PET prices set to rise following surge in crude oil prices

L/LDPE

Initially, L/LDPE suppliers considered asking for price increases of up to €50/tonne for September. However, following the €40/tonne reduction in the ethylene reference price any such hopes producers had for a price hike quickly faded. Instead, their focus was on retaining as much of the cost fall as possible. Tightening supply and better demand meant that the cost reduction was not passed on in full. L/LDPE prices fell in average by €35/tonne. 

Material availability shortened due to outages at several facilities in North-western Europe and the upcoming autumn plant maintenance season. Meanwhile, LLDPE imports remained lower than expected. 

Demand was slightly improved compared with the previous month as a result of the holiday period coming to an end and an upturn in seasonal business. However, September business was much slacker than would normally be expected. 

HDPE

HDPE suppliers also planned to raise prices at the beginning of September. However, following a reduction of €40/tonne for the September ethylene reference price any such hopes producers had for a price hike quickly faded. Instead, their focus was on retaining as much of the cost fall as possible. Tightening supply and slightly improved demand meant that the cost reduction was not passed on in full for blown film and blow moulding product. Injection moulding prices fell in line with costs mainly as a result of import pressure. 

Material availability shortened due to outages at several facilities and the upcoming autumn plant maintenance season. 

Demand was slightly improved compared with the previous month as a result of the holiday period coming to an end and an upturn in seasonal business, but was quieter than usual. 

PP

The September propylene reference price fell €50/tonne reflecting lower naphtha costs. PP producers were determined to improve their margins by not passing on the cost reduction in full to customers. Despite low demand, planned and unplanned supply restrictions at cracker and PP production plants helped their cause. PP prices fell on average during September by around €30/tonne compared with the previous month. 

PP supply is shortening as a result of present and upcoming plant maintenance programmes and force majeure being called at several European PP production plants. 

Demand failed to pick up noticeably as would normally be expected after the summer holiday period came to an end. Weak end use demand meant there was no pressure on converters to rebuild stocks and they were mostly prepared to sit back and wait to see what happens. 

PS

For September, the styrene monomer (SM) reference price continued on an upward trend following a sharp rise in the cost of benzene, and to a lesser extent, ethylene. Some PS producers announced planned price hikes for general-purpose PS of €70/tonne to improve their margins. However, given poor demand and good supply, producers were forced to offer small price concessions and increase prices by less than the €59/tonne rise in the SM costs. The premium for high impact-resistant (HIPS) material remained at €90-100/tonne despite a reduction in the cost of butadiene.

There was sufficient material available in the market to meet demand. However, one producer reported production problems and was only delivering to regular customers. 

Demand disappointed in September with many processors only ordering what was absolutely necessary in the hope of a cut in October. 

PVC

In September, ethylene, a key component of the PVC cost base, settled €40/tonne lower against the previous months’ contract price. PVC producers hoped to broaden their profit margin by restricting price rebates to less than the proportionate €20/tonne reduction in their cost base. However, a combination of good supply and weak demand forced them to pass on the ethylene cost reduction to processors in full. 

Several European PVC plants have been undergoing maintenance work, but supply shortages have not been reported. However, the upcoming cracker maintenance season which could lead to outages in C2 production are an ongoing source of uncertainty. 

The seasonal PVC demand upturn following the end of the holiday period was much milder than anticipated. Construction sector order intake was weaker than over the same period last year due to the economic slowdown. 

PET

September paraxylene and monoethylene glycol contract prices had not yet settled at time of writing. However, prices were expected to rise following a surge in crude oil prices after the drone strikes on the Saudi Arabian refinery, and a rebound in Chinese demand. Given the uncertainty about price development freely-negotiated monthly contracts for bottle-grade PET varied widely; from a rollover to an increase of €30/tonne for small volume business. 

Demand from end markets remained subdued last month despite the return from holiday and rising temperatures. Processors had little incentive to buy with well-stocked warehouses. 

PET producers continued to restrict production in order to avoid excessive stock levels developing. However, there is still a steady supply a competitive import offers from Asia. Planned maintenance work will begin at PET plants in Spain and Lithuania during September.