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European standard thermoplastics prices have continued to fall this month following the downturn in May. Prices are under pressure from the falling cost of raw materials and supply far exceeding demand. Ethylene, propylene and styrene monomer costs have all come down over the last two months. There is also absolutely no sign of any widespread upturn in order activity. At the same time, there is more than sufficient material available, despite production cutbacks.
In the polyethylene sector, L/LDPE and HDPE prices fell by €20-30/tonne in May compared to a reduction of €10/tonne for ethylene. L/LDPE and HDPE prices are down by a further €10/tonne by mid-June against a fall of €30/tonne for ethylene. A reduction closer to the ethylene cost fall is considered likely by the end of the month.
It us a similar story for polypropylene with prices down in line with the cost of propylene over the last two months. Again, further discounts are likely by the end of this month.
Base PVC prices fell by slightly more than the proportionate impact of lower ethylene costs on the PVC production base in May. By mid-June, base PVC prices are down by a further €10/tonne.
Polystyrene producers managed to pocket part of the €111/tonne reduction for the styrene monomer reference price in May as prices dipped by only €90/tonne. So far this month, PS prices are down in line with the €30/tonne fall in the cost of styrene.
PET prices have moved very little over the last two months mainly attributable to stable raw material costs.
Supply normal
There is more than enough material available to meet demand despite producers continuing to throttle production and many planned and unplanned plant outages. Supply is bolstered by a steady inflow of imported material from the USA and the Middle East. However, higher logistics costs and delays as cargoes are being diverted, are making imported material from Asia more expensive to European converters.
A selection of the latest supply-related developments are summarised below:
• Sabic declared force majeure on homopolymer PP deliveries on 14th June, with operations halted at the larger of its two PP plants in Gelsenkirchen, Germany
• SIBUR Tobolsk (ZapSibNeftekhim) shut down several HDPE facilities in the Russian Federation for maintenance 12th June
• Total PC has lifted force majeure on styrene production in France
• A strike at the Notre-Dame-de-Gravenchon / Port-Jérôme-sur-Seine PE/PP production site of ExxonMobil in France led to the shutdown of the facility 5th June
• Ineos lifted the force majeure on HDPE pipe qualities from the Belgian production site in Antwerp-Lillo 5th June
• Repsol Quimica lifted force majeure on PP in Spain on 15th May.
Demand low
Polymer demand has remained well below what would normally be expected during the months of May and June. Most converters have adequate stocks and are reluctant to buy more than they need to meet their current production requirements in view of the poor demand across most end user sectors. Public holidays further dampened buying activity in May.
Outlook
For polyolefins, converters are likely to achieve further price concessions from sellers over the course of this month closer to the lower cost of monomer as supply will continue to exceed demand. For PP in particular, pressure from less expensive imported product is likely to support converters’ calls for further price concessions. For polystyrene, falling styrene spot prices are fuelling an expectation of further PS price reductions in July.
L/LDPE
In May, L/LDPE prices fell by €20-30/tonne, which represents a bigger discount compared to the €10/tonne reduction for the ethylene reference price. There was more than enough material to meet persistent low demand. A steady stream of low-cost imported material more than compensated for production cutbacks by local producers
Public holidays and sufficient stocks at converters meant that demand remained low.
L/LDPE prices have continued to fall during the first half of June following a reduction of €30/tonne for the ethylene reference price and ongoing low demand. Producers are attempting to keep prices stable to preserve their margins. However, a combination of good material availability and weak demand are pushing prices downward. LDPE prices are down by €10/tonne with LLDPE prices down by €200-25/tonne. Larger price discounts are expected during the rest of the month.
HDPE
HDPE prices fell €20-30/tonne in May following a €10/tonne reduction in the ethylene reference price. Producers were unable to prevent prices from falling faster than the ethylene cost reduction as a result of more than adequate material availability and low demand. Supply was supplemented by the arrival of competitively-priced imports from the Middle East. A combination of public holidays and sufficient stocks at converters kept a lid on demand.
HDPE prices are continuing to fall during the first two weeks of June because of lower feedstock costs and supply exceeding demand. Producers have so far kept price discounts at less than the €30/tonne reduction for the ethylene reference price. However, larger discounts are considered likely over the course of the month. There are few signs of a pickup in demand and supply is more than adequate, despite the production cutbacks.
PP
PP prices were under downward pressure in May because of lower feedstock prices, rising imports and inadequate demand. Producers initially offered a rollover following a €10/tonne reduction for the propylene reference price but were forced to concede discounts of €20-30/tonne. Local producers continued to throttle production and several PP plants were down for maintenance. However, material availability was swelled by an inflow of imports from Asia and the Middle East.
PP prices are continuing to fall this month with early settlements down by €10/tonne, Producers are attempting to restrict price rebates to less than the €30/tonne fall for the propylene reference price in a bid to improve margins. However, larger price discounts are likely during the rest of the month. Supply is plentiful, despite production cutbacks, due to a good supply of imported material. There are few signs of a revival in demand.
PVC
Base S-PVC prices slipped by slightly more than the proportionate impact from the €10/tonne reduction for the ethylene reference price in May with settlements falling on average by €10-20/tonne. Supply was more than adequate to satisfy demand despite most plants running at reduce rates and an end to the plant maintenance season. Construction sector demand remained less than expected yet there was more positive buying activity from the pharmaceutical packaging market.
Base PVC prices are down more or less in line with the proportionate reduction in the cost of ethylene during the first half of June. There is more than sufficient material available to meet demand, despite the cutbacks in output by local produces. Demand remains at a very low level with few signs of an upturn in order activity so far this month.
PS
After sharp increases in previous months, the May styrene monomer reference price fell by €111/tonne due to falling spot prices and a large reduction in the cost of benzene (-€151/tonne). PS producers managed to restrict price discounts to less than the cost reduction with contracts settling down on average by just €90/tonne. European producers continued to keep a lid on production while demand was further depressed by public holidays.
In June, polystyrene producers had targeted price reductions of between €5-10/tonne. However, PS prices were down more or less in line with the €30/tonne fall for the styrene monomer reference price during the first half of the month. There is more than enough material available to meet demand despite the ongoing production cutbacks. Demand is reported to have recovered a little compared to the previous month, but remans lower than normal.
PET
A rise of €38/tonne for the April paraxylene contract price prompted European PET producers to consider a small price rise to cover the additional cost of production. PET prices nudged slightly higher last month with gains of just €5/tonne. Producers continue to run their plants at normal rates while imports were less visible due to issues around logistics. Demand failed to take off as hoped for due to earlier restocking and poor weather conditions.
In June, initial PET offers were unveiled with rollovers to €10-20/ton price increases, despite a fairly stable cost position. The May paraxylene reference price settled down by €38/tonne, just offsetting the €38/tonne rise for April. The PET sector remains adequately supplied by local producers; import prices are rising due to the higher cost of logistics. Furthermore, Chinese PET has mostly disappeared from the market after the imposition of definitive anti-dumping duties since early April. A demand upturn remains elusive, but there are hopes of a boost from the sporting events in Europe this summer.
The latest pricing charts can be accessed here.