The downward price trend for standard thermoplastics, which started during the second half of April, continued into May. Polyolefin feedstock costs were unchanged in May while styrene monomer plunged even further. Supply is now more than adequate to meet fairly lackluster demand.
In May, PE prices fell between €10-30/tonne and PP was down €10-15/tonne, despite a rollover for both the ethylene and propylene contract prices. PET prices were also lower again following further reduction in key raw material costs. Only PVC compound prices firmed, largely as a result of the severe shortages of titanium dioxide.
PS prices plummeted once more after the styrene monomer reference price fell by €245/tonne. Again, producers did not pass through the full cost reduction to processors.
Material availability has improved during the second quarter as most European refinery maintenance so far this year took place in the first quarter, with the second quarter seeing a return to full production. Producers are well stocked and there is more than sufficient material available across all polymer classes. The stronger euro exchange rate is also encouraging a larger volume of imported material from Asia and the Middle East into Europe.
A summary of the latest supply-related developments is presented below:
• Dow Chemical announced 12 May investments totaling $4 billion into the expansion of PE, in particular, over five years. While most of these investments are set to be made in the USA, Dow also announced the construction of a new 450,000 tonnes/year HDPE line in Europe producing high-quality grades for pressure pipes and fittings as well as caps and closures.
• Since 6 May Total's refinery facilities are successively being shut down in Feyzin, near Lyon, France due to a large strike, with employees demanding better working conditions. An end to the walkout was expected by 19 May.
• Reconstruction of Total's facility in Carling, France, which started in 2013, has been officially completed and inaugurated.
• Only one of Huntsman's two MDI production plants in the Netherlands resumed operation early May following maintenance programs. Huntsman has encountered "an unforeseen technical issue" that has prevented the second MDI unit from restarting. No precise date for a restart could be given.
• German plastic producer Covestro confirmed 28 April that force majeure is declared on the PU precursor MDI (polymer). The reason for this is an unforeseen failure at its plant in Brunsbüttel, Germany. It is unclear when production of the isocyanate can be resumed.
• PVC manufacturer Vynova Group declared force majeure 21 April on sodium hydroxide from Runcorn, UK. The reason is an "unforeseen disruption" in the plant for ethylene dichloride (EDC) at the site. As a result, PVC production in Wilhelmshaven, Germany, which is supplied by Runcorn with EDC precursor, could be affected.
In early May, polymer demand was lower than would normally be expected. Plastic processors were for the most part well stocked and in no hurry to buy. Many were waiting to see whether prices fell further before replenishing inventories.
Crude oil prices edged higher in May due to an expectation that the OPEC meeting in Vienna 25 May will agree to further control of output. On the other hand, as the return of cracker capacity arrives, there could be downward pressure on June contract prices. Furthermore, the first half of June includes the public holiday for Whitsun, which may mean that demand gets off to a slow start.
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