In September, standard thermoplastics prices registered strong price gains driven by higher upstream costs. In many cases, producers asked for price increases far in excess of the respective monomer cost rise because margins have been inadequate for quite a while. While converters have resisted excessive price increases, they may have to pay more should they need to purchase certain polymers which are in shorter supply.
Overall, demand failed to recover after the summer holidays during the first two weeks of September. Given the pre-buying which took place in August and well-stocked warehouses, converters bought just sufficient to meet their immediate production needs.
Polyethylene producers managed to raise prices by €80-100/tonne during the first two weeks of September, less than half what they had initially asked for. Similarly, PP prices increased by €60/tonne, half of the €120/tonne which producers had called for at the start of the month. (Access the latest price charts here.)
Polystyrene prices soared in line with the €170/tonne rise for the styrene monomer reference price. Base PVC prices increased by slightly more than 50% of the ethylene cost rise. PET prices also nudged higher driven by rising upstream costs rather than a demand upturn.
In August, polyolefin prices were largely unchanged following a rollover for both ethylene and propylene contracts. Buyers refused to accept the substantial price hikes that were announced by producers. Only LLDPE film, HDPE film and PP homopolymer film registered small price upticks.
Polystyrene prices increased sharply because of a surge in spot styrene prices and an increase of €108/tonne for the styrene monomer reference price. Styrene supply has tightened considerably because of a series of planned and unplanned plant outages.
Base PVC prices were down by €10/tonne with flexible and rigid PVC compound prices falling by €60/tonne and €35/tonne, respectively, due to a sharp fall in the cost of additives.
PET prices firmed slightly in August following an increase in feedstock costs and less competition from imports.
Producers across all polymer classes have maintained production cutbacks during the last two months in order to better balance output against weak demand. The availability of imported material has also diminished during the late summer months. There remains sufficient material to satisfy demand despite the reduced availability.
The latest supply-related developments include;
- Anwil SA shut down its S-PVC plant in Poland on 8 September for maintenance;
- The styrene and propylene oxide plant of the Ellba joint venture, operated by Shell and BASF, was reportedly shut down on 17 August due to technical problems;
- LyondellBasell is planning the final shutdown of one of the two polypropylene production plants at its Italian site in Brindisi by end 2023 because the advanced age of the plant means it cannot be operated economically;
- Vynova announced 12 September that its Belgium VCM plant will undergo a partial shutdown for a further two weeks.
Demand improved slightly as converters returned to work at the end of the holiday season but sales still remain well short of what would normally be expected for the time of year. Weakness in European economies and worries about inflation are the main restraints on end user demand. Converters were buying just enough material to meet current production needs.
For October, the sharp rise in crude oil costs could lead to higher monomer cost settlements for polyolefins. PS players mostly do not expect styrenics markets to post further hikes if spot styrene prices continue to slide.
In August, L/LDPE producers went to the market with planned price increases of €100/tonne, despite a rollover for the ethylene contract price. Converters unsurprisingly refused to accept such large price hikes. LDPE prices remained mostly unchanged with LLDPE prices up by €15-20/tonne.
An adequate supply of material was available to the market despite production cutbacks and plant maintenance turnarounds. Some producers even stopped taking orders from converters who refused to accept higher prices. Demand was even lower than expected for the time of year because of converters delaying their return from holiday.
Initial September offers were revealed with planned hikes of €200/tonne compared to the €75/tonne rise for the ethylene contract. Buyers have refused to pay such a hefty price premium over the cost increase with most contracts settling with a rise of €90-100/tonne.
HDPE producers called for large price increases at the beginning of August despite a rollover for the ethylene contract price. However, most converters were reluctant to pay higher prices and most contacts were settled on a rollover basis. HDPE blown film material prices increased by €10/tonne.
Supply remained much reduced because of production cutbacks and plant shutdowns for maintenance. There was a good supply of imported material available but at less favourable prices than previously. Demand remained very weak as many converters delayed their return from summer holidays.
In September, HDPE producers approached the market with planned price increases of €100/tonne against a rise of €75/tonne for the ethylene contract. In a well-balanced market, HDPE prices were rising by €80-90/tonne during early September trading. Production is still running at reduced rates while demand has picked up slightly.
In August, PP producers called for price increases of €50/tonne despite the propylene contract price remaining unchanged. Converters were not prepared to accept price increases and contract price settlements were mostly agreed on a rollover basis. Homopolymer film was the exception with prices climbing by €10/tonne.
Material availability continued to be on the low side in August due to production cutbacks and planned and unplanned plant outages. Imported material was less widely available and at slightly higher prices compared to the mid-summer months. Demand remained very low because of extended summer holidays and adequate stocks at converters.
For September, PP producers announced planned a price hike of €100-120/tonne. However, buyers managed to knock back price increases to a level closer to the €60/tonne rise for the propylene contract. Demand improved slightly but remained well below normal.
PVC prices continued to slide in August even though the cost of ethylene had stabilised. Base PVC prices were down by €10-20/tonne with PVC compound prices down significantly. Flexible PVC compounds prices fell by €60/tonne because of a sharp drop in the cost of plasticisers. Rigid PVC compound prices dropped by €30-35/tonne due to a reduction in the cost of additives such as titanium dioxide.
Supply was curtailed significantly due to planned and unplanned plant shutdowns, production cutbacks and fewer imports than earlier in the summer. Demand was even lower than expected as many converters delayed their return to work after the holidays.
PVC suppliers announced price hikes of €60/tonne for September; which represented much more than 50% of the ethylene cost rise. Sellers felt the urge to hike prices because of low margins, higher upstream costs and reduced pressure from imports.
In August, a surge in spot styrene prices and styrene monomer costs led to a sharp price upturn for polystyrene. Spot styrene costs have risen because of tighter supply brought about by a series of planned and unplanned plant outages. General-purpose PS price settlements increased €80/tonne, which was just less than the €108/tonne rise for styrene monomer.
Sufficient material was available to meet demand in August, despite the severe production cutbacks. An extended holiday season and higher prices further curtailed demand even further.
PS producers announced planned price hikes of €170-180/tonne in September after the styrene reference price settled €170/tonne higher. In early September trading, PS price increases mostly matched the SM cost rise. Given limitations on styrene supply and PS production cuts, PS availability is well balanced with the low level of demand.
In August, PET prices firmed for the first time in twelve months due to rising raw material costs and an easing in competitive pressure from cheaper Asian imports. The July paraxylene contract price was finally settled with an increase of €30/tonne following protracted discussions. Producers managed to raise contract prices for small- to medium-size converters by €10/tonne.
More than enough material was available despite the savage production cutbacks and lower imports. Demand was slightly better than expected in August; which was mainly attributed to cautious pre-buying ahead of firmer price expectations for September.
Firmer price expectations for September are being driven by higher upstream costs rather than robust buying activity. Indeed, the paraxylene contract for August increased by €20/tonne. Meanwhile, demand is likely to soften as the peak of the bottle-making season draws to a close.