L/LDPE
The July ethylene reference price fell by only €15/tonne, much less than market participants had originally expected. Crude oil and naphtha prices began to stabilise in the days before settlement following two months of falling notations.
L/LDPE producers fought hard to prevent any further erosion to their under pressure margins but had to conceded small price rebates to converters. L/LDPE prices declined by €5/tonne during the first half of the month with pressure for higher rebates likely to mount towards end July.
Producers were pointing to limited material availability, a need to replenish stock levels and to upcoming maintenance turnarounds. There were even reports that some producers had placed customers on allocation.
Demand was subdued with the holiday season approaching and the possibility that prices could fall further during the second half of the year.
HDPE
The July ethylene reference price fell by only €15/tonne, much less than market participants had originally expected. Crude oil and naphtha prices began to stabilise in the days before settlement following two months of falling notations.
HDPE producers fought hard to prevent any further erosion to their under pressure margins but had to conceded small price rebates to converters. HDPE prices declined by €5/tonne during the first half of the month with pressure for higher rebates likely to mount towards end July.
Producers were pointing to limited material availability, a need to replenish stock levels and to upcoming maintenance turnarounds. There were even reports that some producers had placed customers on allocation.
Demand was subdued with the holiday season approaching and the possibility that prices could fall further during the second half of the year.
PP
In July, the propylene reference price settled on a rollover basis. Initially, PP producers called for price increases to bolster their flagging profit margins. However, demand was simply not strong enough to support an across-the-board price increase and material availability was starting to rise.
By mid-month, all PP classes were showing unchanged prices from the previous month. Producers were only able to push prices forward for small orders of specialty material where supply was rather more limited.
Material availability was fairly balanced early July but there were signs that supply was starting to increase as the month progressed. There were reports of ‘special offers' appearing for certain grades.
As the holiday season approached, demand started to weaken. Also, the possibility that prices could fall further during the second half of the year restrained order intake.
PS
The July styrene monomer (SM) reference price was fixed €50/tonne down on the previous month's settlement as a result of falling upstream costs and an impending summer lull in demand.
PS producers attempted to pocket as much of the cost reduction as they could but by mid-July had given away between €30-40/tonne of the €50/tonne SM cost reduction. They pointed to prices having increased by less than the SM cost rise in the previous month as justification for limiting July price rebates.
Demand was subdued with converters limiting purchasing volumes ahead of the summer holidays in August. There was also an expectations for a modest fall in August styrene and polystyrene prices.
Supply was plentiful even though import offers remained unattractive. Some producers also offered competitive prices to minimise stock accumulation ahead of the summer holidays.
PVC
In July, the €15/tonne reduction in the ethylene reference price implied a proportionate €7.5/tonne fall in the PVC production cost base. Initially, some PVC producers sought small price increases to stretch their profit margins. However, others were settling for a price rollover, which at least gave them some margin improvement. By mid-month, most contracts were being settled unchanged from the previous month. However, notations could slip towards end of the month should demand stagnate further.
Material was sufficient to meet demand although there were production restrictions for a short while in France late June as the plants operated by Arkema and Kem One at Saint-Auban came to a standstill due to a strike.
Demand was fairly muted as the holiday season approached. However, pipe sector demand was reported to be holding up better than for profiles.
PET
The European PET market was much calmer in July following the turbulence of the past two months brought about by PTA feedstock shortages and supply tightness. PET prices were reported as being more stable by mid-month following the price surge of around €150/tonne in June.
The price increases of recent months have started to bear little resemblance to feedstock cost development. The limited supply means that sellers can now get much higher prices than can be justified from pure cost increases and earn a much needed margin upturn.
Material availability remained tight, although there were reports of a slight easing in the supply situation. However, with no help from Asian supplies, it will be some time before material availability returns to normal.
Meanwhile, PET demand continues to boom with the hot summer weather driving beverages demand.