Western European standard thermoplastic prices have continued on an upward trend in the past two months due to higher feedstock costs.
In March, L/LDPE prices increased by €70-80/tonne with HDPE prices rising by €50-60/tonne, more than enough to cover the €30/tonne rise for the ethylene reference price. So far this month, L/LDPE prices have increased by a further €20-40/tonne and HDPE prices by €20/tonne compared to a €40/tonne increased for ethylene.
PP prices similarly increased at a slightly higher rate than the €35/tonne rise for propylene in April, but have failed to match the €45/tonne propylene cost increase so far this month due to weak demand.
PS prices soared last month as the styrene monomer reference price settled up by €222/tonne following a spike in the cost of benzene. This month, PS prices are up by slightly less than the €44/tonne rise for the feedstock cost.
PET prices gained €30-35/tonne in March because of higher raw material costs and the late arrival of Asian imports into the European market because of shipments being rerouted around the Horn of Africa.
Base PVC prices have matched the combined pro-rata increase for ethylene of €35/tonne in both March and April to date.
Supply tight
Material availability has remained tight across most product classes over the last two months. Apart from PET plants, where run rates have risen, polymer producers have maintained low operating rates across their plants. Imports have been fewer because cargoes arrived late due to the attacks on shipping in the Red Sea. There have also been a number of planned and unplanned plant outages.
A summary of the latest supply-related developments is provided below:
- ExxonMobil announced 12th April that it will close down the steam cracker and downstream polymerisation lines at its French site in Gravenchon near Port-Jérôme-sur-Seine before the end of this year
- TotalEnergies declared force majeure on 3rd April for styrene production at its Gonfreville site in France due to a technical issue
- Vestolit (Orbia subsidiary) shut down PVC plants in Germany on 1st March for a two-week maintenance programme
- Covestro/LyondellBasell declared force majeure at their joint venture plant for the production of styrene and propylene oxide in Maasvlakte, The Netherlands, on 27th March following a technical issue
- Inovyn shut down its PVC plant in Sweden on 1st April for a two-week maintenance programme
- Total called force majeure at its styrene facility in France on 15th April.
Demand weak
The upturn in end user demand which had been much needed this springtime has so far failed to materialise. Even the construction and the beverages sectors, which would normally pick up in the springtime, are not showing any signs of recovery. As order books remain weak, converters are buying only as much material as they need to meet current production requirements.
Outlook
Few deals had been concluded at the start of April as price negotiations were slow to get going after the Easter break. As more deals are concluded over the remainder of the month, producers are unlikely to be able to factor in further price increases above the monomer cost settlements. Any further planned price increases are more likely to be smaller, or even tending to a rollover, especially in view of the significant price hikes that converters have had to absorb in recent months.
Much uncertainty surrounds polymer price trends going forward into May and beyond in view of the growing tension in the Middle East.
L/LDPE
In March, L/LDPE producers began the month calling for price increases of up to €150/tonne. Such calls however proved unrealistic because of low demand and a rise of just €30/tonne for the March ethylene reference price. Price settlements varied widely but on average contracts were settled with increases ranging €65-70/tonne.
Supply was very tight because of production restrictions, unplanned plant outages and a low volume of imports. Call-offs remained very low.
By mid-April few contracts had been settled due to the Easter holidays; producers were targeting price increases to at least match the €40/tonne increase in the ethylene reference price. Material availability is tight yet there is more than enough material to meet demand despite production cutbacks and several PE plant maintenance turnarounds. Converters are buying only just enough material to meet their immediate needs.
HDPE
In March, HDPE producers asked for price increases far in excess of the €30/tonne rise for the ethylene reference price. However, given the sluggish demand converters were able to restrict price increases to between €50-60/tonne.
Material availability remains tight because of ongoing production restrictions but supply improved late in the month following the arrival of imports from the US. Demand was well below normal, but an uptick in call-offs for film grades was reported.
Few price negotiations had been concluded by mid-April due to the Easter holidays. Producers called for price increases that at least matched the €40/tonne rise for the ethylene reference price. However, continuing low levels of demand is likely to restrict such planned price increases. Supply is tight but remains more than adequate despite production cutbacks and maintenance turnarounds at PE plants.
PP
In early March, PP prices were showing triple-digit increases in view of the tight supply situation. However, given the ongoing weak demand such large price rises could not be sustained; settlements ended the month with average gains of €50-60/tonne.
Supply was very tight last month on the PP market because of several planned and unplanned plant outages. There was no sign of an upturn in seasonal demand and a long Easter break at some converters further dampened sales.
By mid-April, few deals had been settled due to the Easter holidays. Producers were hoping to pass through in full the €45/tonne rise for the propylene reference price. However, weak demand and adequate supply means that a more modest price upturn is likely this month. Converters are buying just sufficient material to satisfy their immediate production needs.
PVC
PVC producers were seeking price increases of €20-30/tonne at the beginning of March. However, the low demand meant that base PVC prices mostly settled €15-20/tonne higher, which was in line with the pro-rata rise in the ethylene reference price.
There was sufficient material available despite production cutbacks and a series of planned and unplanned plant outages. Demand remained weak, but there was a small upturn in stock-building activity in the construction sector.
In early April, most price negotiations were being settled with the pro-rata rise of €20/tonne arising from a €40/tonne
increase in the cost of ethylene. Supply is tight as producers continue to operate their plants at reduced rates and several PVC sites are down for routine maintenance. Demand remains weak with only limited evidence of a seasonal upturn in demand from the construction sector.
PS
PS prices soared again in March following an increase of €222/tonne for the styrene monomer reference price. Most contracts were settled with increases similar to the rise in the SM cost.
Material availability remained tight due to ongoing production cutbacks. Meanwhile, PS demand was further restrained by the skyrocketing price of the material. Converters only bought what was absolutely required to meet their immediate production needs.
Most price negotiations reached during the first two weeks of April were settling at just less than the €44/tonne rise in the cost of styrene monomer. Supply remains on the tight side as a result of production cutbacks and planned plant maintenance turnarounds. Demand shows no sign of a recovery; many converters are buying only enough material to meet their immediate production needs in view of the very high prices.
PET
European PET producers were able to push through price increases of €30-35/tonne last month. Their cause was aided by the late arrival of Asian imports due to cargoes being rerouted around the Horn of Africa. Feedstock costs also increased with monoethylene glycol prices rising €70/tonne and paraxylene prices up €5/tonne.
The supply situation is back to normal with most European sites now running at higher rates. There was no discernible pick up in end market demand.
PET producers plan to raise prices further this month following the increase in raw material costs. However, in view of a rising tide of imported material, good availability from local producers and inadequate demand, a rollover to a small price rise looks more likely. There are few signs in early April of the demand pickup that producers hoped for.
The latest pricing charts can be accessed here.