In June, a combination of weak demand and improving supply led to a further decline in European standard thermoplastic prices, despite little change to monomer costs.
Polyolefin prices saw the biggest price reductions. Polyethylene and polypropylene price developments bore no relation to monomer cost settlements. The ethylene reference price settled at a rollover with propylene settling down by €10/tonne. LDPE prices fell by €170/tonne, LLDPE prices fell by €150/tonne and HDPE prices were down by €150/tonne. Homopolymer and copolymer PP prices declined by €200/tonne.
Polystyrene prices either rolled over or fell slightly after the styrene monomer reference price increased €16/tonne. It was a similar picture for base PVC prices, while flexible PVC compound prices fell as a result of lower plasticiser costs.
PET prices turned upward in June following a rise of €75/tonne in the paraxylene reference price. However, a growing volume of cheaper imported material limited price increase to €40/tonne.
In June, polyolefin demand was particularly weak although other polymer classes also experienced lower sales volumes than would normally be expected. Converters took a cautious approach given growing economic uncertainty, soaring energy costs and rising inflation. Buyers were also holding back from making additional purchases as prices were widely expected to drop further in July.
The construction sector boom appeared to be flagging while the automotive sector remained weak. The economic uncertainty also weighed heavily on packaging and consumer goods markets. The beverages sector, on the other hand, saw a surprise demand upturn in June.
The supply situation has improved across all product sectors since early summer as several production plants are now back on stream following outages. In the polyolefin sector, most production facilities are operating without interruption. While a number of PVC and styrenics production plants were not fully operational, there was sufficient material available to meet the low level of demand.
Local supply was supplemented by a growing volume of competitively-priced imported material across most product classes.
A selection of the latest supply-side developments in polymer markets are summarised below;
- Covestro declared force majeure for styrene on 4 July due to the breakdown of the production plant jointly operated with LyondellBasell in Maasvlakte, the Netherlands;
- Borealis declared force majeure 5 July for cracker products from Stenungsund, Sweden. Borealis cited a technical issue as the reason for the outage;
- The damage to the OMV refinery in Schwechat, Austria, is much more serious than initially assumed. A complete restart and full utilisation of the refinery can only be assumed for August or September 2022. It remains unclear exactly what this means for the cracker, which is a key supplier of ethylene and propylene for polyolefin plants at OMV unit Borealis;
- TotalEnergies declared force majeure 21 June for EVA production at its domestic facility in Gonfreville, France.
In July, polymer price trends are showing a mixed picture. Polyethylene and polypropylene prices are declining by triple-digits following respective reductions of €100/tonne for the ethylene reference price and €120/tonne for propylene. Polyolefin prices are under added pressure from imports and lower holiday season demand.
PVC prices are also coming under pressure from the ethylene cost fall and lower seasonal sales.
The styrene monomer reference price increased €155/tonne following higher ethylene costs and a surge of €386/tonne in benzene costs. Sellers are confident of achieving a small price premium over the SM cost rise.
PET prices are also expected to increase as paraxylene costs are rising sharply.