Prices tumble as supply shortages ease

Following months of sharply rising prices, contract prices for most classes of standard thermoplastic finally started to fall over the last two months, despite rising feedstock costs. An improvement in the overall production position coupled with the much-awaited arrival of significant import volumes was the main reason for the downward price adjustment. Demand was good across most polymer classes.

The price picture, however, varied widely between different polymers and product types. L/LDPE prices have fallen by €115-125/tonne over the last two months with HDPE down €120-140/tonne. Meanwhile, HDPE pipe grade prices have increased slightly over the same period.

In June, PP homopolymer film and copolymer injection prices increased €20/tonne and homopolymer injection prices remained stable. In July, copolymer injection prices fell by only €15-20/tonne with homopolymer film and homopolymer injection prices falling €75-100/tonne.

Polystyrene prices have tumbled €560/tonne over the last two months following a sharp reduction in styrene monomer costs and improving availability. PET prices have also continued to fall steadily despite rising raw material prices.

PVC remains the exception with prices rising €130/tonne over the last two months due to ongoing supply tightness and strong demand.

Supply shortage eases

The material shortages which have contributed to record price levels over recent months have shown signs of easing over the summer. Several feedstock and polymer plants came back on stream following planned or unplanned outages. Significant import volumes also started to arrive from the US and Asia in June to swell material availability.

Some of the plants returning from disruptions were as follows:

• Shin-Etsu and Kem One declared an end to the force majeure for plants at Portuguese subsidiary Cires and Berre France, respectively, 22 July;
• Shin-Etsu lifted force majeure on PVC production at its Netherlands site near Rotterdam  28 June;
• A Unipetrol PP reactor n Litvinov was shut down due to “serious technical problems” 28 May and was restarted 30 June. Unipetrol has also rectified the problem at its PVC plant in Spolana, Czech Republic;
• Vestolit lifted the force majeure for deliveries of PVC products from its Marl, Germany plant 15 June.

A number of unplanned plant outages have also been announced since June:

• The ExxonMobil ethylene and propylene crackers in France went offline 28 July;
• ïSabic announced a force majeure for polyethylene at Geleen, the Netherlands 28 July due to flooding on the Maas river;
• Vinnolit called force majeure on PVC production in Knapsack, Germany 20 July due to flood damage;
• Vinnolit also declared force majeure on PVC from its Burghausen and Gendorf sites in Germany on 5 July due to operational problems;
• Total Petrochemicals called force majeure on EPS at the Feluy, Belgium plant 7 July;
• Ineos declared force majeure on several HDPE pipe types 27 June due to an unexpected technical problem;
• ïBorealis declared force majeure on plastomer production at Geleen, the Netherlands 23 June and also reported force majeure on polyolefin production at Porvoo, Finland 19 June due to a technical malfunction.

Demand good

Demand for polymers, with the exception of PET, was good to very good over the last two months despite the resurgence of COVID-19 restrictions. Polymers demand for building and construction applications such as PVC, HDPE pipe grade and PS, was particularly strong.

August outlook

In view of the increase in feedstock cost settlements, polymer producers will call for higher prices in August. However, an improving supply position and the holiday-related impact on demand is likely to curtail any such planned price increases.

L/LDPE

After six months of surging prices the L/LDPE market appeared to have reached a peak in May with prices starting to decline in June. LDPE prices fell €25/tonne with LLDPE down €40/tonne despite an increase of €30/tonne in ethylene costs.

While the supply position remained low, there was an increase in material availability from local producers as maintenance programmes ended and the arrival of significant quantities of LLDPE imported material after an absence of several months. Demand was lively as converters sought to meet their order backlog

The downward trend in L/LDPE prices gathered pace last month with prices sliding sharply even though ethylene costs increased by €40/tonne. LDPE prices declined €90/tonne with LLDPE down €85/tonne.

The tight supply position is improving as a result of growing quantities of imports from the US and Asia.

HDPE

In June, HDPE prices fell for the first time in six months despite a rise of €30/tonne in the ethylene contract price. Blow moulding product prices fell €20/tonne, blown film prices were down €40/tonne with injection moulding declining €50/tonne.

Material availability started to return to more normal levels in June with several European plants restarting after production outages. The arrival of the first significant volumes of imported material also improved supply.

HDPE prices continued to decline last month despite a rise of €40/tonne in the ethylene contract price. Prices dropped between €80-100/tonne with blown film and blow moulding recording the sharpest declines. HDPE pipe grade prices were stable.

Supply from local produces remained quite tight, while the arrival of imports from the US and Asia improved availability. Demand for pipe grade material was particularly strong.

PP

With prices already at such high levels, PP producers struggled to pass through the €40/tonne rise in the propylene contract price in June. Homopolymer injection moulding prices were largely rolled over from May levels while blown film and copolymer injection prices increased by around half the propylene cost rise.

While supply remained on the low side, the restart of several European production facilities and the arrival of imports improved availability. Converters bought just sufficient to cover their current needs with prices at such high levels.

In July, PP price trends varied considerably after propylene settled €50/tonne higher. Homopolymer prices fell €70-100/tonne due to an improved supply situation. Copolymer prices fell only €15-20/tonne as material remained very tight.

PP demand was significantly stronger last month despite the COVID-19 restrictions and the production limitations in the automotive industry.

PVC

The sharp upward trend in PVC prices showed no sign of abating in June with further significant hikes for the thirteenth month in a row. Base PVC resin prices increased €80/tonne on average with PVC compound prices rising €50-55/tonne.

Supply remains tight even though a number of PVC facilities returned to production following maintenance shutdowns and force majeures, but imports were largely absent. Demand was very lively from the construction and other market sectors.

PVC buyers found no price relief last month as supply shortages persisted and demand remained high. Base PVC prices increased well in excess of the proportionate rise of €20/tonne from higher ethylene costs. Rigid PVC compound prices were driven even higher by rising additive costs.

The much hoped-for improvement in supply failed to materialise last month with more plants calling force majeure.

PS

The record-breaking rise in PS prices finally came to an end in June with costs and prices crashing. General-purpose polystyrene (GPPS) prices and high-impact polystyrene (HIPS) prices plummeted by €350/tonne following a drop of €401/tonne in the styrene monomer contract price and a reduction of €480/tonne in benzene costs.

Material availability remained low, especially for high-impact material. Construction sector demand was particularly strong while some converters began rebuilding stocks as prices fell.

PS prices continued to tumble in July following a €208/tonne reduction in the styrene monomer reference price. GPPS prices slumped €210/tonne with HIPS down by slightly less due to a sharp rise in butadiene costs.

GPPS supply is virtually back to normal while HIPS supply remains tight. PS demand continued to be strong in July with the building sector leading the way.

PET

In June, European PET prices fell for the second month in a row largely as a result of an improving supply situation. Bottle-grade PET prices fell around €40/tonne despite the cost position remaining stable from the previous month.

PET production returned to more normal levels in June with improving availability of the PTA feedstock although imports remain short as a result of the extremely high freight rates. Demand remained disappointingly low, despite the hot weather.

PET prices continued their slide in July despite firming feedstock costs, the paraxylene contract price settled €55/tonne higher last month, driven by rising oil prices.

Demand was once again rather disappointing, mainly down to the worsening weather across Europe and the emergence of the fourth wave of the pandemic. The local supply situation was back to normal while imports remained largely absent.