In January, polyethylene and polypropylene prices rolled over following unchanged feedstock costs and weak demand. Similarly, PVC and PET prices remained unmoved at the start of the year.
High-density polyethylene, in contrast, registered significant price increases, despite flat feedstock costs and better availability. Seemingly, converters had run down stocks to such an extent that they were forced to pay higher prices to cover their immediate production needs.
The January styrene monomer reference cost surged €119/tonne due to a spike in the cost of benzene. PS producers managed to push through price increases well in excess of the cost increase.
In February, polyethylene prices increased less than the €67.5/tonne rise in feedstock costs. L/LDPE prices increased €30-35/tonne, HDPE prices €20-30/tonne with injection moulding grades remaining unchanged. Polypropylene price increases also lagged behind the €67/tonne rise in propylene costs. PVC prices, which had remained flat for the previous two months, increased in line with the proportionate ethylene cost rise in February.
Polystyrene prices declined by more than the €51/tonne decrease in the cost of styrene monomer due to a slight easing in energy costs.
Material availability for polyolefins, polystyrene and PET has improved over the last two months as several production plants have resumed operations after outages and imports have started to arrive in larger quantities. PVC supply, however, is likely to remain tight for a while yet.
Most producers were able to meet contractual obligations for standard material without delay, but others experienced a shortage of certain specialty grades.
Some of the latest plant outages are summarised below.
- It was reported 22nd February that the smaller of LyondellBasell’s two crackers in Wesseling, Germany had been down for several days
- Sabic reportedly had production problems with PP homopolymer in Gelsenkirchen, Germany on 14th February and the plant had to be temporarily shut down
- Total Energies declared force majeure on polypropylene copolymer from its domestic facility in Gonfreville on 8th February due to technical problems and a stoppage at a production plant
- Strikes halted operations at four of the five French locations of PVC manufacturer Kem One on 2nd February and they were unable to deliver any products
- BP shut down its ethylene cracker in Germany for maintenance on 10th January
- Vynova announced a partial turnaround for maintenance at its Belgium VCM plant from 1st March to 1st April
- Kem One shut down production of paste PVC (E-PVC) at its plant in Hernani, Spain mid-January due to a technical malfunction.
Demand was slow at the beginning of the year due to high stock levels at converters and extended bank holidays. While February has seen an uptick in order activity, demand remains lower than normal. Converters bought on a needs only basis as they were sitting on ample stocks and refrained from buying additional material with prices at such high levels. Construction was the liveliest sector while automotive demand remained weak.
For March, the polymer price outlook is uncertain. On the one hand, crude oil prices continue to climb amid uncertainty over the invasion of Ukraine by Russia. Hence, petrochemical feedstock costs are expected to rise. Polymer producers will target full recovery of material and energy cost increases, but will face strong buyer resistance.
Polymer demand is likely to pick up further in March as Covid restrictions are gradually eased and end user demand recovers. On the other hand, higher imports should increase supply.