In October, European standard thermoplastics prices presented a mixed picture, both between the various product types and within the same product class.
L/LDPE producers initially targeted price increases of up to €150/tonne, despite a €45/tonne reduction in ethylene costs. Weak demand and competitively-priced imports however meant that LDPE prices fell slightly while LLDPE prices, which did not face such strong competition from cheaper imported material, increased by €20-30/tonne. Polypropylene prices traded downward across the board even though propylene costs had fallen by €50/tonne.
Polystyrene prices continued to fall in October even though the styrene monomer reference price increased by €9/tonne. PVC prices fell as a result of low demand and a growing inflow of cheaper imports. Bottle-grade PET contract prices also fell sharply in October as a result of aggressive import prices, lower costs and weak demand.
Purchasing activity remained well below normal levels across most product classes in October. Converters were concerned about the deteriorating economic situation and worries about a possible recession.
European converters are also increasingly looking to meet more of their needs with cheaper imported material. Import prices are more competitive as a result of falling freight rates out of Asia, which are now at their lowest since 2020.
Packaging and pharmaceuticals demand held up fairly well last month, but demand from other sectors such as construction, consumer goods and furniture, is declining.
Supply better balanced
European producers have trimmed production and brought forward plant maintenance programmes in response to the low demand. There is however sufficient material available to meet the needs of converters. Supply has also been supported by a steady inflow of imported material. The high European prices and lower freight rates are tempting producers to divert more of their cargoes to Europe.
A summary of the latest production issues is presented below:
- The 350,000tonnes/year LDPE plant in Ruwais, Abu Dhabi run by Borouge is expected to resume operations by end-2022;
- Indorama Ventures declared force majeure on production of PTA and PET in Rotterdam, the Netherlands on 18 October;
- TotalEnergies declared force majeure for PP throughout Europe after encountering “technical problems” at its two large Belgian polypropylene plants in Feluy
- The LyondellBasell cracker in Berre, France, offline since a fire in August 2022, will not go back onstream until early 2023;
- Major maintenance work on the OMV cracker in Burghausen, Germany is complete, and the plant is being gradually restarted;
- Anwil SA resumed operations at its S-PVC facility in Poland on 21 October following a maintenance shutdown.
In November, polymer markets are close to balance and there is now limited potential for major price development, despite higher feedstock costs. Production rates have been trimmed across all standard thermoplastic classes, which has reduced material availability, more into line with the low demand levels.
Polyethylene prices are likely to either move sideways or decline slightly, despite a €35/tonne rise in ethylene costs. PP prices are expected to show limited movement, even though the propylene reference price increased by €20/tonne.
Low demand is expected to lead to a reduction in PVC base material and rigid S-PVC compound prices with stable plasticiser prices limiting any reduction to flexible S-PVC prices.
Subdued sales will likely lead to lower polystyrene prices, despite a small rise for the styrene monomer reference price. PET prices will be under further pressure as a result of ongoing demands weakness, a reduction in feedstock costs and competitively-priced imports.