05/19/2014

PIE - Polymerprice Reports

Standard Thermoplastics April 2014

PE stagnating / Tight C3 drives PP upward / PVC notations weaken / Styrenics follow the monomer cost increase / PET pointing down / Prices to rise across a broad front in May

PE: Despite a few minor successes early in the month, in
April European PE producers were forced to abandon their hopes of pushing
through price rises. After the Easter vacation, the price of nearly all products
remained stable, which - in view of the fall in ethylene costs - actually meant
producers' margins tacked on a bit. Prices for LLDPE (C4) saw the steepest
rises, thanks to the fact that EU import duties imposed on Middle Eastern
material early this year are increasingly making themselves felt. The material
is starting to become tight. On the other hand, notations for HDPE blow film
grades slipped slightly.


Although May's ethylene notation was fixed at a weak rollover, suppliers
called for hikes of up to EUR 30/t. In most markets, it will become increasingly
difficult to avoid price rises.


Developments for ethylene copolymer EVA are quite different. Faced with a
major global shortage in VAM feedstock, EVA prices keep rising. The upward
momentum is unlikely to come to an end in May, either.


PP: European PP prices soared in April as the tightness of
principal feedstock C3 played havoc with supply. By closing order books early
and declaring force majeure, producers seized their chance to improve margins at
least slightly. For most standard grades, the price rises exceeded the monomer's
upswing. Among the freely traded compounds, only GRP grades escaped the cost
pass-through.


Along the entire propylene chain, the market continued tight. May's C3
contract was fixed EUR 10/t higher and almost reached parity with ethylene. Many
producers struggling with cost increases are seeking hikes of EUR 40/t for
standard PP grades, and the price wave still appears to have some way to go
before cresting. The compounding segment as usual is unlikely to see a similar
surge, but buyers undoubtedly will continue to see price hikes.


PVC: Even though caustic soda revenues remained highly
unsatisfactory, European PVC producers were unable to lift prices in April 2014.
Their calls for hikes of EUR 30/t were quashed by the renewed slight drop in the
monthly ethylene contract. The C2 notation has been on a steady decline over the
course of the past three months, strengthening the hand of processors, who were
able to secure slight rebates for all PVC grades reported by PIE, from base
material to compounds and pastes.


In May, the price of vinyl-based plastics could rise for the first time this
year, as the minute decline in this month's ethylene contract probably will no
longer serve as a justification for declines. On the contrary, both output and
inventory levels are relatively low, at a time when seasonal business - in the
construction sector especially - is starting to pick up. Although it is unlikely
that the calls of the larger producers will be accepted in full, prices will
probably rise this month.


PS: In reaction to the narrow EUR 15/t increase in April's
SM contract, prices for styrenic polymers rose only minimally. Producers were
only able to push through the entire SM increase where prices for PS and EPS
insulation grades had previously been very low. In most cases, notations gained
only slight momentum or rolled over - the latter was particularly true for
smaller volumes or speciality grades. The presence of cheap imports of ABS and
PS material curbed any upward momentum.


Demand was at a respectable level, despite the Easter holidays. The upswing
in building activity boosted demand for EPS insulation materials. A central
topic of discussion in the market was converters' impending switch to HBCD-free
products by mid-year.


May´s SM reference contract was fixed EUR 20/t higher, following on the heels
of the EUR 29/t rise in the benzene notation. Against this backdrop, styrenics
notations are sure to move higher, too.


PET: The prices of small- and medium-sized European PET
orders receded slightly in April, following the downward trend in PX. Customers
ordering larger volume lots had already received rebates in March, which meant
their prices mostly rolled over. Those looking for alternate suppliers were able
to procure low-priced offers from southern Europe, which competed with imports
from Asia. No longer able to withstand the pressures of the virgin market
decline, prices for high-quality rPET grades slipped slightly in April.


The market remains chronically oversupplied. However, since costs have
stabilised, prices could end up taking a breather in May before continuing their
downward slide. With a number of new large-scale plants set to start up in
Europe soon and demand expected to remain stable, the current oversupply is set
to worsen, further pressuring notations. In the long run, recyclate notations,
too, will be unable to withstand the general downward trend.

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