The ethylene contract price for February was fixed €20/tonne higher following a rise in naphtha costs. L/LDPE producers initially sought to raise prices more than the cost rise but by mid-month prices were increasing less than the rise in ethylene costs. LDPE film grade prices were trading €10/tonne over the January closing level while standard LLDPE C4 grades remained unchanged.
LDPE supplies in Europe are balanced while supply of C4 material is longer with plentiful availability of imports. Higher grade LLDPE material supply, on the other hand, is better balanced. While the European ethylene market is balanced at the moment, the feedstock supply situation could deteriorate due to the upcoming cracker maintenance turnarounds in March.
Demand was well below normal as many buyers had stocks remaining after strong buying at the end of last year.
In February, HDPE suppliers attempted to raise prices by more than the €20/tonne increase in ethylene costs in order to widen profit margins. However, by late-month HDPE blown film, blow moulding and injection moulding prices were increasing by €10/tonne, around half of the feedstock cost rise.
The European HDPE sector is well balanced with adequate quantities of material available both from local suppliers and imports. However, availability of imported material from the Middle East was reported as lower than in recent months during early February. The balanced market situation could however tighten due to the upcoming cracker maintenance turnarounds in March.
Demand was lower than normal as many converters ran down stocks after strong buying towards the end of the last year. With crude oil prices easing, HDPE prices could come under pressure in March.
The February propylene contract price settled €28/tonne higher as a result of sharp gains in US prices and concern over tightening supplies. In response PP suppliers announced planned price hikes above the cost rise. Towards end February homopolymer film and homopolymer injection material registered gains of €40/tonne with copolymer injection prices rising around €35/tonne.
While there was still sufficient material available to meet demand, polypropylene supply has shortened since the start of the year. The plant outages at Feluy in Belgium, Gonfreville in France and Botlek in the Netherlands have evidently curtailed material availability. Polypropylene is expected to remain relatively tight following the recent plant outages and the start of the cracker maintenance season this month.
Demand was lively through February due to the prospect of tighter supply and even higher prices over the coming months.
The February styrene monomer (SM) reference cost increased substantially due to a sharp increase in SM spot prices driven by supply worries. The US major Cosmar had extended its force majeure, while in Europe turnarounds are ongoing and more units are expected to start maintenance works in the coming weeks.
Polystyrene producers managed to pass through the €130/tonne cost rise in full in some cases, but overall general-purpose PS notations increased by slightly less than the cost rise. The surcharge to high-impact material remained unchanged at around €100/tonne after the latest €50/t increase in the cost of butadiene.
Demand was low in view of the high prices and converters ordered just enough material to cover their current production needs. Material availability improved slightly during February as the low demand started to swell producers' stock levels.
In February, a combination of tightening supply and lively demand allowed PVC producers to achieve a much-needed margin improvement. The €20/tonne rise in ethylene costs was equivalent to a €10/tonne rise in the PVC cost base. Titanium dioxide costs also continued to exert upward price pressure for unplasticised PVC compounds. Plasticiser costs have settled down and hence plasticised PVC compound prices registered slightly lower gains.
PVC profile demand was very lively through February across Europe, but order activity from other sectors was at normal levels.
While there was sufficient material around, European PVC markets tightened early February due to a shortfall in production in certain parts of Europe and a reduction in producers' stock levels. Turkish PVC markets face even stronger supply pressure as they continue to look for material from the tighter European market.
European bottle-grade PET prices are edging higher on a combination of rising feedstock contracts, buoyant demand and a scarcity of supply.
The February monoethylene glycol contract price ticked €33/tonne higher as a cold snap in Europe increased the demand for anti-freeze. The February paraxylene contract price is expected to settle around €20/tonne higher. Hence, the PET cost base was expected to be around €25/tonne higher last month.
PET availability is tending low. Imports remain scarce since prices in the Far East are rising and at the same time, preparations are being made for plant maintenance in Europe, with the build-up of stocks taking quantities off the market. PET resins maker Equipolymers is expected to conduct a four-week planned maintenance starting 1 March at its Schkopau, Germany plant, which will lead to tighter availability in Europe.