Supply pressures eased in May and this, paired with buyer caution, kept polymer price rises restrained.
A slight rise in oil and naphtha notations in April was reflected in a €40/tonne increase in the May ethylene contract price. L/LDPE producers again targeted price hikes higher than the rise in feedstock costs to widen their margins. Buyers, on the other hand, fought hard to minimise the planned price rises in early May. Most were unwilling to pay any more than the cost rise having paid a premium over the cost rise in April.
LDPE contract prices were settling in line with the €40/tonne cost rise by mid-month, while LLDPE prices were settling around €40-45/tonne higher than April contracts.
The relatively high European LLDPE prices continued to attract imports from the Middle East, which further undermined producers' efforts to raise margins.
Demand was in line with seasonal expectations at the start of May.
HDPE sellers faced a tough battle to improve their margins last month as buyers strongly resisted the planned price hikes. Producers wanted to raise prices by more than the €40/tonne increase in ethylene costs. By mid-month, however, notations were largely settling at or below the rise in ethylene.
Blow moulding prices more or less matched the cost rise, whereas blown film and injection moulding prices saw gains of €35-40/tonne.
The start of the agricultural season supported demand for blow moulded containers. Blown film and injection moulding demand was relatively slack as converters held back from making additional purchases due to the high prices.
No major new supply outages were reported and buyers were mostly able to secure the volumes they wanted. Higher European prices attracted ample imports of unimodal blown film and injection moulding material.
In May, the modest rise of €15/tonne in the propylene contract price slowed down the increase in polypropylene prices that was seen during the previous month. Nevertheless, producers managed to raise notations by slightly more than the rise in feedstock costs. Homopolymer film, homopolymer injection and copolymer injection material registered price gains of €20/tonne up to mid-month.
The supply situation showed signs of improvement last month but was still expected to remain more limited than normal due to plant maintenance turnarounds. One major supplier has scheduled maintenance programmes beginning in May at both its polypropylene sites in Belgium. A growing influx of cheaper material is entering the European market from the Middle East.
Demand was normal early May, although the large number of public holidays in Europe during the month was likely to restrain sales.
In May, the styrene monomer contract price rolled over following a sharp rise in the previous month. The styrene monomer market is now better balanced as plant maintenance works were reaching an end. Benzene, the key feedstock for GPPS production, declined €17/tonne, while the cost of ethylene increased €40/tonne.
Polystyrene producers announced planned price increases of between €25-20/tonne from 1 May. The HIPS surcharge remained unchanged at €80-90/tonne. Producers did not get all their own way during the first two weeks of May. GPPS contract prices remained firm but settled short of the increase that producers were calling for.
Polystyrene production increased in May as feedstock availability improved. Imports arriving from the US in June will also contribute to better supply.
Meanwhile, polystyrene demand was lower than expected in view of the high price levels.
PVC producers at last managed a successful price campaign in April, when they achieved much needed margin gains. They were also hoping for more of the same last month and targeted price rises well above the €20/tonne proportionate impact of the ethylene cost rise on their production base. The cost of additives, particularly titanium dioxide, was also on the rise.
Producers initially targeted a price hike of €60/tonne from 1 May. During the first two weeks of the month however, most contracts settled some way short of the target, although margin gains were still being achieved.
Their cause was helped by continued material shortages and a seasonal upturn in demand.
Supply continued to be constrained by plant maintenance turnarounds and growing export volumes. There was also a seasonal upturn in demand from the construction sector.
In April, PET price increases fell well short of the €65/tonne rise that producers needed to match cost increases. The supply bottlenecks that were expected did not materialise.
In May, the European paraxylene contract price, the key PET feedstock, rolled over, while the monoethylene glycol contract price increased €27/tonne. The combined cost increases lifted the PET cost mix by just less than €10/tonne.
PET sellers attempted to improve margins by targeting price increases ahead of the cost rise. While bottle-grade PET prices firmed slightly during the first two weeks of the month, the increase was some way short of target.
Seasonal demand is in line with expectations and material availability has improved over the last two months. A number of plants resumed operations following maintenance turnarounds while Asian imports are still being attracted into Europe.