Polymer Prices Update

The European plastics industry has been under threat since Russia invaded Ukraine, and China’s Shanghai having been in lockdown for about two months. Global supply chains have consequently become even more fragile leading to uncertain supplies and material bottlenecks.

Against this backdrop it came as a relief for converters to see crude oil and naphtha costs falling, and later, ethylene and propylene costs settling lower in May. It was however not all good news, styrene monomer costs and benzene settled much higher.

The €70/tonne reduction in ethylene costs translated into the first PVC price reduction for two years as base PVC prices fell €35/tonne.

L/LDPE producers managed to limit the reduction in prices to just less than the €70/tonne reduction in ethylene costs. HDPE blown film and blow moulding prices, on the other hand, were down in line with the €70/tonne ethylene cost reduction, with HDPE injection moulding down by €80/tonne.

PP homopolymer injection and copolymer injection prices fell by more than the €65/tonne reduction in propylene costs with homopolymer film prices down in line with the propylene cost settlement.

PET prices fell for the first time since mid-2021 due to low demand and improving material availability.

PS prices increased by less than the €84/tonne rise in the styrene monomer cost as producers took into account falling energy costs in May. As a result, general-purpose polystyrene prices increased by around €50/tonne.

Supply adequate

European polymer markets were sufficiently well supplied to meet the low levels of demand in May. Most polymer plants were running normally and several cracker and polymer facilities came back on stream after outages. Higher imports from Asia and the US swelled availability of PE and PET towards the end of May.

A summary of the latest supply-side developments is listed below.

• The repairs to the cracker run by Versalis in Dunkirk, France, were completed quicker than expected, and restart began 15 June
• It was reported 15^th June that the technical problems at the refinery of OMV, Schwechat, Austria, which have been prevalent since the beginning of June, were also affecting the polyolefin production of its Borealis subsidiary
• Total Petrochemicals announced force majeure for HDPE at its facility in France 6^th June
• Westlake Vinnolit announced 2^nd June the lifting of force majeure at PVC production plants at Knapsack and Cologne in Germany and in France
• BASF announced restart of styrene production at its cracker plant in Ludwigshafen, Germany 
• The plant run by Ercros, Barcelona in Spain is running smoothly, Anwil, Poland, Shin-Etsu and Vynova, Belgium, all VCM and PVC plants, are now operating normally
• The force majeure at Kem One, Lyons, France; is still in effect, with in some cases significant customer allocation arrangements.

Demand low

Demand was very disappointing in May as converters ordered just sufficient to cover their immediate needs due to economic uncertainty and with prices still very high. Converters also face ongoing difficulty passing through the desired price increases to their customers. The large number of bank holidays across several European countries also curbed sales.

The automotive sector remained very quiet while building and construction also saw weaker sales. Plastic soft drinks bottle demand was surprisingly low for the time of year.

June outlook

This month, PE prices are down over €100-150/tonne with PP nearly €200/tonne lower. PVC prices have stabilised while PS is up slightly. PET prices are expected to rise on higher costs and better demand.

L/LDPE

In May, L/LDPE prices fell by less than the €70/tonne reduction in the ethylene contract price. LDPE prices fell by €65-70/tonne at the lower end of the scale with prices falling by €55-60/tonne at the upper end of the scale. LLDPE price fell by €55-60/tonne.
There was sufficient material available to meet contractual obligations with most plants running normally. While major logistical problems remained which hindered trade, a significant volume of imported material arrived from Asia and the US towards the end of the month.
L/LDPE demand actually declined in May as converters were deterred from buying more than they needed due to the high prices. Bank holidays across several European countries also curbed sales.
In June, L/LDPE prices are falling sharply due largely to weak demand. LDPE prices are down €150/tonne with LLDPE €100-120/tonne lower.

HDPE

In May, the reduction in HDPE prices exceeded the €70/tonne reduction in the cost of ethylene due largely to weak demand. Blow moulding and blown film prices fell by €70-75/tonne while injection moulding prices were down by €80/tonne.
There was sufficient material available to meet contractual obligations with most plants running normally. While major logistical problems remained which hindered trade, a significant volume of imported injection moulding material arrived from Asia and the US towards the end of the month.
Demand was very low in May, especially from the automotive sector. Converters were ordering just sufficient to cover their immediate needs. With prices still at very high levels, converters are facing difficulty passing through price increases to their customers.
In June, HDPE prices are falling around €150/tonne, despite a rollover of the ethylene reference price.

PP

In May, the reduction in PP prices exceeded the €65/tonne fall in the propylene reference price due largely to weak demand. Homopolymer injection prices fell by €85/tonne, homopolymer film prices were down by €65/tonne and copolymer injection prices fell by €75/tonne.
There was sufficient material available to meet demand as most plants were operating without disruption. However, import volumes were low but were expected to pick up in June.
Demand was very low in May, especially from the automotive sector. Converters were ordering just sufficient to cover their immediate needs. With prices still at very high levels, converters are having difficulty passing through price increases to their customers.
In June, while the PP reference price fell by just €10/tonne, PP prices are falling dramatically as a result of weak demand. PP prices were down €200/tonne by mid-month.

PS

PS producers announced planned price hikes at the beginning of May factoring in an increase of €84/tonne in the styrene monomer reference price. Producers also took account of falling energy costs, and therefore asked for lower premiums compared to the SM cost. As a result, general-purpose polystyrene prices increased by around €50/tonne with high-impact grade prices rising €20-25/tonne.
Styrene monomer continues in short supply as a result of production outages. PS supply has however improved and there is sufficient material to meet demand.
Demand was very low in May as converters ordered just sufficient material to cover their immediate needs with prices still at record levels and the prospect of lower prices in June.
This month, PS producers announced either a price rollover or a small price increase following a €16/tonne rise in the styrene monomer cost.

PVC

In May, PVC prices fell for the first time in two years. PVC bas material prices fell by €35/tonne, which was equivalent to 50% of the reduction in ethylene costs. PVC producers actually increased margins as they failed to take account of lower energy costs. PVC rigid and flexible compound prices fell by €20/tonne due to higher titanium dioxide and plasticiser costs, respectively.
PVC base material availability remains low due to ongoing plant outages. Imported material is also in very short supply but PVC compound supply has improved.
Demand was rather patchy in May with buyers showing caution in view of economic worries and high prices. The building sector was a little quieter but film demand was livelier. Automotive sales remain quite weak.
This month, PVC prices are rolling over following an unchanged ethylene contract price.       

PET

PET prices fell for the first time since mid-2021 in May despite stable feedstock costs. Low demand and improved material availability exerted downward pressure on prices. Bottle-grade PET prices fell on average by around €100/tonne last month. 
With most European PET production plants operating normally there was more than sufficient material available. Supply was also swelled by an unexpectedly large consignment of Imported material arriving from Asia, which further put downward pressure on prices.
PET demand was surprisingly low for early summer; a time which should represent the peak of the bottle making season. Converters were proceeding with caution in view of such high price levels.
In June, PET producers have revised their offers slightly upward. The June paraxylene contract price is expected to show a triple-digit rise and demand is recovering as the summer weather heats up.