European standard thermoplastic prices are closely following feedstock cost developments in well-balanced markets.
In October, standard thermoplastic prices continued on an uptrend following a further rise in raw material costs and a tightening supply situation.
L.LDPE prices settled with a triple-digit increase over September levels, well above the €65/tonne rise for the ethylene contract price and supported by more stringent supply restrictions. HDPE availability was not quite so tight as in the L/LDPE sector and so price increases were in the range of €70-75/tonne. PP and PS prices also registered gains in line with the respective increase of €60/tonne in the cost of propylene and styrene monomer. PET and PVC upstream costs also increased in October, yet producers mostly failed to achieve much-needed margin gains because of persistently weak demand.
Standard thermoplastic prices fell across the board during the first week of November largely because of a reduction in feedstock costs. In well-balanced markets, prices are expected to continue on a downward trajectory during the rest of the month.
L/LDPE and HDPE prices are falling close to the €45/tonne reduction in the cost of ethylene. PP prices are also down in line with the €40/tonne fall in the propylene reference price.
PVC prices are down following a pro-rata reduction of €22.5/tonne in the cost base following the €45/tonne reduction in the cost of ethylene. PET producers remain under severe margin pressure with very low demand and rising costs. PET prices are expected to decline this month after the October paraxylene contract price dell by €50/tonne.
In October and into early November, polymer demand remained well below what would normally be expected for the season. In view of the economic uncertainty around Europe and the weakness in most end-use markets, converters are buying just sufficient material to meet their immediate production needs. Converters also reacted to the rising price trend by calling off stocks which had been built up in their warehouses during the summer. Polymer demand is unlikely to recover during the rest of the year.
In October and into November, material availability for L/LDPE and PP tightened as producers reduced operating rates even further so as to avoid a build-up of excess stocks. Producers of other polymer classes have also maintained reduced plant operating rates.
In the PET sector, the first plant shutdown was observed in September and JBF Industries announced the closure of one of its PET lines at Geel, Belgium in October for economic reasons. Imports have maintained a strong presence in the PET sector. Imports of L/LDPE, PP and PVC are less widely available than in previous months.
A selection of the latest supply-related developments are summarised below:
- Trinseo announced that it will stop making styrene and ethylbenzene at its plant in Terneuzen, the Netherlands on 1 November
- JBF Global Europe announced the temporarily shut down of one of its PET plant at Geel in Belgium in October because of high costs and weaker demand
- BP announced force majeure for propylene and ethylene production at its facility in Germany on 6 November
- BASF announced a temporary shutdown for styrene at its German production facility on 24 October.
Polymer prices are expected to continue falling in step with the feedstock cost reduction over the rest of November. Demand will remain well below normal levels until the end of the year, and producers will keep a brake on plant operating rates to ensure a continuation of well-balanced markets.
In October, L/LDPE suppliers approached the market with a larger increase than the €65/tonne rise for the ethylene contract in an attempt to bolster under pressure margins. Producers successfully implemented significant price increases with L/LDPE contracts settling close to triple-digit gains. This reflected tight supply because of reduced run rates and limited availability of competitively-priced imports. However, processors are not rushing to buy due to the unsatisfactory demand from their customers.
L/LDPE prices softened a little during the first week of November following a €45/tonne decline in the ethylene reference price. The full cost reduction was not however factored into most early contract settlements because of short supply, although converters are pushing for further price concessions during annual supply discussions. Market fundamentals remain largely unchanged; producers are maintaining tight control of production; demand remains very subdued.
HDPE prices closed October with gains above the €65/tonne increase for the ethylene contract price. Blow moulding and blown film prices were up by €80/tonne with injection moulding prices up by €70/tonne. HDPE supply remained well--balanced as reduced output and lower availability of competitively-priced imports were closely aligned to the low level of demand. A demand upturn failed to materialise because of the unsatisfactory order intake from end markets.
HDPE prices followed the lead set by the reduction in feedstock costs during the first week of November. The price for most HDPE product tended to fall by an amount close to the €45/tonne reduction for the ethylene reference price. Output from local producers remains significantly restricted yet overall availability continued to be supported by imports. The current weak demand situation is unlikely to improve before the end pf the year.
In October, PP prices registered good gains as producers pushed for price hikes in excess of the €60/tonne propylene cost rise in order to restore their profit margins. However, most PP contracts settled close to the increase in the cost pf propylene. Supply tightened as producers trimmed their operating rates even further; imported material was also less widely available. Meanwhile, demand remained low due to a lack of purchasing activity in upstream markets and a reluctance by processors to add more material to their well-stocked warehouses.
PP prices fell in line with the €40/tonne reduction in the propylene reference price during the first week of November. Material availability remains tight because of low production rates and a series of planned and unplanned plant outages. Imports are however likely to be more widely available this month.
In October, PVC producers approached the market with planned price increases well above the €32.5/tonne pro-rata increase in the cost of ethylene in order to avoid a further erosion to their profit margins. However, demand remained very sluggish, and, in particular, there was a lack of new orders from the construction sector. Low demand levels restricted the producers’ planned price hikes; base PVC prices increased by €20-25/tonne; PVC compound prices were up by €10/tonne. Weakening export prices and the possible emergence of competitively-priced imports also restrained planned price increases last month.
Base PVC prices turned downward during the first week of November following a reduction of €45/tonne for the ethylene reference price. There is still plenty of material available despite continued restrictions on production. Demand is unlikely to show any significant improvement during the rest of the year.
PS producers announced planned price hikes of between €80-90/tonne at the beginning of October, which was in excess of the €60/tonne increase for the styrene monomer reference price. PS producers were largely successful in raising contract prices by a similar level to the cost rise. While the limitations on styrene availability has eased, producers continue to operate polystyrene production plants at reduced operating rates. Meanwhile, demand remains subdued due to a lack of end user stimuli.
In November, the styrene monomer reference cost increased by a surprisingly large amount, up by €149/tonne following a sharp reduction in spot styrene monomer prices over the previous few weeks. PS producers initially announced planned price decreases of €125/tonne. In early November, few deals had been concluded, but the market consensus view held that contracts would likely settle below the cost rise.
In October, PET producers initially targeted price increases in excess of the rise in feedstock costs to restore their margins. There was a wide range of contract settlements; from a rollover to triple-digit increases, depending on the starting level. Overall, PET prices were up on average by €30-35/tonne during the month as a whole. Persistent demand weakness restricted the planned price hikes. On the supply side, plant closures and output restrictions kept a brake on material availability.
In November, PET prices are likely to fall following a decrease of €50/tonne for the October paraxylene reference price. The extent of any such PET price reduction is likely to be at a level close to the cost reduction. Demand is expected to remain very subdued for the remainder of the year while material availability continues to be swelled by the presence of Asian imports.