Short supply and strong sales lift PVC

David Platt

With the exception of PVC, prices for most other classes of standard thermoplastic remained largely unchanged during the first three weeks of September following limited feedstock cost movement. Demand was disappointingly muted after the holiday season and there was sufficient material available.

L/LDPE, HDPE and PP prices remained unchanged after the ethylene contract price settled on a rollover basis, although producers had initially targeted a price rise.

PS prices softened a little with the styrene monomer reference price declining €13/tonne. PET prices also declined as a result of low demand and higher imports.

PVC, on the other hand, registered strong price gains on the back of tightening supply and good demand.

Supply balanced

There was more than enough material available from local suppliers to satisfy the generally muted demand for PE, PP, PET and PS. However, following Hurricane “Laura” in the US, PE and PP imports virtually dried up because production plants in the southeast of the country were heavily damaged. PVC availability was extremely tight as a result of maintenance turnarounds and various unexpected plant outages.

The unplanned plant outrages and production disruptions during September include.

  • Inovyn declared force majeure 1 September for VCM from the plant of its sister company Noretyl at the Norwegian facility of Rafnes due to a power failure. Inovyn also declared force majeure for PVC from its facilities in Newton Aycliffe, Stenungsund and Porsgrunn, which are supplied with VCM from Rafnes.
  • Chlor-alkali and PVC producer Vynova put its customers on allocation for September supplies, while preparing two of its production sites for October maintenance works.
  • Total declared force majeure for metallocene polyethylene (mPE) from its site in Feluy, Belgium on 4 September due to a power outage at the facility.

Several PVC and PET producers across Europe will conduct planned maintenance works at their plants in September and during the fourth quarter if the year.

  • Vestolit, Vinnolit and Inovyn were planning maintenance at European PVC facilities in September, with further turnarounds already announced for October.
  • Indorama Ventures plans to shut its PET plants for maintenance in Poland and the Netherlands. Spain’s Novapet will be conducting a maintenance shutdown at its Barbastro site and Lithuania’s Neogroup will also shut its PET plant in Klaipeda, Lithuania for maintenance.

Demand disappoints

A much-anticipated rebound in demand after the end of the holiday season failed to materialise. Many converters ran down their stocks and bought on a needs-only basis. There was a growing feeling that prices would soften during the fourth quarter of the year while the demand outlook was still clouded with uncertainty caused by a resurgence in Covid-19 across the continent.

Packaging and construction continued to fare better than most other sectors while automotive demand remained in the doldrums.

October outlook

LDPE, PP and PS prices could soften a little over the rest of the month as converters push for lower prices. Alternatively, LLDPE and HDPE prices could firm as a result of the lower imports. PVC prices can also be expected to firm further over the month due to lower imports and growing supply tightness from local producers.

For October, European standard thermoplastic prices are again unlikely to move very much. Crude oil prices were trending slightly higher in September, which should feed through into October feedstock contract price settlements. Polymer producers are expected to call for a price increase but whether their calls are successful will depend on a demand revival.

Western European standard thermoplastic prices, €/tonne

L/LDPE

L/LDPE prices remained unchanged during the first three weeks of September following a rollover for the ethylene contract price. Producers initially attempted price hikes to restore profit margins, but it soon became apparent these plans were too ambitious given unsupportive demand.

The post-holiday revival in demand failed to materialize as expected with many converters running down their existing stocks or buying on a needs-only basis. This was based on a growing expectation of softening prices during the fourth quarter and further possible lockdowns. Packaging continued to fare better than other sectors.

There was sufficient material available during the first half of the month to satisfy weak demand.  Following Hurricane “Laura” in the US, LLDPE imports have virtually dried up because the infrastructure of the PE production plants in the southeast of the country was heavily damaged.

HDPE

HDPE prices were unchanged during the first three weeks of September following a rollover for the ethylene contract price. Producers initially attempted price hikes to restore profit margins, but it soon became apparent these plans were too ambitious given unsupportive demand.

The post-holiday revival in demand failed to materialize as expected with many converters running down their existing stocks or buying on a needs-only basis. This was based on a growing expectation of softening prices during the fourth quarter and further possible lockdowns. Packaging continued to fare better than other sectors.

There was sufficient material available during the first half of the month to satisfy weak demand.  Following Hurricane “Laura” in the US, HDPE imports have virtually dried up because the infrastructure of the PE production plants in the southeast of the country was heavily damaged.

PP

PP prices were flat during the first three weeks following a rollover for the September propylene contract price. Producers were pinning their hopes on demand picking up after the holidays and for a further firming in prices, but demand was unsupportive.

Post-holiday demand disappointed as converters ran down their existing stocks and bought on a needs-only basis. There was a growing expectation of lower prices during the fourth quarter and a fear of further lockdowns as the pandemic worsened. Packaging, home appliances and household products fared better than the automotive sector.

Despite a global propylene shortage as a result of cracker outages, buyers had no difficulty obtaining the PP material they wanted.

Some sources reported that suppliers may concede to slight price reductions in the latter half of the month if demand remains weak.

PVC

European PVC prices continued to climb during September as a result of supply tightness and lively demand. PVC sellers called for price hikes of between €50-80/tonne despite a rollover for the ethylene contract price. By mid-September, PVC contract prices were settling with gains of at least €50/tonne over the previous month.

Producers’ stock levels were extremely low due to various ongoing and forthcoming plant turnarounds or unexpected production issues. In addition, supply was further shortened by a virtual lack of imports due to high demand in other regions of the world. Production outages due to hurricane ‘Laura’ in the US further limited the already weak import situation.

Order intake was better than expected as converters replenished inventories on their return from summer holidays. Construction continued to perform well while export orders also picked up sharply.

PS

Most European PS producers were content to accept a price rollover in September and improve margins after the styrene reference price fell €13/tonne. Meanwhile, Trinseo announced a planned price increase of €30/tonne for general purpose polystyrene (GPPS) and high-impact polystyrene (HIPS) materials. However, a slow recovery in demand meant that GPPS prices slipped back a little despite supply disruptions. The surcharge for HIPS mostly remained at €85-100/tonne even after the small increase of €25/tonne in the cost of butadiene.

Supply was adequate despite the plant maintenance turnarounds and material availability was more than adequate to meet the overall weak level of demand during September.

A much hoped for topping-up of inventories failed to materialize early September as converters returned to work after the holiday season. Demand recovered at a much slower rate than expected.

PET

European PET prices softened further during the first three weeks of September as a result of dwindling demand, good material availability from local producers and competitively-priced imports. The cost position was unclear at time of writing as the September paraxylene contract price had not been settled. The September monoethylene glycol contract indicated a €33/tonne increase from the previous month.

European production lines ran largely without interruption and there was more than sufficient material available from local producers. A growing tide of competitively-priced imports from the Far East proved attractive to European buyers. Maintenance at a number of larger PET production plants could lead to some supply restrictions in October and November.

Beverage bottle demand is slowing down as summer draws to a close while the outlook is still clouded by uncertainty caused by the pandemic.