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March 26, 2019 06:00 AM

Buyers knock back producers' large hike plans

Buyers knock back producers' large hike plans

David Platt
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    PVC sellers also managed a price rise in line with the proportionate impact on their cost base

    In March, petrochemical feedstock costs increased across the board as a result of rising oil and naphtha costs. During the first three weeks of the month, European standard thermoplastic producers hoped to pass on feedstock cost increases, plus an additional price premium for margin improvement. However, due to buyer resistance, it is questionable whether they will achieve their objective over the month as a whole.

    L/LDPE producers targeted margin-improving price increases at the beginning of the month but had to backtrack on their goals as buyers refused to pay any more than the increase in monomer costs. As a consequence, by the end of the third week L/LDPE prices had increased by just €15/tonne compared with February closing levels.

    In the HDPE sector, where availability is tighter, producers also had to curtail plans to increase prices above the ethylene cost increase. Price increases varied between €25/tonne for blown film to €35/tonne for injection moulding material.

    Polypropylene prices increased in line with the €25/tonne rise in the propylene contract price. A combination of moderate demand and adequate supply limited producers' price ambitions. PVC sellers also managed a price rise in line with the proportionate impact on their cist base of the €30/tonne ethylene contract price increase. Similarly, PET producers wanted a larger price rise to bolster margins but converter resistance limited price increases to the rise in feedstock costs.

    In contrast, polystyrene prices increased by more than the €60/tonne rise in the styrene monomer reference price due to a short supply position.

    Supply adequate

    There were few additional production outages reported during the first three weeks of March with most polymer plants running as normal. The supply situation varied between classes. In the polyethylene category, L/LDPE, HDPE film and HDPE blow moulding availability was adequate. HDPE injection moulding was tighter due to a lack of imports. PVC supply was also more than adequate. European PET material availability has also improved over recent months as several plants have come back on stream following production outages.

    On the other hand, polystyrene was still on the short side and there were restrictions on availability of some specified PP materials.

    Recent supply-related developments are summarised below.

    •             On 27 February, Sabic lifted the force majeure on LDPE deliveries from its plant in Wilton, UK.

    •             PVC production at Inovyn's plant in Martorell, Spain declared force majeure on 19 February due to a problem in waste water handling.

    •             On 13 February, Vestolit informed customers it has lifted the force majeure on PVC, which was declared on 12 November 2018 due to problems with the supply of raw materials to its Marl site.

    •             Polychim's force majeure on polypropylene from its Dunkirk site in northwest France remains in place. There has been no indication when the force majeure, which was declared in mid-January for unknown reasons, might be lifted.

    Demand normal

    In March, demand was in line with market expectations across most polymer classes. However, polyethylene producers reported that some customers were holding back on purchasing due to rising prices. In the PP sector, only demand from seasonal sectors was in line with expectations. Some PS converters used part of the additional stocks they had bought in previous months in anticipation of rising prices.

     

    Click here to read more.

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