The European plastics industry has been under threat since Russia invaded Ukraine, and China’s Shanghai having been in lockdown for about two months. Global supply chains have consequently become even more fragile leading to uncertain supplies and material bottlenecks.
Against this backdrop it came as a relief for converters to see crude oil and naphtha costs falling, and later, ethylene and propylene costs settling lower in May. It was however not all good news, styrene monomer costs and benzene settled much higher.
The €70/tonne reduction in ethylene costs translated into the first PVC price reduction for two years as base PVC prices fell €35/tonne.
L/LDPE producers managed to limit the reduction in prices to just less than the €70/tonne reduction in ethylene costs. HDPE blown film and blow moulding prices, on the other hand, were down in line with the €70/tonne ethylene cost reduction, with HDPE injection moulding down by €80/tonne.
PP homopolymer injection and copolymer injection prices fell by more than the €65/tonne reduction in propylene costs with homopolymer film prices down in line with the propylene cost settlement.
PET prices fell for the first time since mid-2021 due to low demand and improving material availability.
PS prices increased by less than the €84/tonne rise in the styrene monomer cost as producers took into account falling energy costs in May. As a result, general-purpose polystyrene prices increased by around €50/tonne.
European polymer markets were sufficiently well supplied to meet the low levels of demand in May. Most polymer plants were running normally and several cracker and polymer facilities came back on stream after outages. Higher imports from Asia and the US swelled availability of PE and PET towards the end of May.
A summary of the latest supply-side developments is listed below.
- The repairs to the cracker run by Versalis in Dunkirk, France, were completed quicker than expected, and restart began 15 June
- It was reported 15th June that the technical problems at the refinery of OMV, Schwechat, Austria, which have been prevalent since the beginning of June, were also affecting the polyolefin production of its Borealis subsidiary
- Total Petrochemicals announced force majeure for HDPE at its facility in France 6th June
- Westlake Vinnolit announced 2nd June the lifting of force majeure at PVC production plants at Knapsack and Cologne in Germany and in France
- BASF announced restart of styrene production at its cracker plant in Ludwigshafen, Germany
- The plant run by Ercros, Barcelona in Spain is running smoothly, Anwil, Poland, Shin-Etsu and Vynova, Belgium, all VCM and PVC plants, are now operating normally
- The force majeure at Kem One, Lyons, France; is still in effect, with in some cases significant customer allocation arrangements.
Demand was very disappointing in May as converters ordered just sufficient to cover their immediate needs due to economic uncertainty and with prices still very high. Converters also face ongoing difficulty passing through the desired price increases to their customers. The large number of bank holidays across several European countries also curbed sales.
The automotive sector remained very quiet while building and construction also saw weaker sales. Plastic soft drinks bottle demand was surprisingly low for the time of year.
This month, PE prices are down over €100-150/tonne with PP nearly €200/tonne lower. PVC prices have stabilised while PS is up slightly. PET prices are expected to rise on higher costs and better demand.