In December, European standard thermoplastic prices mostly posted small price increases despite lower demand towards the end-of-year holiday period and limited cost development.
Tight supply remained a feature of most polymer classes in December.
The PVC market continues to exhibit very low supply, which supported further price increases for both rigid and flexible compounds, base material prices were stable in December.
Styrenics prices increased by just less than the €23/tonne rise in styrene monomer costs as weak demand offset the supply tightness.
L/LDPE and HDPE prices gained €20/tonne despite a €10/tonne reduction in the ethylene contract price, which mainly reflected low material availability.
For PP, a stable propylene cost settlement was followed by small gains for film grades with rollovers for homopolymer and copolymer injection moulding grades.
PET prices gained €40-50/tonne and may well have reached a peak in the current price cycle as a large volume of imported Asian material is expected to arrive during the first quarter.
Material availability remained tight during the final month of the year. Despite the supply constraints, producers were mostly able to meet contractual volumes during December. Imports of polymer remain quite low but this situation is likely to improve during the first quarter of the year.
The PVC, styrenics and PET sectors are particularly suffering from supply shortages as a result of production restrictions and low import volumes.
Several planned and unplanned plant outages were announced during December and January 2022;
- Total declared force majeure for polystyrene deliveries from the plant in Carling, France 20 December 2021 due to strike at Arkema, which is also located at the site. This meant that access roads to the plant were blocked
- Dow declared force majeure on all polyethylene grades on 17 December 2021 following the breakdown of two of the three crackers at Terneuzen in the Netherlands
- Ercros SA shut its VCM unit in Spain on 2 January for a planned 89-day maintenance programme
- Ineos declared force majeure for PP at its site in the UK on 7 December
- Versalis LDPE plant in Italy shut down for a 49-day planned maintenance programme 10 January
- Trinseo reduced operating rates at its GPPS and HIPS lines in Belgium for around two weeks in December as a result of feedstock shortages
- Borealis plans to shut down the 300,000 tonnes/year propylene facility in Belgium for maintenance late January
Vynova lifted the force majeure at its VCM line in the Netherlands 22 December
Seasonal demand lull
Seasonal demand levels dropped as usual in December, but in addition, the reimposition of coronavirus restrictions in many European countries and converters aiming to minimise stock levels for balance sheet reasons as year-end approached, further curbed polymer sales. Building and construction demand remained unusually good but there was continued weakness in the automotive sector.
Styrenics prices are expected to soar following a triple-digit rise in the January styrene monomer reference price, while polyolefin producers are also likely to target higher prices despite a rollover for both ethylene and propylene contract prices. There is no sign of an end to the upturn in PVC prices.
Converters are also likely to face further upward price pressure as polymer producers seek to push through a surcharge for higher energy costs. Negotiations could involve the inclusion of a binding electricity price formula into customer contracts or a higher annually negotiated, fixed ‘conversion fee’ for the producer, in addition to the cost of the monomer.