Polymer prices: Substantial hikes for PVC and PS, polyolefins stable

European polyolefin prices have barely changed since end September with very limited feedstock cost development and subdued demand. PVC and PS, on the other hand, have posted significant price hikes due to supply shortages.

PVC producers have seen sharp price and profit margin gains over the last two months. PVC base resin contract prices have increased €65/tonne in both October and November, compared to a €10/tonne decline in ethylene feedstock costs. PVC supply is constrained by several unplanned plant outages and demand has remained very lively.

PS producers have also managed price and margin uplift due to supply restrictions and good demand.

PET prices staged a modest upturn in October and stabilised during November despite lower raw material costs.

Supply shortages

European polymer availability was constrained by a combination of unplanned and planned plant shutdowns over the last two months.

Unplanned plant shutdowns included:

• LyondellBasell declared force majeure on its random copolymer PP supply from Brindisi, Italy due to technical issues 12 October
• SABIC declared force majeure for LDPE deliveries from its UK plant in Wilton due to ‘unexpected technical issues’ 3 November
• Total has extended its force majeure for polypropylene from European production for an indeterminate period. Technical problems at the group’s PP plant in Gonfreville, France, along with a power outage at its Lavera, France facility triggered the force majeure
• Inovyn declared force majeure 1 September on PVC deliveries from its three northern plants following a power outage at the company's Rafnes VCM plant in Norway. Inovyn's Rheinberg production plant was also still undergoing maintenance work into October
• Borealis announced force majeure on its feedstocks and cracker supplies from its     400,000tonnes/year of ethylene, Porvoo, Finland cracker during first week in November
• Borealis declared force majeure on 11 November for products from the cracker in Porvoo, Finland following an external technical defect. The outage is also affecting production of downstream polymerisation stages
• Ineos declared force majeure on its LDPE supplies from one of its plants in Cologne, Germany due to a power outage on 11 November.

In addition, France’s KemOne put its PVC customers on allocation for October on the back of greater interest in October cargoes amid a dearth of global PVC supplies. Furthermore, Vinnolit announced the closure of its 50,000 tonnes/year PVC plant in Schkopau, Germany due to the lack of profitability and long-term competitiveness.

Meanwhile, several plants, including LyondellBasell (LDPE plant at Aubette, France), Versalis (PS plant in Mantova, Italy) and Vynova (PVC plant in Beek, the Netherlands) restarted operations to improve the supply position.

Demand variable

PVC and PS polymers saw good demand during the last two months. PVC has benefitted from a strong order intake from the construction sector, while PS sales were supported by good demand for packaging and white goods.

PET beverage consumption continues to suffer from the restrictions imposed on the hospitality sector, although a small upturn was observed during November. Food packaging demand has benefitted from further government lockdown measures across the continent.

Polyolefins demand has improved a little but remains below what would normally be expected for the time of year.

December outlook

Crude oil and naphtha prices have risen since the announcement of effective vaccines to COVID-19 and an OPEC’s announcement stating that output will be adjusted to better balance supply to demand. A slight firming in December feedstock cost settlements is predicted, which together with continued supply tightening is likely to push standard thermoplastic prices higher.

L/LDPE

A €10/tonne reduction in the ethylene contract price settlement coupled with thin demand led L/LDPE producers to abandon their plans to raise prices in October. L/LDPE contract settlements varied between a rollover and a price reduction in line with ethylene costs.

Demand was slightly better in October but remained below what would normally be expected. Supply was restrained by several plant outages and lower imports but was still more than adequate to meet demand.

In November, L/LDPE producers’ plans to raise prices by €50/tonne was unrealised given a rollover in the ethylene contract price. Prices were raised by €5-10/tonne during the month.

The upward price trends were underpinned by material shortfalls as a result of continued plant outages and a virtual absence of LLDPE imports as prices in other regions were more attractive. Demand remained subdued.

HDPE

HDPE producers had to drop plans for a price increase in October after the ethylene contract fell and demand remained below expectations. HDPE contract price settlements varied between producers and between products. Blow moulding and injection moulding prices were down €5/tonne with film grade prices falling €10/tonne.

HDPE availability was somewhat shorter compared to L/LDPE mainly because of lower imports. Demand improved for certain market sectors such as automotive and caps and closures, but overall remained lower than normal levels.

HDPE prices were largely stable in November apart from injection moulding, where prices increased slightly due to more limited availability.

Supply was more than adequate for blow moulding and blown film despite low import volumes. Demand remained muted as converters refrained from building up stock levels before the end of the year.

PP

PP suppliers were forced to concede price rebates for homopolymer film and copolymer injection products which were slightly less than the €12.5/tonne decline in the October propylene contract price. Homopolymer injection prices remained stable largely due to better demand.

Demand was weak overall with continued lacklustre sales to automotive and packaging, although consumer durable product markets performed much better. Material availability was low because of several planned and unplanned plant outages.

Homopolymer film and homopolymer injection prices were largely stable in November following a rollover for the propylene reference price, but there were small increases for copolymers where availability was tighter.

Supply was generally shorter due to plant outages and limited availability of imported material. Food packaging demand was higher with further lockdowns being introduced across the continent while building sector sales dropped.

PS

PS contract price settlements varied widely between producers in October. A few producers offered a price reduction in line with the €33/tonne fall in the styrene monomer reference price while others offered a rollover as a bare minimum.

GPPS supplies were sufficient to meet demand, while HIPS availability from some producers’ sites was more restricted. This may partially be explained by higher demand for white goods.

PS suppliers tabled triple-digit price increases for November following the €58/tonne rise in the styrene monomer reference price and tightening supply. Contract prices settled well above feedstock costs ranging between €65-70/tonne.

Material availability shortened because of output restrictions at several PS plants and some producers were unable to meet customer orders in full. Demand was lively with stronger order intake for packaging and white goods.

PVC

In October, PVC producers were once again able to raise their prices significantly on the back of continued supply constraints and good order intake. They also managed to improve margins given a fall of €10/tonne in ethylene costs. PVC base material contract prices increased €65/tonne with gains of around €45/tonne for rigid and flexible PVC compounds.

Supply limitations persisted due to several major planned and unplanned plant production. shutdowns. Many customers had to be placed on allocation. PVC saw high demand across the board.

PVC sellers called for price increases of €70-80/tonne in November despite a stable cost base. In most cases, price hikes of €65-70/tonne were passed through without too much difficulty due to continued supply constraints.

While some production plants have resumed operations, PVC availability remains very tight. Construction demand also remained very good.

PET

European bottle-grade PET contract prices increased €10/tonne during October mainly because of lower material availability and higher feedstock costs.

PET supply was restrained by a series of planned maintenance programmes that were brought forward at European plants. There were also fewer imports of Asian material as the European market became less attractive to suppliers. PET beverage bottle demand was further hampered by the resurgence in the pandemic across the continent.

For November, PET deals were closed with rollovers to small increases of €10/tonne, despite lower feedstock costs and thin trading activity. However, higher PET import prices and some regional production outages enabled producers to stabilise prices.

While buying activity remained below expectations because of a further clampdown on the hospitality sector, there was a slight upturn in local sales in response to higher import prices.