Lower feedstock costs and disappointing demand pushed European standard thermoplastic prices further downward across the board last month.
Polyolefin prices fell by considerably more than the reduction in raw material costs. L/LDPE prices fell by €120/tonne compared to the €70/tonne fall in the August ethylene cost settlement. HDPE prices fell by slightly more on wider material availability. PP prices fell between €100-120/tonne against a reduction of €85/tonne for the propylene contract price.
The base PVC prices reduction also exceeded the proportionate impact of lower ethylene costs with notations tumbling by €65-70/tonne. PVC flexible and PVC rigid compound prices fell by slightly less than base PVC prices as a result of lower additive costs.
The styrene monomer reference price plummeted by a monthly record of €509/tonne in August and this resulted in PS price settlements down between €450-500/tonne. PET prices also slumped up to €200/tonne due to lower costs, abundant supply and disappointing sales.
Demand was much lower than would normally be expected during the summer holiday period across all material classes. Fear of recession and high price levels meant that most converters purchased just sufficient material to cover their immediate production needs. The automotive and building & construction sectors were especially reluctant to buy.
Supply was ample to meet the low demand across all product sectors in August despite production cutbacks and plant outrages. Converters were also able to purchase a growing volume of competitively-priced PE, PP, PVC and PET imports from Asia and the Middle East as freight rates eased.
Reports of producers shutting down facilities due to the high costs in Europe are on the rise. These include Dow Chemical, and a similar approach has reportedly been taken by SABIC for its European PP homopolymers production, with demand instead being met with imports. Polynt, the specialty polymers and intermediates producer, announced 4 September that it was to shut down its Italian lines to get a handle on the costs being caused by the high energy prices.
Vynova, Europe’s third largest PVC producer, has begun reducing output due to high gas prices and weak demand. All three of the company’s PVC lines in the Netherlands, Germany, and France – and possibly the backward-integrated VCM lines – are affected by the change.
In September, resin producers made it clear that they want to retain part of the decreased feedstock cost. Whether or not they succeed remains to be seen.
LyondellBasell has announced an energy surcharge for LDPE, HDPE, and PP in September, amounting, for now, to €160/tonne. Other polyolefin producers plan to retain at least part of the drop in raw materials costs for PE and PP – currently between €40-80/tonne – either within the total or, as with LyondellBasell, by way of an energy surcharge. The ethylene and propylene contracts fell by €120/tonne and €165/tonne, respectively, in September.
L/LDPE, HDPE and PP are falling by less than the reduction in feedstock costs during the first two weeks of September due to production cutbacks by producers and weak demand. PVC prices continue to fall as competitively-priced imports and low demand pile further downward pressure on European producers.
PS prices have fallen on average by around €255/tonne following a sharp reduction in both the benzene and ethylene contract prices. PET prices are trading lower following a decline in feedstock costs, low demand and the ongoing pressure from imports. Elevated utility costs may however check possible PET drops.