In December, the €30/tonne decline in the ethylene reference price was in most cases passed on in full. Demand slowed in the run up to the holiday period and availability tended towards long.
In January, the ethylene reference price was fixed €45/tonne higher as a result of rising naphtha cots and a weakening of the euro against the US dollar.
L/LDPE producers initially targeted a price hike higher than the increase in their cost base to recover some of their lost margins. However, continued subdued demand soon halted these plans to bolster margins.
Most LLDPE contracts were settled in line with the increase in ethylene costs. LDPE prices increased slightly ahead of the cost rise as the supply situation for LDPE was a little tighter than LLDPE. Shortages of some niche LLDPE products were reported.
In quiet December trading, HDPE producers, in most cases, passed on the €30/tonne reduction in the ethylene reference cost. However, blow moulding prices settled somewhat less than the cost decline due to slightly shorter supply.
In January, HDPE producers planned to raise notations ahead of the €45/tonne rise in the ethylene contract price in order to recover lost margins. However, sluggish order intake at the start of the year soon put paid to their plans. Nevertheless, HDPE prices increased slightly ahead of the cost rise registering gains of around €50/tonne across the board. HDPE injection moulding product prices, it was reported, could face further upward adjustment towards the end of the month.
The HDPE market was better balanced at the end of January after producers had completed the sale of surplus stocks at discounted prices.
In December, polypropylene prices more or less tracked the €30/tonne reduction in the propylene contract price. Copolymer injection product prices fell slightly more than the cost reduction with homopolymer film prices falling by slightly less.
Polypropylene producers aimed to recover lost margin by raising prices ahead of the €45/tonne increase in the propylene contract prices at the start of the New Year. While price hikes fell short of their target, notations nevertheless increased slightly above the rise in costs. Homopolymer products saw gains of around €50/tonne with copolymer injection grades up by €55/tonne.
While there was generally sufficient material to meet demand, copolymer grade availability was a little shorter than homopolymer. There was also discussion of producers potentially restricting production of lower-margin products. Demand returned to more normal levels at the start of the New Year.
In December, polystyrene prices skyrocketed following a massive increase of €170/tonne in the styrene monomer (SM) reference price. However, producers failed to pass on the cost increase in full with polystyrene prices rising by around €140/tonne. Styrene spot prices started to climb in November due to production outages at several plants in North America which restricted imports into Europe.
In January, PS producers were unwilling to see margins slip much further and insisted on prices rising close to the further €105/tonne rise in styrene monomer costs. General-purpose PS prices saw gains around €100/tonne with the premium for high-impact material remaining around €90/tonne.
Despite limited SM availability, there is sufficient polystyrene available. The sharp increase in polystyrene prices led to lower demand in January as converters ran down stocks or reduced order intake to a minimum.
PVC producers attempted to hold prices in December despite the proportionate €15/tonne reduction in their cost base brought about by the lower ethylene contract price. In the end, however, producers reluctantly lowered prices for S-PVC base material by €10/tonne. Unplasticised PVC compound prices also fell €10/tonne, but plasticised PVC compounds actually increased by €10/tonne due to global plasticiser shortages.
In January, PVC producers wanted to raise prices by more than the €25/tonne proportionate rise in the cost base following a €50/tonne rise in ethylene costs. However, a combination of subdued demand and adequate availability restrained any hopes of significant margin gains.
The PVC market is well balanced as producers have tailored output to the lower levels of winter demand. Despite the dampening impact of the winter weather, there remain good export opportunities for PVC compounds.
European PET notations pointed upward in December on the back of rising feedstock costs along the polyester chain. However, PET producers didn't quite manage to pass through the additional €20/tonne increase in paraxylene costs as PET prices increased on average by around €10/tonne. The price rise was around €30-40/tonne for small-volume customers and €10/tonne for medium-volume buyers.
The weakening euro against the US dollar helped to keep competitively-priced Asian material at bay. European producers reduced their output to match the lower off-season demand.
Costs continued to rise in January with the paraxylene contract price settling €55/tonne higher and monoethylene glycol prices up by €50/tonne. Producers were however largely unable to pass through the full cost rise and had to settle for gains of €30-40/tonne. Demand picked up slightly after the holidays came to an end.