A monthly review of European polymer prices, provided by Plastics Information Europe, part of the KI.PIE Group
Standard thermoplastics
- Holiday lull drags PE, PP, PVC prices down or sideways
- Styrenics surge on monomer spike, then reverse
- PET steady with cautious restocking
- Feedstock contracts point to a calm September
Standard recyclate
- Price gap to virgin material narrows
- Recyclers forced to make concessions
- No demand upswing expected, even after holiday season
POLYETHYLENE
In view of the weak demand, prices of the grades covered by this report occasionally trended slightly downwards, but also sometimes stuck at a rollover.
Producers’ attempts to factor in the increase in the cost of ethylene (up €42.50($49.50) per tonne) were only successful at the beginning of the month. After that, with prices still very high, proposals began to crumble, particularly as the supply situation was in most cases good, with a trend towards a surplus – despite the cutbacks at European plants.
The call-offs by converters remained at a very low level, because many companies took advantage of the poor order situation to halt production and send their workforce on holiday. Apart from that, stocks were still very high at some companies.
With the end of the holiday period, demand should improve again to a certain extent – that, at any rate is to be expected. Converters are likely, however, for the time being to stick with their cautious approach and only buy the quantities they really need.
The ethylene contract for September, which serves as a major guideline, has still not yet been finalised. However, significant price movements are not expected. That should mean only minor changes for PE prices, too
POLYPROPYLENE
The PP market was uneven in August. Agreements that had already undergone significant downward corrections in previous months in particular, followed the lead of the propylene contract (up by €55($64)/t), at least in terms of direction.
The situation for compounds was different. Although the bargaining did not involve large quantities here, negotiations were slow and ended with falling prices.
Across all product ranges, the market was well supplied, even to the point of oversupply, despite ongoing production cutbacks. Imports from Asia added further to supply.
The ordering situation remained at a very low level during the summer holidays. Processors held back on orders, operated cautiously, and preferred to use up inventory. Some shut down operations for several weeks.
In September, nothing fundamental is likely to change. The propylene contract is trending lighter by €10($11.60)/t. No major changes are anticipated. Supply shortages are also not expected, despite plants operating at reduced rates in many locations.
Only a few market participants expect demand to pick up significantly after the summer holidays. Many processors will therefore continue to order only what they need.
PVC
The higher ethylene costs had virtually no impact on PVC prices in August. Given the extremely low level of demand due to the holiday period, producers were only able to pass on the pro-rata increase in the C2 contract (up €42.50/t) in isolated cases. Most transactions were concluded with a rollover.
Slight increases were only seen for the suspension-PVC-(plasticised) compounds. This was due to bottlenecks that developed for a number of plasticisers, causing their prices to go up again.
Not much movement is expected for September, either. No notable price changes are anticipated for ethylene, and demand is likely to recover only modestly once the holiday season ends. Although further production cutbacks are likely to reduce supply slightly, they are unlikely to make much difference to the oversupply in the market.
STYRENICS
After the pronounced declines in July, prices for styrenics rose significantly again in August. Once again, the decisive factor was the movement in the styrene reference, which went up by €149($173)/t last month.
For expanded polystyrene (EPS), the cost increase was generally passed on in full, with some variation of around plus or minus €10/t. At the same time, for PS, price increases only matched the rise in monomer costs at the upper end of the range and were often somewhat lower.
For acrylonitrile butadiene styrene, the price rises were lower in any case due to the other cost components, butadiene (down €50($58)/t), and acrylonitrile (up €26($30)/t).
Demand suffered from the toxic mix of a weak economy, the holiday season including extended plant shutdowns, the high price level, and – following the advance purchases of the previous month – existing stocks already held by converters. This meant that virtually nothing was purchased.
The roller coaster is continuing, with the styrene monomer contract falling by €140($163)/t in September. Prices for styrenics are set to follow this trend – to one extent or another. The high level of price volatility is putting converters under considerable pressure, as they can generally pass on upward price movements only with a time lag. A further point of criticism is the lack of transparency in the way the styrene reference is set.
Discussions with plastics producers are therefore increasingly focusing on possible alternatives, or additional parameters alongside the styrene monomer contract, which could be taken into account when setting prices.
PET
As expected, the European PET market was calmer during the weeks of August. While the volatile oil prices and the unclear situation on the feedstock markets prompted a degree of uncertainty (the paraxylene reference for August had still not been found at the time of publication, for example), supply remained more than adequate.
This was because the already low level of demand was further dampened by the curtailed production at converter companies. Many small customers, where purchasing is mostly the top priority, took advantage of the calm situation to secure slightly bigger price reductions.
These larger orders served to narrow the volume gap that had widened due to the purchase of smaller quantities over previous months. Import offers thinned out somewhat following a number of port closures in East Asia as a result of storms.
For September, the current situation would suggest a strong rollover with moderate increases at most.
A rather vague sense of uncertainty is prevailing on the markets, however, due to logistical difficulties and the potential resurgence of the conflict with Iran.
Many customers are starting to reassess their stock levels after the holiday period so as to determine their restocking needs. This could possibly lead to temporary supply bottlenecks at times.
STANDARD RECYCLATE
Although prices for virgin material did not fall further in August, they continued to pose stiff competition for recyclates. Across virtually all product categories, recyclers found themselves forced to offer discounts in order to sell any volumes. Production lines continued to run at reduced capacity.
Nevertheless, recyclers had sufficient stock to meet the subdued demand. The summer holidays kept demand at a very low level, with processors buying only essential volumes. In many places – particularly in southern Europe – company holidays meant that no materials were ordered at all.
The picture was more positive for PET recyclers. As bottle scrap prices declined only slightly and demand remained robust in August, suppliers only had to make marginal price concessions on recycled compounds. High summer temperatures fuelled strong demand from the beverage industry, and this is unlikely to change in September.
Generally speaking, the price gap between virgin and recycled materials is narrowing further. If the slight increase in demand that typically follows the holiday season leads to higher virgin material quotations in September, recyclers will likely seek to use the opportunity to stabilise their own prices.
Construction activity is also likely to pick up again once the summer holidays have ended. This could at least support, and potentially boost, recyclate prices.
Capacity utilisation at recycling lines is expected to remain severely curtailed. Despite the production cutbacks, the market is unlikely to slip into any kind of undersupply. Even if orders increase slightly, manufacturers will generally continue to buy only what they urgently need.
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