Feedstock supply tightens following plant outages

In August, European standard thermoplastic prices saw very limited movement in mostly balanced markets. The ethylene and propylene contract prices for August were unchanged from the previous month, while the styrene monomer reference price settled down €30/tonne, as a result of lower benzene costs. Material availability tightened following a number of unplanned plant outages at the beginning of the month. At the same time, demand was particularly good for the holiday month of August.

Some polyolefin grades edged higher in August, despite the ethylene cost rollover. LDPE and HDPE injection moulding grade prices increased by €5/tonne with LLDPE and other HDPE grade prices remaining unchanged. Polypropylene prices increased €10-15/tonne on tighter supply.

Polystyrene prices fell €10/tonne, less than the €30/tonne reduction in styrene monomer, due to market concerns about tightening supply. Base PVC prices were unchanged, but PVC compound prices remain under pressure from rising additive costs. Bottle-grade PET prices edged upward by €10/tonne, in line with the rise in feedstock costs.

Supply tightens

Feedstock availability tightened once more in August due to numerous unplanned outages at European cracker plants. Principal among these was the declaration of force majeure on supplies of ethylene from Shell's Moerdijk steam cracker in the Netherlands. The declaration stems from a lack of supply of feedstock naphtha to Moerdijk from Shell's Pernis refinery, also in the Netherlands, which suffered a fire in late July.

A summary of the latest supply-related developments is shown below:

• PET producer JBF Industries shut down its production facility in Geel, Belgium due to liquidity problems. In communication issued to customers on 7 August, the company stated that it assumes the standstill will only be short-lived and production will be restarted soon.

• Styrenics major Styrolution is expected to conduct maintenance works at one of its lines in Antwerp, Belgium, in the third quarter of this year, according to industry sources.

• LyondellBasell/Covestro's propylene oxide styrene/monomer unit underwent about five days of maintenance work at the beginning of August.

• At Total's site in Carling, France, production of LDPE grades for medical applications was shut down 12 August as decomposition had occurred in one of the reactors.

• After the fire in an acetylene production plant at the Marl Chemical Park in Germany 11 August, Ashland declared force majeure on 1,4-butanediol (BDO), tetrahydrofurane (THF) and formaldehyde.

• Shell Nederland hopes to put its Pernis refinery back into service in Rotterdam at the end of August. What is heard coming out of the Netherlands is that some plants have already restarted. However, for the petrochemical plants directly affected by the power outage on 30 July, the authorities seem to still not have given permission for a re-start. The force majeure for many materials, including propylene, will remain for the time being

• Effective 3 August, Shin-Etsu declared force majeure for supplies of its “K67” PVC grade from Rotterdam  Shin-Etsu's PVC plant at Pernis in the Netherlands had to be shut down following the fire at the Shell refinery there.

Demand brisk

Demand was better than would normally be expected during the peak of the holiday season. Many buyers sought additional material in anticipation of higher September notations.

September outlook

Naphtha and spot monomer costs have strengthened in recent weeks due to firming demand and unplanned operational issues at several European crackers. September monomer contract prices seem set to rise. For example, market indicators suggest a €20-30/tonne increase in the September ethylene contract price. 

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