A monthly review of European polymer prices, provided by Plastics Information Europe, part of the KI.PIE Group
Standard thermoplastics
- Demand weakens, supply improves
- June outlook turns bearish as feedstock costs ease, imports return
- Converters destock as summer lull sets in across PE, PP, PVC, styrenics, and PET
Standard recyclate
- Prices trending up, but financial pressure remains
- Weaker order intake among processors
- Recyclate gains importance as a feedstock
POLYETHYLENE
Price agreements concluded in May varied considerably. Where producers had already applied significant increases in the last two months, they were now prepared to grant their customers a rollover.
Other agreements followed the development of ethylene (up €100($116) per tonne) and factored in the cost increases. Despite continuing production cutbacks, the availability of some materials improved and suppliers had no difficulty fulfilling their contracts.
Order intake for many processors weakened, as customers were no longer engaging in panic buying and therefore inventory restocking came to an end. In addition, some companies took advantage of the public holidays and bridge days in May to temporarily suspend their production.
What can be expected in June? After four consecutive months of increases, the ethylene contract was fixed €50($58)/t lower. In combination with weak demand ahead of the summer holidays, this could indicate significant downward price adjustments.
Furthermore, the first import volumes are expected to return to the market. If these shipments do indeed arrive, they could increase supply and push the market towards oversupply.
Nevertheless, ordering activity is expected to remain at a low level. Converters are focused on lowering their stocks and will likely order only what they absolutely need.
POLYPROPYLENE
Price developments varied considerably in May. While the cost pass-through of propylene (up by €120($140)/t) was fixed in some negotiations, other processors were only able to achieve a rollover for standard compounds.
Overall, producers were faced with declining demand. Although production continued to be affected, the supply situation in Europe eased slightly. Nevertheless, many processors had major problems passing on the sharp rise in costs to their customers.
The resulting reluctance to buy and the low number of production days in May noticeably curtailed demand. After four consecutive months of price increases, the contract for the precursor propylene was adjusted downwards by €30($35)/t. This opens the door to correcting the price level for PP.
Significantly more imports are expected in June. As production in Asia is also restricted by the conflict in the Middle East, it remains to be seen what volumes will actually arrive. The statements regarding the development of demand are uniformly negative.
The development of prices for reinforced compounds was more dramatic. Producers once again had to pass on increased costs to their customers – even at the risk of suppressing demand altogether through price increases of around €350($407)/t.
Capacity utilisation across most production lines remained stable at a low level. Many processors were keeping a close eye on developments. Prices are likely to rise again in June, but only slightly. No momentum is expected in terms of ordering activity.
PVC
The market calmed significantly in May. Although the sharp increase in the ethylene contract (up €100/t) created further upward pressure, unlike in the previous month most suppliers limited themselves to passing on the higher raw material costs, i.e. they passed through roughly half of the C2 increase.
At the same time, demand weakened noticeably. Many processors purchased only to cover their immediate requirements. In particular, the pipe segment reported increasing reluctance to buy.
Meanwhile, the supply situation was considerably more relaxed than in the previous month. In addition to the existing production cutbacks, output was reduced only by maintenance work at one plant and an unplanned production outage. Nevertheless, sufficient material remained available.
For June, there are growing signs of a reversal in price trends. Following the end of the ethylene price rally and the settlement of the contract for the upstream product at €1,645($1,914)/t, €50/t lower than previously, processors are expected to continue restricting purchasing activity to immediate requirements while reducing existing inventories.
Suppliers seeking to place volumes will therefore increasingly have to consider making price concessions. No additional demand stimulus is currently in sight.
STYRENICS
Prices continued to trend upwards in May. The level of premiums for polystyrene (PS) was generally based on the recent increase in the styrene monomer reference (up €55($64)/t). Premiums for expanded PS were sometimes below this level, depending on the respective supplier and previous pricing.
Acrylonitrile butadiene styrene (ABS), by contrast, became more expensive, as the costs of the other key components butadiene (up €200($233)/t) and acrylonitrile (ACN) (up €168($196)/t) increased much more sharply than the styrene price.
The availability of materials improved noticeably. At the same time, demand declined, as the high price level deterred many processors from ordering more material than was necessary to keep up operations. In addition, many of them have ample stocks following the hedging purchases of the previous months.
The upward momentum in styrenics prices has now slowed considerably. Although the styrene monomer spot price increased by a further €15($17)/t in June, it remains questionable whether this modest rise will be reflected in market prices, given the approaching summer slowdown.
Even less change is expected for ABS prices, as the June declines in butadiene (down €40($47)/t) and ACN (down €11($13)/t) offset the higher cost of styrene.
PET
What had previously seemed like an extremely precarious situation on the European PET market eased considerably in May – and much more rapidly than expected. On the supply side, significant declines in Asian production chains took everyone by surprise, resulting in falling import prices from East Asia. At the same time, customers adopted a more realistic approach after two months of panic buying to secure supplies.
Fears of material shortages evaporated in light of the ongoing subdued demand during the peak season. While warehouses are now filled with expensive raw materials, the coffers are empty. And, as a result, some major buyers have already secured initial concessions from suppliers.
Across the market as a whole, however, slight increases were seen again, particularly in the first half of the month. As at the end of May, no major hikes were to be expected in June. All the signs pointed to a further easing.
Given the unstable global situation, however, nothing is certain. Much will depend on what happens on the Asian markets.
STANDARD RECYCLATE
Despite a balanced market and the uncertain availability of virgin material, not all recyclers were able to push through their price demands in full. Recyclers that managed to transfer the full cost increase of bale material were the exception, rather than the rule. That said, recyclers were busy and able to keep their output stable.
Contracts were fulfilled at all times. However, there was often not enough material available for additional volumes. PET was a special case – the market for PET was not balanced, driving prices further upwards.
In contrast, incoming orders among processors have weakened slightly. Nevertheless, they ordered more material and stocked up to secure volumes.
Prices may have to rise in June, too, otherwise the economic pressure on recyclers is unlikely to be sustainable. Even now, many companies are already struggling. It is high time that they succeed in passing on their costs to the market. Bale material will therefore likely become even more expensive, and recyclers urgently need these price increases to be reflected in the market.
That this will nevertheless be a difficult undertaking is clear to everyone. One consolation is that as long as the supply of virgin material remains tight, recyclates will continue to benefit and will finally be recognised in Europe as an important feedstock.
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