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Supply is more than adequate to meet the low level of demand across most product sectors, despite polymer production plants continuing to operate at reduced rates and several planned and unplanned plant outages. Material availability for LLDPE, PP, PET and PS is normal, but at a low level, while for LDPE and base PVC, supply is tighter.
L/LDPE
In December, LDPE prices were unchanged while LLDPE prices slipped by €10/tonne compared to a reduction of €7.5/tonne for ethylene. Demand was very low in the run-up to the Christmas holidays; converters reduced stocks for balance sheet reasons. There was plenty of material available to meet demand, despite the production cutbacks.
L/LDPE prices were largely stable at the start of the New Year following a rollover for the January ethylene reference price. However, there was some evidence of a small uptick for LDPE prices as the cost of imported resin from the US had increased because the US dollar strengthened against the Euro. LDPE supply is tighter than for LLDPE supply largely because imports have led to good availability. Demand remains well below normal although there are tentative signs that processors are looking to rebuild stocks.
HDPE
HDPE prices fell by slightly more than the €7.5/tonne reduction for the ethylene reference price last month with all product types down by €10/tonne. Demand was very low in the run-up to the Christmas holidays as converters reduced stock levels for balance sheet reasons while the overall economic situation remained weak. There was more than sufficient material available from local producers and from imports to meet the low demand, despite production cutbacks.
HDPE prices are largely unchanged during the first two weeks of the New Year because of weak demand and a rollover for the January ethylene reference price. Demand has so far been slow to pick up after the holidays, but sellers are hopeful that processors may soon start to replenish their stocks. Material availability is normal, despite cutbacks, and is being supplemented by imports.
PP
In December, PP prices fell by more than the €10/tonne reduction for the propylene contract price, mainly as a result of over-supply. There was more than enough material available to meet the demand even though a couple of plants declared force majeure late November. Demand was very thin in the run-up to Christmas as converters kept a close eye on their stock levels for balance sheet reason.
PP prices moved sideways during the first two weeks of the New Year following a rollover for the propylene reference price. One major player asked for a sizeable price rise, which has to date failed to achieve market acceptance. Demand is simply too low to support a hefty price hike as the key automotive and construction sectors remain in the doldrums. Supply remains more than adequate, despite production cutbacks.
PS
In December, polystyrene prices fell by €10/tonne, which was slightly more than the €7/tonne reduction for the styrene monomer reference price. The premium for high-impact grades over GPPS grades remained in most cases between €60-700/tonne – despite a reduction €50/tonne in the cost of butadiene. There was very limited buying activity with many converters closing early for an extended Christmas break. There was more than sufficient material available.
In January, PS producers approached the market with calls for a price increase of €50-55/tonne following a rise of €36/tonne for the styrene monomer reference price over the previous month. PS prices had increased by €40/tonne by mid-month, although very few agreements had settled at that stage. There is plenty of material available despite cutbacks in production. Converters are rebuilding stocks but only to a small extent.
PVC
PVC prices slipped slightly last month after the cost of ethylene dropped by €7.5/tonne. PVC compound prices were largely unchanged as the cost of additives remained stable. Demand was very weak; many converters closed their plants early for an extended holiday period. Supply was tight because of the ongoing production cutbacks, yet there was still enough material available to meet demand.
Base PVC prices were mostly stable during the first two weeks of January because of weak demand and an unchanged January ethylene reference price. PVC compound prices also remained stable. Demand continues in the doldrums as a result of a weak building and construction sector, seasonal effects and a slow return to work by converters after the holidays. There is more than enough material to go around despite production cutbacks and plant maintenance turnarounds.
PET
PET prices slipped slightly in December because of low demand, despite an increase in the cost base. The November paraxylene reference price settled €35/tonne higher while the November monoethylene glycol contract price fell €15/tonne. A stronger dollar made imports less attractive to European buyers while production cutbacks resulted in a more balanced stock position for producers. Demand remained extremely weak.
The European PET market begins the New Year in a more balanced position, albeit at a much lower level. Prices were mostly stable during the first two weeks of January. However, there were signs that some early settlements were nudging slightly higher because of reduced pressure from lower-cost imports and higher costs: the December paraxylene contract settled €5/tonne higher. There was no sign of a demand upturn as most buyers were adopting a cautious approach.