Downtrend gains momentum / Cost reductions meet strong output, imports and weakening demand / Price pressure to continue in March
There was a sense of gloom permeating the European engineering thermoplastics production market in February, with prices eroding almost everywhere. In some cases - with PBT and PMMA, for example - the lower Q1 agreements affected notations, whereas in others - among them ABS and PC - lower feedstock costs took their toll. The latter impact was less pronounced for PP compounds due to the "structural adjustments starting to have an effect. In the case of POM, the pressure came primarily from imports as well as falling recyclate prices.
The polyamide chains currently constitute a particular worry for producers. The global overcapacities for feedstocks such as caprolactam and base polymers are becoming increasingly apparent, pushing PA prices into a virtually unstoppable slide. There is no end in sight yet to the erosion, not least since demand is currently on the sluggish side.
While the decline in commodity-related ABS and PP notations could come to a halt soon, the price pressure on nearly all the "traditional" engineering materials could continue into March, with a number of factors working together. In the cases of PBT and PMMA, the price reductions granted in the quarterly contracts will still be factored into the distribution and compound businesses in the last month of Q1. Imports continue to pressure European POM producers, while both PC and especially PA remain dogged by oversupply. Production cutbacks will do little to change that underlying reality, in part because of the inevitable drop in demand in March due to this year's early Easter holidays. Apart from that, the signs from the automotive sector are not exactly encouraging.