Sluggish sales put brake on planned price hikes

In August, European standard thermoplastic prices tracked cost development in generally very calm markets. Buying activity was sluggish, particularly in Southern Europe, where most of the plastics processing industry was closed for the holiday season. 

At the start of the month, some polymer producers announced planned price increases ahead of monomer cost development to bolster margins. However, buyers strongly resisted these plans. Polyolefins and PVC notations were mostly settled on a rollover basis compared to the previous month. Styrenics, on the other hand, moved upward in line with higher feedstock costs. 

The August ethylene contract price surprisingly settled €10/tonne higher when most market participants expected a rollover from July. Polyethylene contract prices mostly settled unchanged compared to the previous month. Producers’ plans to raise notations were mostly undermined by low demand, special offers and good material availability. 

PVC prices, which are also largely influenced by the cost of ethylene, were also mostly rolled over due to lacklustre demand. 

The August propylene contract price was fixed with a rollover after the sharp fall of €80/tonne in July. Polypropylene contract prices followed suit in quiet markets. 

The August styrene monomer (SM) reference price settled €33/tonne higher compared to the previous month reflecting cost increases for benzene and ethylene. Most polystyrene sellers announced plans to raise prices by more than the SM reference price, but buyers were not prepared to comply. Contract negotiations for general-purpose polystyrene and high-impact polystyrene mostly settled €30-35/tonne higher. 

The August feedstock reference prices for paraxylene had not settled at time of writing but monoethylene glycol prices fell slightly. With market sentiment predicting fairly stable costs, the majority of PET contracts settled either slightly lower or showing a weak rollover compared to the previous month
 

Supply normalises

In August, material availability for the HDPE, PP, PVC and PS polymer markets was getting back to normal, but a small surplus remained for L/LDPE. The PET sector was still characterised by oversupply and imports were still evident.

Braskem lifted the force majeure on polypropylene production at its plant in Schkopau, Germany 1 August after a long shutdown.

European monomer production has also mostly returned to normal after the end of the maintenance season. Shell has announced that the facility at Moerdijk, The Netherlands is again operational and Dow has restarted its cracker at Böhlen, Germany. 

However, according to market sources, LyondellBasell has started a turnaround at its cracker in Wesseling, Germany and Ineos has also began a six-week maintenance at its cracker in Grangemouth, the UK. Furthermore, ExxonMobil had an unplanned shutdown of its Fife cracker in Scotland 12 August due to mechanical failure of two boilers. 

Demand low

In August, polymer demand was low as many converters, particularly in France, southern Germany, Italy and Spain, had closed their plants for the holiday season. Many of those converters who remained open held back from making additional purchases with an expectation of lower prices to come. The economic slowdown across Europe also restrained end user demand. 

September outlook

In September, polymer demand is expected to recover as the market returns to normal following the end of the summer holidays. Monomer contracts could settle higher with the onset of cracker maintenance works. However, crude oil and naphtha prices have pointed downward in recent weeks. While polymer producers could seek to raise prices and improve their margins, weak end-use demand could restrain any such planned price hikes.

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