The latest pricing charts can be accessed here.
Western European standard thermoplastic prices continued to climb in April but have taken a downward turn this month on lower feedstock costs.
Polyolefin producers initially tried to improve their profit margins in April and May. However, a combination of weak demand and price pressure from low-cost imports resulted in a further deterioration in producers’ margins.
PE prices increased by €20-30/tonne in April, which was less than the €40/tonne rise for the ethylene reference price. PE prices have fallen €20-30/tonne by mid-May after ethylene settled down by €10/tonne.
In April, PP producers planned to pass through in full the €45/tonne rise for the propylene reference price, but had to settle for gains of just €15/tonne. In May, PP initially asked for a price rollover following a €10/tonne reduction for the propylene reference price, but were forced to concede discounts of €20-30/tonne.
In April, base S-PVC prices settled with the pro-rata rise of €20/tonne arising from a €40/tonne increase in the cost of ethylene. Base S-PVC prices have slipped by slightly more than the proportionate impact from the €10/tonne reduction for ethylene in May as settlements are down on average by €10-20/tonne.
In April, PS prices settled with gains of €40/tonne compared to the €44/tonne rise for the styrene monomer reference price. In May, PS prices had fallen by €90/tonne by mid-month, which was less than the €111/tonne fall for styrene monomer.
The PET sector has been much calmer over the last two months after a long period of turbulence. In April, PET producers offered price discounts of €20-30/tonne, which were accepted as reasonable by converters.
Supply adequate
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 Middle East and Asia. However, higher logistics costs and delays as cargoes are being diverted, are making imported material less attractive to European converters.
A selection of the latest supply-related developments are summarised below:
- TotalEnergies announced on 3rd May that “a major and unforeseeable event” had occurred at its Gonfreville cracker and that it does not have sufficient PP and HDPE in stock to meet all contractual obligations and is shutting down HDPE production
- Synthos Dwory shut down its Polish styrene plant towards end April
- Versalis S.p.A. shut down its styrene plant in Italy on 23rd April
- Lyondell/Covestro, Netherlands called force majeure on styrene production on 21st April
- Total PC called force majeure on styrene at its French facility on 21st April
- Borealis shut down its PP plant in Belgium for maintenance mid-April
- Versalis S.p.A. shut down its PP | PE lines in Italy for maintenance in mid-April
- LyondellBasell shut down its PP lines in Italy mid-April for maintenance
- LyondellBasell shut down its ethylene and propylene lines in France for maintenance mid-May.
Demand low
Polymer demand remains well below what would normally be expected. Most converters have adequate stocks and are reluctant to buy more than they need to meet their current production requirements. Public holidays have further disrupted demand during April and May. Nevertheless, there are a few brighter markets; including PP packaging film, PVC for pharmaceuticals and PET beverage bottles.
Outlook
Feedstock costs are likely to fall further in June because naphtha quotations are falling and the supply situation is improving as crackers are restarting after maintenance. Tension in the Middel East remains a risk factor.
L/LDPE
In April, L/LDPE producers were targeting price increases that at least matched the €40/tonne increase for the ethylene reference price. However, by the end of the month most contracts were settled with gains of just €20-30/tonne.
Material availability was tight yet there was more than enough material to meet demand despite production cutbacks and several PE plant maintenance turnarounds. Converters bought only just enough material to meet their immediate needs.
L/LDPE prices fell by €20-30/tonne during the first half of May, 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.
HDPE
In April, HDPE producers called for price increases that at least matched the €40/tonne rise for the ethylene reference price. However, continuing low levels of demand restricted price increases to just €10-20/tonne. Supply remained tight but was more than adequate despite production cutbacks and maintenance turnarounds at several PE plants.
HDPE prices fell during the first two weeks of May following a reduction in the ethylene reference price, adequate material availability and low demand. Producers were unable to prevent prices from falling faster than the €10/tonne reduction for ethylene with settlements down on average by €20-30/tonne.
Supply was more than adequate to meet demand as competitively-priced imports from the Middle East more than compensated for the production cutbacks at local production plants. A combination of public holidays and sufficient stocks at converters kept a lid on buying activity.
PP
In April, PP producers planned to pass through in full the €45/tonne rise for the propylene reference price. However, weak demand and adequate supply meant that prices were raised by just €15/tonne. Converters blamed poor demand and a rising volume of imported material for a lid being firmly placed on price increases.
PP prices were under downward pressure during the first two weeks of 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 film demand has started to revive this month.
PVC
In April, base S-PVC prices settled with a pro-rata rise of €20/tonne arising from a €40/tonne increase in the cost of ethylene. Supply was tight as producers continued to operate their plants at reduced rates and several PVC sites were down for routine maintenance. Demand remained weak with only limited evidence of a seasonal upturn in demand from the construction sector.
Base S-PVC prices slipped by slightly more than the proportionate impact from the €10/tonne reduction for the ethylene reference price during the first half of May with settlements falling on average by €10-20/tonne.
Supply is more than adequate to satisfy demand despite most plants running at reduce rates and an end to the plant maintenance season. Construction sector demand remains less than expected yet there is more positive buying activity from the pharmaceutical packaging market.
PS
In April, PS prices settled with gains of just less than the €44/tonne rise for the styrene monomer reference price. Supply was tight as a result of production cutbacks and planned plant maintenance turnarounds. Demand showed no sign of a recovery; many converters are buying only enough material to meet their immediate production needs in view of the very high prices.
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 retain a part of the cost reduction during the first half of the month with contracts being settled down on average by just €90/tonne.
European producers continue to keep a lid on production while demand has been further dampened by the public holidays.
PET
The European PET market moved towards a more balanced situation in April. Feedstock costs stabilised, production plants were operating at normal levels and demand started to show signs of an improvement. PET producers offered price discounts of €20-30/tonne, which were accepted as reasonable by converters.
Imported material was less attractive due to higher logistics cost arising from the diversion of cargoes from Asia. The lower PET prices on offer and the prospect of higher demand likely to come from major summer sporting events persuaded buyers to replenish their stocks.
A rise of €38/tonne for the April paraxylene contract price has prompted European PET producers to consider a small price rise to cover the additional cost of production. Producers continue to run their plants at normal rates with demand expected to gather momentum over the summer.
The latest pricing charts can be accessed here.