European standard thermoplastic prices have remained largely unchanged since the beginning of the year. Polyethylene and polypropylene feedstock contract price settlements provided no stimulus for price change.
Styrene monomer (SM) and bottle-grade PET raw materials are the only feedstock costs to have changed compared to closing December 2019 levels. Polyethylene and polypropylene producers announced quite hefty price increases both in January and in February despite the unchanged cost base. They cited an urgent need to broaden margins after a long period of under-performance. However, the market supply-demand dynamics were simply unhelpful to their cause, and in most cases they were rarely successful in raising notations. Within polyolefins, only LLDPE film, HDPE film and PP homopolymer injection material managed small price increases since the turn of the year.
The styrene monomer reference price has increased €114/tonne since the New Year. The SM cost has been rising as a result of a sharp increase in benzene and planned and unplanned production outages, which limited European plants’ output.
In January, general-purpose polystyrene prices more or less tracked the €64/tonne rise in SM costs, which was almost in line with what producers were targeting. However, during the following month, due to over-supply, producers’ price targets of €70-100/tonne were not met in full as GPPS and HIPS prices increased in line with the €50/tonne SM cost increase. PVC base resin producers will continue to push hard for higher prices late February and into March as they maintain that profit margins have been squeezed to unacceptable levels.
PVC producers were largely unsuccessful in raising notations during the first two weeks of February as they had hoped for, but a small rise towards end February was evident. Rigid and flexible PVC compound prices dipped slightly in January due to lower additive costs.
January contract prices for paraxylene and monethylene glycol, the key precursors for PET production, were only settled mid-February amid very difficult negotiations. Overall, the PET cost base increased by almost €20/tonne. Bottle-grade PET prices generally remained stable through January while February PET prices also haven’t change by very much.
Mixed supply picture
Ethylene and propylene production ran at a high level while polyolefin producers maintained production cutbacks in view of the low demand. There were also a few production issues limiting PP production. For styrene monomer, planned and unplanned production outages limited plants’ output, but polystyrene supply remained high. PET supply also remained on the high side.
There were continued high import volumes of HDPE injection and blow moulding material from the US and a steady inflow of PET imports from Asia. Several maintenance turnaround at cracker and polymer plants are planned for March, which could restrict material availability.
Demand has picked up steadily for most polymer classes since the turn of the year following several months of disappointing sales. However, some buyers were still holding back from purchasing more than was absolutely required given the expectation of possibly lower prices to come in March.
In March, the ethylene and propylene contract prices are expected to settle lower as a result of downward movement in crude oil and spot prices. Producers can be expected to continue pushing for higher prices, as in their opinion, margins are too low. The maintenance turnarounds scheduled for March should tighten material availability. On the other hand, buyers will resist any attempt to raise prices, especially if costs continue to fall.