In March, European standard thermoplastic markets were calmer following February's sharp price slump. Polyolefin feedstock cost settlements barely moved compared with the previous month, but styrene monomer costs surprisingly soared. Demand was reasonably good across most polymer classes while at the same time material availability tightened.
Polymer producers tried to seize the opportunity presented by the beneficial market fundamentals to secure improved profit margins. During the first two weeks of March trading however, there were mixed price trends between polymer classes. Some contracts either settled lower or on a rollover basis, while others registered small price increases.
Polyethylene producers saw small margin gains with most grades registering a slight price decline following a €20/tonne fall in the March ethylene contact price. Polypropylene producers, meanwhile, also saw small price increases after propylene had settled on a weak rollover. PVC prices were largely rolled over from the previous month after a €10/tonne decline in the cost base.
Polystyrene producers announced planned price hikes of between €100-120/tonne to recover the €100/tonne rise in March styrene monomer costs. By mid-month, most early contracts were settling and showing gains of slightly less than the cost rise.
Tightening market fundamentals enabled PET producers to raise contract prices on average by €10-20/tonne compared with a €10/tonne rise in their cost base.
While most polymer classes had sufficient material to satisfy demand and only a few bottlenecks were reported, supply is expected to shorten this spring. The plant maintenance season is about to get into full swing and imports are likely to wane as North American prices rise.
The LDPE sector is shorter than LLDPE due to the current plant outages taking a significant chunk out of production. HDPE is also facing imminent bottlenecks with a major Belgian plant due to undergo maintenance. A large PP producer is also planning a maintenance turnaround, with others to follow soon.
Two styrene and PS European production plants began maintenance in March.
PVC availability is set to tighten due to maintenance turnarounds at several plants.
Maintenance work is also due to be carried out at several PET plants, including one of Novapet's PET lines at Barbastro, Spain during the second quarter.
On a more positive note, fewer force majeures are being reported. However, LyondellBasell declared force majeure for parts of its “Catalloy” portfolio citing technical problems at its production facility at Moerdijk, The Netherlands. The plant was unlikely to be back on stream before 26 March.
Demand began to recover towards late February into early March when it became apparent that crude oil prices appeared to be bottoming out. Processors sought to refill inventories ahead of an expected rise in feedstock and polymer prices. Demand was however likely to be curtailed during the Easter holidays as many processors lowered operating rates.
The onset of spring also meant that seasonal factors were driving demand. The PVC sector, for example, benefitted from an upturn in construction, while PET demand was spurred by the beginning of the beverage bottle-making season.
Polymer prices are most likely to be firmer in April. Feedstock contracts are expected to rise following an increase in crude oil costs of around $10 a barrel between mid-February and mid-March. Furthermore, the onset of the plant maintenance season will restrict material availability across all product sectors. Meanwhile, seasonal factors should help to ensure that demand is maintained at a reasonable level.
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