Polystyrene prices soar to an all-time high

In February, European standard thermoplastic prices continued on a firm upward trend due to higher feedstock costs and nervousness ahead of the cracker maintenance season beginning this month. Polyethylene producers managed to achieve most of their targeted margin improvement, while the margin gains were slightly less for polypropylene and PVC. PET and polystyrene prices matched the rise in feedstock costs.

Polystyrene once again saw massive price hikes in February, following gains of €90/tonne in January. The styrene monomer (SM) reference price settled €260/tonne higher last month, meaning that SM costs have risen €575/tonne since last November, an increase of almost 60%.

Global SM supply is very low due mostly to maintenance outages at plants in Asia and North America. Furthermore, European supply has been squeezed by higher exports to Asia over recent months. PS producers were able to pass on the cost increase in full, leaving PS prices at an all-time high.

Following a €460/tonne rise in butadiene costs the €90/tonne premium for high-impact polystyrene will likely come under scrutiny.

Polyethylene producers achieved margin improvement with prices increasing ahead of the €35/tonne rise in ethylene costs. LLDPE prices registered gains of €60/tonne, HDPE grades were €55/tonne higher and LDPE prices increased €50/tonne.

Polypropylene homopolymer prices increased €50/tonne with the tighter copolymer grades registering gains of €55/tonne compared with a €45/tonne rise in the propylene contract price.

PVC compound prices increased €25-30/tonne, which was slightly higher than the proportionate €17.5/tonne impact of higher ethylene costs on the PVC cost base.

PET prices gained €70/tonne, which was in line with the increase in the cost mix. Continuing scarcity of cheaper imported Asian material supported the upward price trend.

Supply tightens

In February, there was ample material availability to meet demand, although producers started to build up buffer stocks ahead of the cracker plant maintenance season beginning in March. There are impending production outages, with four major European cracker operators: Dow, ExxonMobil, Sabic Hydrocarbons and Total all scheduling maintenance of one-to-two months in the coming weeks.

LLDPE, HDPE and PP imports were scarcer last month mainly due to production issues in the Middle East.

The latest supply-related developments are summarised below:

• Oxea declared force majeure 1 February on butyl acetate in Europe until further notice due to unforeseen technical issues at its production plant in Marl, Germany.

• LyondellBasell declared force majeure 2 February for a certain grade of PP from its production plant at the Italian site of Brindisi.

Demand livelier

Following a slow start to the year, polymer demand was a little livelier last month across most polymer classes, despite higher prices. However, the very high polystyrene prices led to lower than expected demand in February.

A pick-up in end markets forced some converters who hadn't previously stocked up in January to increase demand. Nervousness ahead of the planned refinery maintenance season also persuaded converters to build stocks ahead of the likely impending supply shortages.

Off-peak season demand for PVC and PET was at normal levels for the time of year.

March outlook

Standard thermoplastic prices are expected to increase further this month with continued upward pressure on petrochemical feedstock prices. The cracker maintenance season starts this month, which will lead to feedstock supply shortages. Polymer imports from Asia and the Middle East are also less evident. Furthermore, demand is likely to pick up as converters build stocks to meet growing demand at the outset of springtime.