Polymer demand picks up as holiday season comes to end

L/LDPE

The September ethylene contract price settled €30/tonne higher at €995/tonne as a result of planned steam cracker plant outages plus the effects of the recent hurricane catastrophe on the US Gulf Coast. In response, L/LDPE producers aimed to at least recover the cost increase as well as broaden their profit margins. By mid-month, L/LDPE prices were up by around €50-55/tonne compared with the previous month.

Supply remains tight and stocks are low. Several polymer plants are down for planned and unplanned maintenance work. There is also a lack of imported LLDPE material into Europe. Furthermore, the closure of the Rhine Valley railway line in the south of Germany and the resultant shortage of road transport capacities resulted in widespread logistic bottlenecks and delivery delays.

Demand picked up as the holiday season came to an end.

HDPE

In September, the ethylene contract price settled €30/tonne higher at €995/tonne as a result of planned steam cracker plant outages plus the effects of the recent hurricane catastrophe on the US Gulf Coast.

In response, HDPE producers aimed to at least recover the cost increase as well as broaden their profit margins. However, by mid-month, HDPE blown film and blow moulding prices had risen by €30/tonne, which was line with the cost increase, while injection moulding grades were up by around €35/tonne compared with the previous month.

The HDPE sector is in a better balance than L/LDPE with fewer plant outages and adequate stocks for most grades. In addition, there is a steady supply of imports from the Middle East.

Demand was good across most end-use sectors as converters returned to work after the holidays.

PP

In September, the propylene contract price settled €40/tonne higher at €830/tonne due to rising naphtha costs, announced maintenance turnarounds at refineries and the effects of the recent hurricane catastrophe on the US Gulf Coast.

PP producers aimed to at least recover the €40/tonne cost increase plus an additional amount for margin improvement. By mid-month, however, PP prices were up by around €40-60/tonne compared with the previous month.

For homopolymers, material availability was adequate and prices increased in line with the higher monomer cost. Copolymers, on the other hand, faced tighter supply and prices increased by €60/tonne. Supply tightened as major producers redirected material across the Atlantic due to shortages caused by Hurricane Harvey.

As demand improves during September after the holidays and supply tightens, further price increases could be on the cards during the month.

PVC

In September, the ethylene contract price increased by €30/tonne over the previous month, which meant a €15/tonne rise in the PVC cost base from ethylene. PVC producers sought a price increase for base material which at least covered the higher cost of ethylene, and price increases for PVC compounds of up to €50/tonne.

By mid-September, PVC base material prices were up by €15/tonne compared with the previous month with PVC compound prices up by €20-25/tonne. PVC compound prices remain under pressure from tight supplies of titanium dioxide and plasticisers.

Most PVC production plants are operating without disruption, but Shin-Etsu's force majeure in Pernis, the Netherlands, remained in place. Delivery delays were being experienced due to the closure of the Rhine Valley railway line.

PVC demand was normal after the holiday period came to a close.

PS

The September styrene monomer reference price soared €190/tonne as a result of growing supply worries. There was significant styrene supply disruptions in the US due to Hurricane Harvey which meant export cargoes destined for Europe were delayed. In addition, scheduled and unscheduled plant outages in Europe are further tightening supply, including the force majeure at Total's Gonfreville styrene unit in France.

By mid-September, PS producers were managing to pass through the cost increase to buyers with GPPS prices up around €190/tonne. The premium to the high impact material remained at around €100/tonne following a €25/tonne rise in the cost of butadiene.

Polystyrene production was naturally affected by the reduced availability of styrene and ongoing plant maintenance work is also restricting supply.

In early September, PS demand increased in line with expectations after the holiday period.

PET

In September, bottle-grade PET prices continued their upward trend as a result of supply tightness and rising feedstock costs. The final European September paraxylene contract price increased €15/tonne over August. The European monoethylene glycol contract for September had not yet settled at time of writing but was also expected to increase.

PET sellers successfully passed through the higher raw material prices to converters as supply tightness continued. However, the Lotte Chemical PET plant at Wilton, UK returned to production in September after an unplanned outage and aimed to return at least 70% of allocated volumes to customers during the month. There are still ongoing market concerns about JBF Industries shutting down its production facility in Geel, Belgium due to liquidity problems.

PET demand slowed in September as the beverage bottle-making season drew to a close.