European standard thermoplastic prices continued on an upward trajectory during the last two months after the pandemic-related price collapse earlier this year. Polymer price increases were largely driven by higher upstream costs. Polymer producers generally called for price hikes in excess of the higher feedstock costs to improve profit margin.
In the PE sector, July contracts for LDPE grades broadly settled at a margin pass-though, or at least a €84/tonne increase. Lower production rates and the lack of imports supported suppliers’ hike requests. However, LLDPE and HDPE grades saw margin erosion with contracts settling at no more than a €70/tonne increase.
For early August, most L/LDPE and HDPE grades settled on a rollover despite producers’ calls for price increases of up to €40/tonne. Only HDPE blow moulding posted price increases.
In July, PP copolymer injection prices increased in line with the €75/tonne rise in propylene costs with homopolymer products showing small margin erosion. However, August PP contracts are increasing across the board in excess of the €27.5/tonne rise in propylene costs mainly as a result of lower availability following several plant stoppages in France.
PVC prices have increased by slightly more than the pro-rata additional ethylene costs over the last two months due to restricted supply and a pickup in demand.
PS producers experienced further margin erosion during July and August with contracts settling less than the rise in styrene monomer costs. PS is well supplied and demand is low.
PET sellers have also seen further margin erosion with contract prices failing to rise in liner with feedstock cost increases during the last two months.
European standard thermoplastic markets were adequately supplied over the peak summer months although there were significant differences between individual producers’ ability to supply. A few bottlenecks were evident in the PE and PVC sectors as a result of production outages. Otherwise, polymer plants in most other product sectors were running without interruption, although producers maintained strict output controls to avoid excess stocks developing ahead of the holiday season.
Few additional unplanned plant outages were called during the last two months. However, in early August Total declared force majeure on its 115,000 tonnes/year PP line at Lavera, France due to technical issues. Total also had to shut down its 150,000 tonnes/year PP line in Lavera due to a power outage caused by the persistent forest fires near Marseille. Other companies producing at the French petrochemical site include Kem One and Ineos.
A number of polymer plants will be shut down for planned maintenance work during the autumn. Producers have been building buffer stocks ahead of the planned shutdowns.
In July, polymer demand was generally quite mixed. The easing of the lockdown led to some stimulus, especially in Southern Europe, but in view of the high prices and earlier restocking, converters bought only what they needed for immediate production. Packaging industry demand was mixed with good demand from the hygiene products sector and weak demand for beverage products. The construction industry was much more buoyant in July, which lifted PVC sales. Automotive industry sales remained subdued.
In August, many converters are shutting their lines for 2-3 weeks for summer holidays. The high prices and the holiday season are expected to further dampen demand.