Most classes of standard thermoplastic materials saw prices decline in line with feedstock costs during the run-up to the Christmas holiday period. Polystyrene and PET were exceptions. However, the downward trend was short-lived and prices started to rise again at the beginning of the New Year. A sharp rise in crude oil and naphtha costs fed through into January petrochemical feedstock contract price settlements. The OPEC Conference in Vienna on 30 November, which decided to cut back oil production, drove oil prices up.
Polystyrene prices have seen massive price hikes since November 2016. The styrene monomer (SM) reference price increased by €170/tonne in December and by a further €105/tonne in January. SM supply became much shorter towards the end of last year due to technical issues at several North American plants, with consequently fewer imports reaching Europe. At the same time, European producers continued to export SM to Asia.
Producers managed to pass through most of the €275/tonne SM cost increase with general-purpose polystyrene prices rising €240/tonne on average during the two month period to end-January.
Bottle-grade PET also registered price gains during each of the last two months on the back of rising feedstock costs. Overall, PET prices have increased by around €60/tonne since the end of November.
Other polymer classes were in good balance at the beginning of the year and price generally tracked the rise in feedstock costs. Producers were looking for more to recover lost margin, but subdued demand curtailed their plans.
Polyethylene prices increased between €45-50/tonne compared with a €45/tonne rise in the January ethylene contract price. Polypropylene prices were up €50-55/tonne against a €45/tonne propylene contract price rise.
PVC base material prices moved €25/tonne higher in January, which was in line with the proportionate impact of higher ethylene costs on the PVC cost base. Plasticised PVC compound prices continued to rise sharply due to plasticiser shortages.
Polymer markets were well balanced at the start of the New Year as producers tailored output in line with lower demand. There was generally sufficient material available, with a few sectors tending shorter. LDPE was a little tighter than LLDPE and there were shortages of some niche LLDPE products. Polypropylene copolymer grades were also a little tighter than homopolymers. Furthermore, a weakening of the euro against the US dollar stemmed the inflow of imported material.
The latest supply-related developments are summarised below:
• Following a fire mid-January, Abu Dhabi National Oil Company had to shut down about half of the output of its Takreer refinery in Ruwais, UAE.
• Basell Orlen Polyolefins (BOP) lifted its force majeure for HDPE deliveries mid-January from its site in Plock, Poland. BOP had declared force majeure on 15 November 2016, after the ethylene supply from one of its owners, PKN Orlen, had broken down.
• Force majeure for polypropylene from Polychim's plant in Dunkirk, France, was lifted mid-December. Polychim declared force majeure in mid-November following technical difficulties that emerged restarting from maintenance.
Demand was quieter than expected at the start of the year. Faced with rising prices, many converters worked off stocks and bought only sufficient material to meet their immediate production needs. There were however promising signs of a pickup in demand from the consumer goods and packaging sectors as the month progressed.
Crude oil prices have stabilised around $55/barrel and therefore petrochemical feedstock costs and polymer prices may show little change this month.