Standard thermoplastics markets began the New Year quietly with very little price movement in either direction.
The ethylene reference price and the propylene reference price both settled on a rollover in January. LLDPE prices nudged slightly higher while LDPE prices remained unchanged. HDPE blow moulding and blown film prices increased by just €5-10/tonne while injection moulding prices were rolled over.
In the polypropylene sector, both homopolymer injection and copolymer injection prices increased by €5-10/tonne and homopolymer film prices remained unchanged. Base PVC prices also remained unchanged.
Polystyrene prices moved down in line with the €5/tonne reduction for the styrene monomer reference price. PET packaging prices surged by €70-80/tonne in response to supply concerns brought about by turmoil in the Red Sea.
Polyolefin prices took a surprisingly sharp upward turn during the first two weeks of February, especially as both the ethylene and propylene reference prices were only settled slightly higher, up by €5/tonne and €15/tonne, respectively. Polyolefin markets became concerned about the supply implications cargo delays and rising logistics costs around the Red Sea following attacks on commercial shipping by the Houthis. Consequently, producers were able to ask for triple-digit price increases without too much difficulty.
Polystyrene prices are rising at the fastest rate in February, more than matching the €190/tonne increase for the styrene monomer reference price. PET packaging prices are also rising again this month following an increase in feedstock costs. PVC prices are stable as the turbulence in the Red Sea is having less of an impact on supply.
Supply tight
The attacks on commercial shipping in the Red Sea is leading to late arrival of cargos from Asia, rising freight rates and tighter supply. European polymer output was already quite tight across all polymer classes as producers maintained low run rates. There have also been several planned and unplanned plant outages, particularly affecting the polyolefin sector. A summary of the latest supply-related market developments are summarised below;
- Ineos declared force majeure on 11 February for the delivery of multiple phenol feedstocks and intermediates at the company’s plant in Gladbeck, Germany, possibly due to problems with feedstock supply
- Ineos declared force majeure for deliveries of HDPE pipe grades from the Belgian production site in Antwerp-Lillo on 29 January as a result of ‘exceptional circumstances”
- TotalEnergies declared force majeure on PP for the entire European market on 26 January due to an unspecified mechanical issue at the Gonfreville, France, production site
- Formosa Plastics said in January that it was declaring force majeure due to the shipping issues in the Red Sea and would halt deliveries to Europe and Turkey
- Sabic announced a force majeure for LDPE deliveries from its Dutch site in Geleen, the Netherlands on 23 January due to technical issues that arose while restarting the plant after maintenance.
Demand low
Demand has barely recovered at the start of the new year and remains well below what would normally be expected for the time of year. A few end use markets are slowly sparking back into life; including packaging film, pharmaceutical packaging and profile extrusion, but overall sentiment remains weak. Most converters are buying just enough material to meet their immediate production needs.
Outlook
Further price increase are possible this month in view of the short supply situation. In March, prices are likely to increase further. Supply is expected to remain tight and the uncertainty caused by turbulence in the Red Sea is contributing to the increase in upstream costs.
L/LDPE
LDPE prices remained unchanged in January following a rollover for the ethylene reference price. LLDPE prices edged €10/tonne higher as a result of shorter supply.
There was a modest upturn in demand but buying activity remained well below what would normally be expected. European L/LDPE import prices have risen because of the conflict in the Middle East and disruption to shipping in the Red Sea. Producers maintained tight production controls.
L/LDPE prices surprisingly increased by a very large amount in the first half of February, despite only a €5/tonne rise for the ethylene reference price. Producers have leveraged the turmoil in the Red Sea to their advantage and hiked prices. Buyers have little choice but to pay the hefty hikes due to very thin material availability caused by delays in arrival of imports and PE plant outages.
HDPE
HDPE injection moulding prices remained unchanged in January after the ethylene reference price settled with a rollover. Blown film and blow moulding prices increased by €5-10/tonne because of slightly tighter availability.
Demand picked up a little following on from the very weak buying activity during December, but still remained much less than would normally be expected. There was still sufficient material available to meet demand, despite ongoing production cutbacks, delays to imports caused by the unrest in the Red Sea and higher exports to Turkey.
HDPE producers called for triple-digit price increases at the beginning of February even though the ethylene reference price had risen by only €5/tonne. Supply was tight because of the reduced availability of imports and tight production controls at European PE plants. Consequently, HDPE prices had risen by €130/tonne by mid-month.
PP
In January, PP homopolymer film prices remained unchanged following a rollover for the propylene reference price. PP homopolymer injection and copolymer injection prices nudged slightly higher later in the month as supply tightened after some producers closed their order books by mid-month.
There was more than enough material available to meet demand despite producers keeping a firm lid on run rates. The attacks on commercial shipping in the Red Sea led to late arrival of cargos from Asia and rising freight rates. Demand remained subdued at the start of the year.
PP producers were able to push through firm price increases ranging from €150-170/tonne in February on the back of tightening supply. Material availability was hindered by several unplanned plant outages, production restrictions and import bottlenecks because of the turmoil in the Red Sea area.
PVC
Base PVC prices rolled over in January in line with the unchanged cost of ethylene. PVC compound prices firmed slightly due to an increase in the cost of additives.
The demand picture is mixed; packaging sales are good whereas demand from the building trade remained very weak. There was still sufficient material available to meet the ow demand, despite production cutbacks and unplanned production outages at two production sites. The attacks on shipping in the Red Sea caused delays in PVC shipments from Taiwan to Europe while imports from the US remained expensive.
In February, some producers tried to hike prices, but a combination of weak demand and sufficient supply meant that PVC prices were generally carried over from the levels of the previous month. Here, the turmoil in the Red Sea had less of an influence.
PS
In January, general-purpose and high impact polystyrene prices fell slightly after a €5/tonne reduction for the styrene reference price.
Converters were slow to restart their plants after the holidays. While demands overall remained well below normal levels for the time of year, some converters started to restock in anticipation of higher prices ahead. There was sufficient material available despite producers continuing to curb output because of the weak demand.
In February, a sharp rise in benzene and styrene spot prices led to a surge of €190/tonne for the styrene monomer reference price. General-purpose PS prices increased by slightly more than the SM cost rise because of limited material availability. Supply was restricted as producers maintained strict production controls. Demand remained weak due to pre-buying in January and converters ordering just sufficient to meet their immediate needs.
PET
PET prices were largely rolled over in the first half of January despite a reduction of €38/tonne for the December paraxylene reference price. The picture changed dramatically by mid-month as the conflict in the Red Sea escalated, and caused PET shipments from Asia to be diverted and delayed, and to become more expensive. Some buyers had to switch to European suppliers in order to secure the required volumes. European PET output was also short because of production cutbacks and PTA shortages. As a result, PET prices soared by €70-80/tonne last month.
PET prices increased during the first two weeks of February following a €20/tonne increase in the cost of paraxylene and higher import costs. European PET supply is expected to improve as local producers may raise production rates to make up for delays for imported material.