Prices driven higher by rising costs, outages

In April, European standard thermoplastic prices increased further following a rise in crude oil, naphtha and feedstock costs. There were also several scheduled and unscheduled cracker outages, which led to tighter monomer supply and higher feedstock prices. Polymer producers attempted with varying degrees of success to raise notations by much more than the rise in monomer costs to improve their profit margins.

The polyethylene sector registered price gains above the €30/tonne increase in the ethylene contract price with supply trending short. L/LDPE and HDPE prices increased €40/tonne compared to March. Polypropylene prices also saw gains slightly ahead of the €20/tonne rise in monomer cost. 

In the case of polystyrene, producers tried to raise prices by more than the €97.5/tonne rise in the styrene monomer cost. However, after tough negotiations they had to settle for gains of just less than the SM cost rise. 

PVC prices managed gains of €15/tonne, equivalent to the proportionate increase in ethylene costs. PET prices registered a small reduction due to demand weakness and import pressure. 

Supply shorter

In April, PE, PP and PVC supply shortened as a result of scheduled and unscheduled cracker and polymer plant outages. PET and styrenics supply was at normal levels. 

There were several cracker outages during the month:

• Two apparently unrelated incidents at Ineos site at Grangemouth and the 50:50 cracker joint venture Fife Ethylene Plant (FEP) of ExxonMobil and Shell UK at Mossmorran over Easter led to emergency flaring. 

• Dow Chemical’s cracker in Bohlen, Germany was shut due to some technical problems in early March. 

• Production rates at Total’s Feyzin cracker in France were reduced in late March.

• The CNV union called a strike at Shell’s sites in the Netherlands – the 404,000 b/d Pernis refinery and Moerdijk petrochemical site – from April 8, which was expected to result in reduced output.

Force majeure was called at several polymer plants, including:

• Borealis declared force majeure on some grades of PP from its Schwechat plant in Austria after facing some technical issues. The producer also faced some production issues at its PP plant in Kallo, Belgium.

• Brazil’s Braskem faced feedstock related production issues at its PPBC unit in Schkopau, Germany due to the technical problems at Dow’s cracker, which feeds their downstream units.

• Shell began maintenance on its 450,000 tonnes/year propylene oxide/styrene monomer unit at Moerdijk late April.

Meanwhile, both BASF and Inovyn lifted force majeure:

• BASF lifted the force majeure on butadiene at its plant in Ludwigshafen on 1 April. The German group declared FM on butadiene in mid-March 2019 due to “unforeseeable technical problems” at the facility 

• Inovyn lifted the force majeure for PVC deliveries from its plant in Martorell, Spain 19 March. 

Meanwhile, Total is in the process of closing its polystyrene site at El Prat, Spain, and concentrating PS production at its integrated sites in Europe and the US. 

Demand slows

An April, polymer demand was lower compared with the previous month partly due to the Easter holidays and also a slowdown in the automotive sector. Construction sector demand improved as a result of an upturn in building activity at the onset of spring. Styrenics converters, in particular, were also drawing down stocks wherever possible to avoid the high price increases. 

May outlook

In May, higher crude oil prices will continue to drive up feedstock costs, and hence polymer prices. Demand is expected to be stronger and the plant maintenance season will continues to restrict supply.

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