In June, L/LDPE sellers were obliged to grant price concessions far in excess of the €35/tonne reduction in the ethylene contract price as a result of swelling supplies. Both LDPE and LLDPE prices dropped by around €75/tonne.
In July, feedstock costs were down a further €50/tonne. However, the supply surplus eased somewhat and price rebates were smaller. LDPE prices fell in line with the lower monomer cost while LLDPE prices were down only €40/tonne. Producers were determined to recover some of the lost margin on LLDPE during the previous month and did not pass on the full cost reduction.
L/LDPE demand was lively during early summer as falling prices encouraged buyers to replenish stock levels. However, many buyers held back from making additional purchases until July as feedstock markets indicated further price cuts were likely.
In June, HDPE prices fell by slightly less than their L/LDPE counterparts, but still considerably more than the €35/tonne fall in the ethylene reference price. Blow moulding material fell €60/tonne with the less readily available blown film and injection moulding grades were down just €40/tonne.
Last month, HDPE price development varied once again between the major product groups. Blow moulding and injection moulding prices fell €50/tonne and €60/tonne, respectively, while blown film prices fell by €40/tonne.
HDPE supply from local producers was generally less widely available than L/LDPE, possibly as a consequence of previous maintenance outages at major production plants. Nevertheless, a plentiful supply of imports supplemented any supply shortfall of standard grades.
HDPE demand was good through early summer with lower prices encouraging sales. Demand was even livelier in July as prices fell further.
In June, the propylene reference price fell €40/tonne, reflecting a better supply situation and lower naphtha costs. Polypropylene prices fell more than the cost reduction, despite PP producers' attempts to hold onto some of the cost advantage to improve their margins. A steady inflow of imported material from the Middle East and Asia did not assist their cause. Copolymer injection prices fell by €55/tonne with homopolymer film and homopolymer injection prices down by €50/tonne.
Following a further fall of €50/tonne in the July propylene contract price, polypropylene prices fell further. Homopolymer material saw prices fall in line with the feedstock cost reduction. Copolymer prices fell by only €40/tonne with the material availability becoming tighter.
PP demand was good for the time of year with buyers encouraged to enter the market by the falling price trend.
PVC producers managed to restrict price discounts for base material to below ethylene costs over the last two months. PVC base material prices fell just over €30/tonne in June and July compared with a proportionate fall of €42.5/tonne in the cost of ethylene.
However, very tight market conditions for C4-based plasticisers, as well as continued shortages of titanium dioxide, led to further price increases for both rigid as well as flexible PVC compounds. The availability of plasticisers is even tighter than for titanium dioxide and several compounding lines have had to shut down.
While there are shortages of plasticised PVC compounds, base material availability has improved in recent months with most plants now operating as normal following maintenance programmes. However, German PVC producer Vinnolit declared force majeure for S-PVC from its site in Knapsack, Germany due to technical issues.
Despite decreasing ethylene and benzene costs, the styrene monomer (SM) reference price moved upwards in June following rising spot prices. Following protracted negotiations, the average SM contract price increased €42.5/tonne to €1,172.5/tonne. PS producers were unable to pass on the full cost increase to customers and GPPS prices increased by €30/tonne. The price premium for high-impact material increased to €100/tonne.
SM costs continued to rise in July despite another reduction in ethylene and benzene costs. This was explained by supply concerns following a major plant´s outage in the Netherlands. GPPS and high-impact grade prices increased in line with the €27.5/tonne increase in the SM reference price.
There is an ample supply of material with most PS plants operating as normal. Demand was lively in June ahead of the usual summer lull during July and August.
European bottle-grade PET prices have risen by €25-30/tonne since the beginning of June as a result of good summer sales and tighter supply. Feedstock costs have actually fallen with paraxylene costs down by €45/tonne in both June and July. Monoethylene glycol prices were down €10/tonne in June but were firmer last month. As a result, PET producers enjoyed a welcome boost to their under pressure profit margins.
PET supply has tightened over the last couple of months due to higher demand and plant maintenance work and logistics issues facing a number of suppliers. Also, the inflow of Asian material, which was so plentiful a short time ago, has started to dry up, at least for the time being.
The good summer weather, particularly in southern Europe, led to increased PET demand for drinks bottle production.