Standard thermoplastic prices have fallen sharply over the last two months following a downturn in feedstock costs and ongoing demand weakness.
Polyolefin producers attempted to limit price discounts to below the reduction in monomer cost in order to improve their flagging margins, but their efforts were largely unsuccessful.
LDPE prices have tumbled by €170/tonne over the last two months compared to a reduction of €90/tonne for the ethylene contract price. LLDPE prices, where supply is somewhat tighter, fell by €110/tonne while HDPE prices fell by €110-120/tonne during the same period.
In May and June, PP prices fell by a combined total of €120-140/tonne against a reduction of €95/tonne for the propylene contract price. Copolymer injection material saw the largest price reduction due to very weak order intake.
PVC prices have fallen by significantly more than the proportionate impact of lower ethylene on the PVC cost base. Base PVC prices have fallen by €150/tonne during the last two months compared to a proportionate €45/tonne reduction in ethylene costs. PVC is under pressure from low demand, a mounting supply surplus and competition from cheap imports.
In May, general-purpose polystyrene (GPPS) prices increased by €10-15/tonne following a surge in benzene costs, which led to a rise of €55/tonne for the styrene monomer reference price. In June, GPPS prices closely matched the €127/tonne reduction for the styrene monomer reference price.
PET prices remain under pressure as a result of lower-than-expected demand, growing price competitiveness from Asian imports and falling feedstock prices.
Material availability is lengthening despite production plants continuing to operate at reduced rates. A supply surplus is developing across most product sectors. The lower production rates from local producers are being countered by imported material, particularly for PET, PP, PVC and LLDPE.
The latest supply-related developments are summarised below;
- Spanish supplier Repsol shut down a polypropylene plant in Tarragona, Spain on 13 June due to “unforeseen and unavoidable technical issues”, and the company has also declared force majeure for the material. No indication has been given on a restart.
- BorsodChem plans to shut down its S-PVC plant in Hungary on 1 July for maintenance with restart scheduled for 1 September.
- There was flare-up activity at BASF SE’s steam cracker in Ludwigshafen, Germany, from 9 June for the following two weeks. The company cited maintenance works as the reason behind the flaring.
- Borealis announced late May a shut down for maintenance at three Austrian PP and PE production lines
- In mid-May, Czech supplier Orlen Unipetrol announced a force majeure for polypropylene from its Litvinov plant following a fire. The earliest production restart is expected in Q3.
Polymer producers were disappointed when a much hoped for upturn in demand failed to materialise during the last two months. Order activity from converters across all major market sectors including automotive, construction and packaging, remained extremely low due to the overall weakness of the economic situation in Europe. Demand has also been adversely impacted by bank holidays and the start of the summer holiday season. In addition, stocks at converters are on the high side and as a result buyers are only ordering what is absolutely necessary for their immediate production needs.
Most polymer classes are expected to see further price reductions by the end of the month due to a growing supply surplus and subdued sales. In July, there is unlikely to be a significant change to the downward price trend.