedstock costs, were turning upward, stimulated sales. Demand was however expected to be dampened by the Easter holidays at the end of the month.
Material availability was somewhat shorter last month. This was largely due to a series of scheduled plant maintenance programmes and a lower volume of Russian homopolymer imports.
Following the surprisingly steep €100/tonne rise in the March styrene monomer (SM) reference price, PS producers called for price increases ranging €100-120/tonne. Producers justified the sharp rise in SM costs on the likelihood of impending supply shortages. In early trading, PS contracts for smaller customers were settling close to the €100/tonne increase in feedstock costs. It remained to be seen whether the full cost increase could be passed onto larger customers settling later in the month.
PS demand started to recover with the arrival of spring and higher crude oil prices also encouraged converters to rebuild stocks.
PS supply was generally sufficient to meet demand. SM availability is however likely to be tighter over the next couple of months. There are several plant maintenance turnarounds planned and imports from the US into Europe are easing.
The €20/tonne reduction in ethylene costs meant just a €10/tonne reduction in the PVC cost base last month. PVC producers targeted a price rollover or even a small price increase to rebuild their profit margins. Tightening supply and a pick-up in demand saw PVC prices largely unchanged from the previous month during the first two weeks of March.
Following a period of plentiful supply, PVC availability started to tighten last month. Several European PVC production plants had either begun or were about to undergo routine maintenance programmes. In addition, higher North American PVC prices meant that imports from the region would likely wane.
The onset of spring heralded an upturn in offtake to the construction sector. There was also a notable rise in export business. Demand was however likely to slow during the Easter holidays.
In early March, PET producers achieved price increases just over the rise in their cost base to provide much-needed margin improvement. The March paraxylene contract price settled €10/tonne higher, while monoethylene glycol settled up €11/tonne. The combined cost increases meant a €10/tonne rise in the PET cost base.
Tightening market fundamentals permitted PET sellers to raise contract prices on average by €10-20/tonne. Spot prices were increasing at an even faster rate as producers reduced supply on the spot market to cover rising demand to meet their contractual obligations. However, PET notations in southern Europe barely moved due to continued import pressure.
Seasonal PET demand has improved as processors build up stocks ahead of the beverage bottle-making season.
Maintenance work is due to be carried out at several PET plants this spring, which will reduce supply.