In November, L/LDPE contract prices fell in line with the €30/tonne reduction in the C2 reference price.
Material availability returned to more normal levels as several production plants resumed operations following outages and producers ended production cutbacks. However, producers are expected to slow down output by mid-month in time for customers to begin their winter break. One producer is planning to switch off all C4 material to take off some of the pressure.
While PE film demand started to return to more normal levels in November it is still below producers’ expectations. The widespread criticism of plastics in the media appears to be having a negative impact on market sentiment.
For December, following a €10/tonne rise in the ethylene contract price L/LDPE prices can be expected to either remain unchanged or show a small rise.
In November, HDPE blow moulding, injection moulding and blown film product prices matched the €30/tonne reduction in ethylene costs.
Material availability was good in November as most European production plants operated as normal after several plant outages in recent months. There was also a significant volume of imported blow moulding and injection moulding material available from North America.
Polymer demand was better last month as converters bought additional material ahead of Christmas business. Order intake for blow moulding product from the automotive industry continued to disappoint while construction sector activity was better than expected.
For December, the most likely scenario is for a price rollover. While the December ethylene contract price settled €10/tonne higher demand is expected to dwindle in the run-up to the Christmas break. There will also be plentiful supply and continued import pressure.
In November, PP homopolymer film and homopolymer injection prices declined in line with the €30/tonne reduction in the propylene contract price. Copolymer injection prices declined by slightly less than the C3 reference price as the impact of force majeure at LyondellBasell’s Carrington UK plant began to have an effect on supply.
Most other PP production plants operated as normal and supply was more than sufficient to meet demand.
Order intake saw a welcome improvement last month although volumes were less than would normally be expected for the time of year.
The most likely outlook for December is for unchanged prices after the propylene reference price settled €5/tonne higher. Demand is likely to be very low as converters take a long winter break. Producers are expected to respond by reducing operating rates to very low levels.