Low demand and supply cuts stabilise prices

In August, standard thermoplastic prices remained largely unchanged from the previous month. There was the usual summer lull in demand, while supply was also impacted by the unusually hot summer weather.

Polyethylene producers had to settle for a price rollover in August in line with ethylene costs amid thin trading. LDPE was well supplied but LLDPE and HDPE were tighter due mainly to a limited volume of imported material. PVC prices were also rolled over in line with the ethylene reference.

Polypropylene producers wanted to factor in the €8/tonne rise in propylene costs but low demand meant that prices largely remained unchanged.

Polystyrene producers passed on the €20/tonne rise in styrene monomer costs onto their customers in full.

After the steep supply-driven price increases in recent months, PET prices softened in August as a result of improved local material availability and a growing wave of competitively-priced Asian imports.

Supply tightens

In August, material availability varied across polymer classes. While there was sufficient material available given the low demand level, LLDPE, HDPE and PP supply was tighter than LDPE and PS. While PET supply has improved after the production issues at two major plants were resolved, material availability remains limited.

Further upstream, the extreme heat wave in Europe impaired refinery and cracker activity during July and August, and as a result, less feedstock was produced.

A number of producers called force majeure or announced production issues during August:.

• Covestro declared force majeure on styrene deliveries from its joint venture Lyondell Covestro in Maasvlakte, the Netherlands 1 August after a power outage.

• ExxonMobil halted their steam cracker in Port Jerome-Gravenchon, France due to an “internal electrical failure” late July.

• The Naphtachimie stream cracker at Lavera in southern France, which has been running at reduced capacity since the end of June following a technical issue, will undergo maintenance in September.

• A fire broke out at one of Alpek's PTA facilities in Mexico mid-July. Production of the PET precursor had to be shut down. It is not yet clear when production can be put back into operation.

On a positive note, several plants came back on stream.

• Total's Gonfreville steam cracker in northwest France was back in operation after maintenance. According to sources, the cracker was expected to end maintenance at the end of June, but the re-start was delayed until the end of July.

• JBF Industries lifted the force majeure on PET produced in Geel, Belgium mid-July.

• BP lifted force majeure for PTA from its plant in Geel, Belgium towards end July.

• Several PVC plants in Eastern Europe restarted mid-August after maintenance shutdowns.

Demand very quiet

August saw the usual seasonal lull in polymer demand as many producers and converters took their summer holiday. Southern European markets were particularly quiet, but there were signs of a pickup in Northern Europe towards the end of the month. PET continued to benefit from the unusually hot weather driving beverage bottle demand.

Outlook for September

European September contracts for ethylene and propylene are expected to settle at either a rollover or a small increase from August. The indicators that determine contract prices are positioned in opposite directions. There is an expectation of tighter supplies due to upcoming cracker maintenance and firmer spot prices support prices. Meanwhile, bearish feedstock naphtha and upstream crude are seen weighing on them. Styrene monomer is considered likely to see a further rise due to production outages.

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