A monthly review of European polymer prices, provided by Plastics Information Europe, part of the KI.PIE Group
Standard thermoplastics
- Destocking, imports, and summer lull drive virgin polymer prices lower
- Minimal buying despite fall in prices
- Demand for PET below seasonal expectation
Standard recyclate
- High sales volumes juxtapose low sales prices
- No boom in demand expected for summer
- Imports of virgin material put pressure on recyclate market
POLYETHYLENE
After four successive months of rising costs, the ethylene contract for June was fixed €50($57) per tonne lower. In combination with the poor demand ahead of the summer holidays, this resulted in major downward price adjustments – which considerably exceeded the minus of the monomer.
A healthy supply situation across the board put additional pressure on prices. Despite plant cutbacks, there was more than enough material available. Apart from that, imports from Asia pushed their way onto the market.
Ordering activity in turn stagnated at a low level. Converters vehemently tried to reduce their expensively purchased stocks in order to minimise the write-offs. There were no impulses from the end-markets that could have stimulated demand.
Not much is likely to change with the situation in July. The ethylene contract continues its downward spiral and, with a drop of €200($228)/t, is even gaining further momentum. European producers will probably not be able to avoid significant price adjustments once again. Despite this, their stocks are likely to grow because new orders are expected to remain in short supply.
Ordering could continue to remain slow during the summer holidays, with converters and their customers carrying out destocking measures on a large scale.
POLYPROPYLENE
A PIE price panellist gave a summary of the market situation that was as apt as it was fatalistic: “No matter how low prices fall, as plastics processors, we aren’t buying anything anyway.”
To put it in slightly more concrete terms, the propylene contract was down by €30($34)/t in June. However, during the negotiations, processors were able to secure significantly larger discounts. This was because prices had risen sharply in the preceding months – and there was no sign of an upturn in demand.
Even plants operating at significantly reduced capacity in Europe were providing enough to meet demand in full. Some suppliers were even offering additional volumes. In southern Europe in particular, imports from Asia arrived on top of this.
On the flipside, ordering activity continued to decline as manufacturers struggled to reduce their costly stock levels. New orders remained few and far between before the summer holidays.
No change in the trend is expected for July: the propylene contract continued its downward trend and was settled €190($216)/t lower. This is also expected to push PP prices further down. As purchases continue to stagnate, the stock levels of producers are likely to rise.
Processors are still showing a reluctance to buy. The summer months, with their holidays, are once again having a dampening effect on purchases.
PVC
Converters set the pace in June. As the month progressed, what initially appeared to be merely the producers passing on the drop in the cost of ethylene (down €50/t) to a moderate extent turned into a broader downward movement.
Weak demand, well-stocked warehouses, and the holiday period also gave buyers more negotiating scope. Greater price reductions were therefore obtained for PVC in many places. A downward price trend also emerged for PVC compounds following three consecutive rounds of price increases.
Sufficient material was available on the market in June, not least because production at the former Vynova plant in Wilhelmshaven, Germany, continued unabated, despite the change of ownership.
Producers also preferred to sell their products on the European spot market rather than enter into fierce competition with Asian producers in the export markets. The price pressure is set to intensify still further in July.
The sharp drop of €200/t in the ethylene contract is opening up considerable scope for further price reductions. At the same time, demand is likely to stall even further during the summer holiday period.
Since many converters have built up their inventories and are only buying what they need for the short term, producers might find it almost impossible to prevent their stock levels from rising.
STYRENICS
The bull market is over. In June, prices for styrenics declined after a months-long upwards trend. The combination of high prices, speculation about a trend reversal, well-filled stocks, and the oncoming holiday season proved to be a crippling blow to demand.
Processors purchased only essential volumes. By consequence, polystyrene (PS) producers were able to pass on the increase in the styrene reference price (up €15($17)/t) only at the start of the month. In the weeks that followed, they tried to at least defend the rollover, which failed in numerous instances. Instead, the market experienced a number of discounts and downward adjustments of prices at the top of the price range.
For expanded PS and acrylonitrile butadiene styrene, the rollover actually represented the upper limit while price reductions were dominant. As a result, the average prices of all styrenics reported by PIE declined slightly.
Next month, the downward trend in prices is expected to accelerate drastically. No stimuli are expected from the demand side; on the contrary, many manufacturers plan to close for the summer, as the holiday season begins in July. What’s more, there are signs of a geopolitical easing, which is having an impact not only on the price of oil, but also on the styrene reference – the latter plummeted by €270($308)/t in July.
In polymer price negotiations, processors will therefore insist on getting a considerable piece of the pie. Weak demand is giving them a boost.
PET
The European PET market underwent a significant trend reversal in June. The panic buying triggered by the hostilities in the Persian Gulf had already eased off considerably during the previous month. With their full warehouses, converters were now able to meet demand without any problems.
Despite the heatwave in Europe, demand from the end-markets remained clearly below seasonal expectations. Imports from East Asia were still available. European suppliers wishing to sell sufficient volumes had no choice but to considerably lower their prices to bring them more in line with the imports.
On the supply side, no major changes are currently in sight for July. Since converters will no doubt be able to meet demand from stocks throughout the summer, they have no incentive to make any purchases. Quotations are therefore set to fall significantly once more, approaching the pre-war level.
STANDARD RECYCLATE
Once more, the sobering reality soon caught up with the recycling industry. Prices in June were significantly more stable than previously expected. Many recycling companies still managed to sell virtually all of their material. For some materials, however, this was only possible by making price concessions. Given that input and production costs remain high, this hit the companies hard. The first effects of the new EU Waste Shipment Regulation were felt only rarely.
July is unlikely to bring any summer euphoria. Many market players see no way around a general downward adjustment for all recyclate prices. Not least because of the approaching holiday season and a number of orders brought forward to build up stocks, processors are once again adopting a much more cautious approach to purchasing. This will likely push demand back to a low level. To make matters worse, competition from cheap virgin material imports has recently become more pronounced again. The presumed end of the war in Iran is likely to increase the influx of materials from non-EU countries. However, an economic upturn is not to be expected, no matter the sector.
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