In May, the ethylene contract price was unchanged from April at €1,050/tonne. L/LDPE producers initially targeted a price rollover, but during the first half of the month prices fell by €20/tonne as material availability improved.
LDPE prices were stable throughout April but the LLDPE price trend started to reverse mid-month. LLDPE prices increased during the first half of April and then declined by €20/tonne after the Easter holidays.
L/LDPE supply lengthened during May as several plants resumed normal operations following maintenance work. Producers' warehouses are now well stocked and there are also many attractive spot offers available. LLDPE supply was swelled by higher volumes of imported material from the Middle East.
Demand was reasonable at the beginning of May as prices started to tumble. However, offtake was expected to slip over the Whitsun holiday period.
HDPE prices were fairly stable during the first two weeks of April. However, prices began to turn downward after Easter due to rising supply and buyer caution. Prices were down €5/tonne for blow moulding grades, where supply was tighter, and €20/tonne for blown film where availability was less tight.
HDPE prices followed a similar trend during the first half of May, despite a rollover in the ethylene contract price. Producers initially targeted a price rollover, but were forced to offer modest discounts. Injection moulding prices fell €30/tonne, blow moulding fell €20/tonne and blown film material fell €10/tonne.
There was plenty of imported injection moulding material on offer, but blown film and blow moulding supply was more balanced.
Most converters had sufficient stock to meet their immediate production needs and were under no pressure to buy.
In May, polypropylene prices headed downward despite a rollover for thee propylene contract price. Homopolymer grades were down by €15/tonne while copolymer grades, where supply is somewhat tighter, fell €10/tonne. Material availability has improved and buyers were showing restraint in view of the falling price trend.
A widening spread between European-produced polypropylene and imported material was also turning sentiment bearish in the European spot market. In early May, imported material was around €100/tonne cheaper than European-produced material. While most buyers preferred to stick with their approved PP suppliers, the very presence of cheaper imports helped buyers negotiate lower prices for European-produced material.
The plant maintenance season is nearing an end and there is sufficient material available, especially for homopolymers.
In early May, PP sales were less than expected, partially due lower demand for seasonal foods.
PVC producers have managed sizeable margin improvement during the last three months as a result of good offtake and supply restrictions. In May, the ethylene component of PVC production was unchanged following the rollover for the ethylene contract price. PVC base material prices edged €5/tonne higher for most of mainland Europe with only a few isolated cases of higher price increases.
Rigid PVC compounds continue to face steeper price increases due to the tight market position for titanium dioxide. Rigid PVC compounds and other higher quality grades saw price gains of around €20/tonne in early May, compared to the €30/tonne which producers had originally sought.
Most PVC production plants are operating as normal, exports are losing their appeal and supply is slowly improving. PVC demand is in line with expectations for the time of year.
Polystyrene prices continued to tumble in May after the styrene monomer reference price shed €245/tonne, a much bigger decline than market participants were expecting. Once again, PS producers did not pass on the cost reduction in full with notations dropping by €200/tonne. The premium for HIPS remained unchanged at around €90-100/tonne.
Both styrene and polystyrene availability improved markedly over the past two months. European styrene production plants are now running smoothly with no outages reported and the supply situation has improved in North America. There were also reports early May that European styrene traders were looking to work the import arbitrage from the US.
In April, the sharp price reduction led to increased purchasing activity. However, buyers started to exercise some restraint when it became clear that a further price reduction could be expected in May.
In May, PET prices once again fell sharply in a bearish market following a plunge of €80/tonne in the previous month. European May paraxylene and monoethylene glycol contract prices were expected to fall further thus adding to the growing downward price pressure for PET.
Demand remained lacklustre in May as buyer expectations remain bearish on prices. While May had traditionally been among the strongest month for PET demand in Europe, buy interest remained weak as cold weather conditions kept demand subdued for downstream bottled drinks. This has encouraged buyers to keep procurement at a minimal, to avoid high cost inventories. Summer demand will now most likely be met in June.
European PET production is long with most plants operating at normal levels. The stronger euro exchange rate is also encouraging competitively-priced PET imports from Asia.