In March, polyolefin prices more or less mirrored the rise in ethylene and propylene costs, although the rise did not always match the increase in monomer. LDPE prices increased by just €10/tonne compared to the €30/tonne rise in ethylene costs largely because of weak demand. LLDPE prices, on the other hand, increased in line with the monomer cost rise because of reduced availability. HDPE prices increased by just less than the €30/tonne rise in the ethylene reference price. PP producers attempted to pass on the €30/tonne increase in propylene costs but their efforts were largely unsuccessful with deals also settling on average at just less than the increase in monomer.
PVC producers attempted to factor in the proportionate €15/tonne rise in the cost of ethylene. Base PVC prices, in most cases, were however rolled over from the previous month because of ongoing demand weakness. Polystyrene prices fell by €80-90/tonne, which was less than the €113/tonne reduction for the styrene monomer reference price. Bottle-grade PET prices began to stabilise and were largely unchanged from the previous month.
In April, polyolefin prices turned downward following a decline of €40/tonne for both the C2 and C3 contract prices. Base PVC prices fell by more than the proportionate €20/tonne impact of the lower ethylene on the PVC cost base because of ongoing demand weakness. Polystyrene prices increased on average by €10/tonne following a rise of €19/tonne for the styrene monomer reference price. PET prices firmed slightly because of higher import prices and an upturn in seasonal demand.
There was sufficient material available across all polymer classes to meet demand during the last two months despite production curbs and a series of planned and unplanned plant outages.
A summary of selected production issues for European polymer plants are summarised below.
- The LyondellBasell cracker at Berne, France was shut down 3rd April due to a fire
- The Ineos PP plant at Lavera, France was taken offline 6th April and force majeure was declared due to strikes. The plant was restarted as of 13th April while force majeure remained in place
- Kem One declared force majeure on PVC output from Balan, France on 23rd March due to VCM issues stemming from strikes. Force majeure was lifted on 14th April
- Borealis shut down PP production plants in Belgium on 28th March with restart to be announced
- Repsol Quimica shut down its styrene plant in Spain on 30th March with restart to be announced
- TotalEnergies declared force majeure on 20th March for polystyrene, citing supply restrictions due to the escalating nationwide strikes.
Demand remained below what would normally be expected at the time of year throughout the last two months. In March, converters bought just sufficient material to meet their immediate production needs as prices were expected to fall in April. The Easter break also put a dampener on demand in early April. There has however been a small upturn in seasonal demand during April across the agricultural, building and beverage sectors.
At the time of writing (mid-April) crude oil prices and spot monomer prices are rising, which could lead to higher monomer cost settlements in May. With the pressure from rising costs, polymer producers are likely to press for higher prices. Whether or not they can successfully pass through the higher costs will depend largely on demand. Perhaps, the low buying appetite in several end user markets will keep the volumes of demand at modest levels.In March, polyolefin prices more or less mirrored the rise in ethylene and propylene costs,