11/25/2015

PIE - Polymer Price Reports

Standard Thermoplastics October 2015

PE: European PE suppliers in October again managed to defend
the high margins they have amassed during the course of this year. Across almost
the entire portfolio, they managed to resist buyers´ attempts to extract more
than just the fall in the cost of ethylene. The only exception was
import-dominated film grades of LLDPE (C4), where concessions ended up being
somewhat larger, albeit from a previously very high level. For European buyers,
LLDPE remained more expensive than LDPE, a result of the euro's ongoing weakness
and the disastrous EU import duties. Availability was affected by the latest
restrictions at the important production sites of Tarragona and Stenungsund.
However, since European notations are relatively high in the global context,
imports have started to appear again and were largely able at filling the
resultant gaps. This meant that the market was largely balanced, despite a
latent tendency towards tightness. Producers have already called for hikes of
EUR 50-80/t for November. However, with the exception of suppliers that are
genuinely short on stock, these demands appear more like wishful thinking.
Stable costs are pointing the way for polymer notations. The one uncertainty
remaining is the dependence on the rather haphazard imports. It is becoming
increasingly clear that the latter have become much more important since the
crisis earlier this year.


PP: European PP producers' hopes of hanging on to some of
their triple-digit cost relief for feedstock propylene in October remained
unfulfilled. However, they were happy to at least protect their margin of nearly
EUR 600/t, which on average is twice as high as was customary in pre-2015
Europe. Although they were aiming for more, converters had no choice but to
accept the fact that their suppliers passed on only the cost reduction. Buyers
of copolymer could even make slight margin gains of their own here and there.
Notations for PP compounds moved down as expected, due to the impact of lower C3
prices on indexed contracts. Despite problems specific to one large producer,
supply was sufficient on the whole. With costs low and C3 long, some producers
thumbed their nose at the required market discipline and ran their plants full
out. Even if the downward momentum has slowed - the latest decline in the
propylene reference contract came to just EUR 40/t - the laws of physics have
not been suspended. If producers' tactic of calling for a rollover - when their
actual goal is holding onto some of their cost advantage - pays off, they will
be ahead of the game. Converters, of course, can always cool their heels and
wait.


PVC: Most producers passed on the proportionate EUR 20/t
cost decline in their October business deals. For bulk orders of S-PVC the
concessions sometimes exceeded the fall in costs. Blends prices felt additional
pressure from the fall in the cost of additives, including titanium dioxide,
modifiers and plasticisers. The market was well supplied despite several planned
and unplanned outages of facilities producing base material. Looking towards
November, solely blends prices could continue to recede, following the ongoing
slide in additive costs. After the monthly C2 contract rolled over, the price of
base PVC will likely move sideways.


PS: Unable to escape the repercussions of the EUR 210/t
tumble in October's SM reference contract, styrenics notations took a
triple-digit nosedive. Still, the final extent of the declines varied widely. PS
producers in particular were able to leverage the rather tight supply situation
to pocket a large share of the cost reduction and improve their margins. Strong
demand from the construction sector - which was at its peak - also allowed EPS
insulation producers to grease their margins, albeit on a smaller scale. Many
ABS and EPS packaging material producers, however, had to pass on the full cost
reduction. The downslide is expected to continue into November, even if its pace
could slow somewhat. Pointing the way is November's SM contract, which fell by
EUR 30/t. Processors will continue to push for the full cost reduction, and
suppliers will find it difficult to offer up arguments for further substantial
margin improvements now that availability of ABS and PS has improved and - with
respect to EPS insulation - the construction season has come to an end.


PET: European PET producers failed to obtain any notable
margin gains in October. They only succeeded at lifting notations beyond the
cost increase in sales of small-volume lots or bottle-grade material. The fact
that supply was limited as a result of a range of maintenance turnarounds and a
decline in imports probed helpful to their endeavour. Looking towards November,
however, it seems likely that prices will once again start to decline. Already,
PX spot notations are pointing to a fall in composite costs, and once the
maintenance cycle comes to an end, supply is expected to improve - even if
imports to Europe should remain muted.

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