The European ethylene contract for August settled at a rollover from July at €1,135/tonne sending flat indications to downstream products. Indeed, L/LDPE markets were very calm last month with subdued demand and no material shortages. As a result, prices were largely settled unchanged from July.
Seasonal demand was very quiet, especially in Southern Europe, due to the peak holiday season. Northern Europe demand started to recover towards the end of the month. This encouraged producers in the south to dispatch excess stock to the north at competitive prices.
The ethylene market is currently well supplied but there are expectations of tightness on the horizon as a few crackers undergo maintenances in the August-September period. The polyethylene market is also well supplied for most grades. LLDPE imports remain short but high-quality grades are more plentiful.
The European ethylene contract for August settled at a rollover from July at €1,135/tonne sending flat indications to downstream products. Indeed, HDPE markets were calm last month with subdued demand but material tightness was reported in some sectors. However, HDPE prices were mostly settled at the same level as in July.
Seasonal demand was very quiet, especially in Southern Europe, due to the peak holiday season. Northern Europe demand started to recover towards the end of the month.
The ethylene market is currently well supplied but there are expectations of tightness on the horizon as a few crackers undergo maintenances in the August-September period. HDPE was the only PE grade expected to remain tighter because of supply constraints faced earlier by a producer, weak imports, maintenance turnarounds in central Europe and heat restrictions on production.
The propylene contract price settled a touch higher in August, up €8/tonne to €1,040/tonne. Signs of tightness continued through the month as spot prices remained at a premium to the industry-settled contract price. While PP producers attempted to factor the small feedstock price into their negotiations with buyers, most deals were settled on a rollover basis.
In August, PP demand was weak due to the holiday season, and especially slow in Southern Europe. There were however signs of life returning to Northern European markets as the month progressed.
PP supply is tighter than for PE and inventory levels are low. The shortage of propylene continues while the heat wave has further disrupted production. In addition, the arbitrage window for PP has become much more attractive and shipments of the material are heading for North America.
The August styrene monomer reference contract price settled €20/tonne higher due to tightening supply as a result of production issues. Styrene spot prices soared due to a production issue at LyondellBasell/Covestro's jointly owned propylene oxide styrene monomer unit in Maasvlakte in the Netherlands and Covestro's force majeure declaration which followed. There were also delays in styrene imports from the US into the EU due to a production issue in the US.
Polystyrene producers were keen to increase PS prices at least in line with the feedstock cost rise and for the most part, this target was achieved. The premium to the high-impact material remained at Ä90-100/tonne.
PS demand was slow in August due to the seasonal summer lull. However, some converters attempted to pre-buy additional stock fearing styrene will become even more expensive in September.
The rollover for the August ethylene contract price led to European producers attempting the same for PVC August contract price negotiations. However, buyers pushed hard for concessions; arguing that PVC producers had raised their margins in recent months and there was no shortage of material. In reality, most deals were settled on a roll over basis with only minor concessions given to buyers who didn't receive a full discount in the previous month.
The European PVC market was quiet last month as demand dropped due to holidays and a slowdown in construction activity.
Material availability improved as PVC plants in Eastern Europe restarted after maintenance. Exports to Turkey were down due to the lira's ongoing sharp fall undermining buying interest. Imports from America are set to arrive, adding more downwards pressure to an already soft market.
Following several months of sharp price increases as a result of supply shortages, there are signs that European PET prices are softening. Spot PET prices fell during August given mounting pressure from competitively-priced Far East Asian material which steadily decreased during the month. PET contract prices also came under pressure with deals closing around €20/tonne down on July levels.
PET supply shortages eased somewhat after JBF Industries lifted force majeure on PET output from its Belgium plant while BP also lifted force majeure on its PTA production. However, the recent explosion at the Petrotemex PTA plant in Mexico is causing anxiety as the producer supplies feedstock to European companies.
The heatwave across Europe has seen demand for beverages and PET remain strong, holding back the downturn that is typically seen at this time of year.