L/LDPE
In June, L/LDPE prices fell sharply because of a reduction in the cost of ethylene and persistently low demand. LDPE prices fell €120-125/tonne while LLDPE prices were down €110-115/tonne compared to the €80/tonne reduction in the cost of ethylene.
Supply was more than sufficient despite the production cutbacks. This is explained by a high level of inventories at producers and an ample supply of imported material. Demand weakness persisted across most end markets. Processors bought only enough material to meet their immediate production needs with prices expected to fall further in July.
In July, the L/LDPE price trend was set by a reduction of €40/tonne for the ethylene reference price. L/LDPE price settlements varied widely but on average were down by €40-50/tonne in early trading as producers curbed run rates even further to better balance the market.
HDPE
In June, HDPE prices closely tracked the €80/tonne reduction for the ethylene contract price. Blow moulding, injection moulding and blown film prices each fell by €80-85/tonne. Bigger discounts were given to those customers ordering larger volumes.
Material availability has been kept under tight control by production cutbacks but imported material meant that there was sufficient supply available to the market. Demand levels remained weak across most end markets and producers ordered just enough to meet their immediate needs given their high stock levels.
In the first two weeks of July HDPE prices tended to follow the €40/tonne reduction for the ethylene contract price. The good market balance is being threatened by a further reduction in order intake because of low seasonal demand as Europeans take a holiday. Producers maintained output controls to counter the lower demand.
PP
In June, PP prices fell by slightly more than the €80/tonne reduction for the propylene reference price. PP homopolymer film prices fell by €110/tonne with homopolymer injection and copolymer injection prices falling by €100/tonne.
Producers’ inventory levels have swelled despite producers further reducing run rates at their plants. There was also plenty of imported material available. Demand weakness persisted across major markets such as automotive and packaging. Buyers adopted a cautious approach in view of further price cuts likely to come in July.
PP prices are indeed declining during the first two weeks of July. In view of the weaker demand brought about by the summer holiday season, homopolymer PP prices are down in most cases in line the €50/tonne reduction for the propylene contract price with copolymer injection prices down €70/tonne due to tighter supply.
PVC
In June, PVC prices tumbled further because of lower costs and weak demand. Producers hoped to minimise the price reduction to the proportionate impact of €40/tonne from lower ethylene costs on PVC production costs. However, base PVC prices fell by twice this amount. Flexible PVC compound prices fell by €70/tonne with rigid PVC compound prices down by €60/tonne.
Producers maintained strict output controls at their plants to curb supply yet there was plenty of material available to the market through imports. Low order levels from the construction industry kept a firm lid on demand.
A decline of €40/tonne for the ethylene contract price and a further reductions in the cost of additives pushed base PVC and PVC compound prices even lower at the start of July. The summer holiday season has restrained demand even further.
PS
In June, ongoing weak demand and lower feedstock costs pushed polystyrene prices sharply downward. PS prices fell more or less in line with the €127/tonne reduction for the styrene monomer reference price although much bigger price discounts were available for larger customers.
Producers maintained strict output controls to enable a better market balance, yet there was more than enough material still available to meet demand. Demand remained very weak in view of the difficult economic situation.
In July, PS prices are falling even further following the €87/tonne reduction for the styrene monomer reference price. General-purpose PS prices had fallen by a similar amount to the feedstock cost by the second week of the month with high-impact grades following in line. No change to the excess supply situation is anticipated this month; demand remains very weak.
PET
At the beginning of June, market expectations were for a more stable price trend. However, there was a further notable fall in bottle-grade PET prices with settlements down on average by €55-60/tonne. The May paraxylene cost settlement dropped by €105/tonne and there was also a plentiful supply of imports available at very competitive prices.
European producers cut the run rates at their plants even further to better balance supply against the low market demand. Indeed, demand failed to recover as expected, despite the warmer weather.
PET prices are again under pressure at the beginning of July. There is limited scope for producers to cut back production further and there is a plentiful supply of cheap imported material available to the market. Demand is unlikely to approach normal levels this month as buyers take their summer holidays.
