In early October, European polyolefin prices edged higher on the back of rising upstream costs while styrenics and PET prices continued on a downward path. Rising crude oil and naphtha costs contributed to an increase in October contract prices for ethylene and propylene.
Ethylene costs increased by €15/tonne with propylene rising by €35/tonne. Propylene supply was restricted by a number of plant maintenance turnarounds but availability improved late September. The October styrene monomer reference price fell by €50/tonne due to good availability and a fall in benzene costs.
Polyolefin producers aimed to at least increase prices in line with the rise in their cost base. However, in early trading polyethylene prices edged around €10/tonne higher against a backdrop of good availability and lower than expected demand. Polypropylene prices, on the other hand, matched the €35/tonne rise in feedstock costs.
Polystyrene producers aimed to pocket a proportion of the cost relief to improve their margins, but early contract settlements saw notations slip by around €40-50/tonne. PVC base material prices remained unchanged but PVC compounds saw small gains due mainly to rising additive costs. PET prices continued on a downward trend due to over-supply and lower seasonal sales.
Polyethylene, PVC and polystyrene supply was well balanced and more than sufficient to meet demand. The few supply bottlenecks caused by plant maintenance programmes came to an end. Polypropylene availability improved during September as additional propylene supply arrived in Europe following an end to a number of force majeures at propylene production facilities. European PET supply remains long and competitively-priced Asian imports also remain widely available.
The latest supply-related developments are summarised below:
• The Rafnes, Norway cracker of Ineos went offline 9 October following a fire that broke out in a compressor. It was not immediately clear when the cracker will go back on stream or if production at downstream polymerisation facilities had been affected.
• Borealis declared force majeure at its 300,000 tonnes/year PP unit at Kallo, Belgium on 15 September following a power outage at the site
• Ineos continued a four-week planned maintenance at its 235,000 tonnes/year polypropylene plant in Grangemouth, Scotland, which began in the first half of September.
• Ineos Styrolution shut its PS plant in Antwerp, Belgium, on 30 August due to an electrical failure. The plant was fully restarted 15 September.
• Vinnolit announced force majeure for S-PVC produced at its site in Knapsack, Germany, on 29 September.
• The bankruptcy of South Korean shipping company Hanjin Shipping late September meant that plastic imports from Asia were stuck at sea, and the goods unable to reach their destination.
In September, polyolefin demand was slow to recover following the summer holidays as converters appeared to be working from inventories. Polyolefin demand started to pick up into October while polystyrene order intake was quite lively as buyers took advantage of the lower prices on offer. PVC demand was also disappointing after the holiday period had ended and order intake continued at a slow pace early October. PET demand was boosted by the warm summer weather in southern Europe in September, but sales were slightly lower last month, as would normally be expected at the start of the autumn season.
Should crude oil costs continue to rise during October, then petrochemical feedstock costs are likely to follow suit. In generally balanced polymer markets, November prices are likely to move in line with the cost base.
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