Feedstock, polymer prices set to rise

April outlook

As crude oil and naphtha costs continued to rise during the first three weeks in March, further feedstock cost and polymer price increases may be on the horizon.

L/LDPE

The March ethylene reference price settled €30/tonne higher as a result of rising crude oil prices and lower availability. L/LDPE producers hoped to increase prices by more than the monomer cost to improve their profit margins. However, the larger price hike attempts were met with resistance from buyers.

Overall, L/LDPE prices had increased on average by around €15/tonne by mid-March, but further price increases were expected to be implemented towards the end of the month. Indeed, there were reports that some sellers had closed order books early to lend support to calls for higher prices.

Demand was in line with expectations and there were no major supply restrictions in the market, despite some production outages. LDPE supply was adequate while LLDPE availability was more plentiful. However, LLDPE imports were not quite as abundant as in previous months.

HDPE

The March ethylene reference price settled €30/tonne higher as a result of rising crude oil prices and lower availability. HDPE producers announced plans to increase prices by up to €50/tonne to improve their profit margins.

Unlike their L/LDPE counterparts, HDPE saw stronger price gains during the first three weeks of March. Blown film grades registered gains of €25/tonne, blow moulding prices matched the ethylene cost increase while injection moulding saw gains of €35/tonne. Further price increases were expected towards the end of the month. Indeed, there were reports that some sellers had closed order books early to lend support to calls for higher prices.

Blown film and blow moulding material was adequately supplies but injection moulding was tighter due to lower import volumes. Demand was steady with buyers holding back on purchasing due to rising prices.

PP

The March propylene reference price settled €25/tonne higher from February largely as a result of rising naphtha costs. In response, polypropylene producers asked for price increases that matched the rise in monomer costs and there were also some hike requests larger than propylene. However, the larger hike attempts met resistance from buyers and producers were forced to lower their demands.

PP prices increased on average during the first three weeks of March in line with the feedstock cost. A combination of moderate demand and adequate supply limited producers' price ambitions. Material availability was normal for standard grades but certain speciality material supply shortened,

Demand was subdued in March with buyers ordering only what material was needed for current output. Buyers replenished their stocks when prices were lower and there was less buying interest in March.

PS

In March, the styrene monomer reference price saw a more significant rise, up €60/tonne over the February settlement. PS sellers responded by announcing planned price hikes in excess of the cost rise for margin improvement. One major producer, for example, announced a €100/tonne price increase for general-purpose polystyrene (GPPS) material. The surcharge for high-impact material (HIPS) remained at €100-120/tonne following the small rise in the cost of butadiene (up €30/tonne).

GPPS prices have actually increased by more than styrene monomer costs due mainly to short supply during the first three weeks in March. While production is no longer affected by unscheduled outages such as the Terneuzen plant in the Netherlands, material availability remains low and the approaching maintenance turnaround season is likely to further restrain supply.

Meanwhile, polystyrene demand was in line with market expectations.

PVC

Ethylene, a key building block for PVC production, saw a €30/tonne rise in the March contract price settlement compared with February. PVC producers responded by asking for price hikes in excess of the proportionate €15/tonne rise in the C2 contract price for margin improvement. In some cases, price increases of up to €35/tonne were tabled. PVC producers attempted to justify the planned price hike by pointing to rising global PVC process and a lack of imported material.

However, buyers were reluctant to pay any additional price premium over and above the proportionate cost rise. PVC prices settled on average around €15/tonne higher during the first three weeks of March over February levels.

While several PVC plant outages affected production levels, there was generally sufficient material available from local producers, while import volumes were not significant.

PET

In March, paraxylene (PX) and monoethylene glycol (MEG), the key PET feedstocks, saw price increases, The European March paraxylene contract price fully settled at €995/tonne against €960/tonne in February, a rise of €35/tonne. The March MEG contract price was also expected to rise due to rising production costs and thin margins.

PET producers called for price increases exceeding the feedstock cost rise to improve margins. However, most buyers resisted any surcharge over the proportionate cost increase and prices increased by around €30/tonne.

European PET material availability has improved over recent months after several plants came back on stream following production outages. PET import volumes have continued to decline as the cost of imported material has increased.

PET demand started to pick up as would normally be expected at the start of the spring bottle-making season.