Price hikes come to a halt in mid-month / Producers still net reasonable margin gains / Slow start to demand / February likely similar
The European markets for standard thermoplastics started the new year slowly and on a rather indecisive note. Although PE producers swaggered into the arena with calls for triple-digit increases despite the stagnant cost base, notations generally settled somewhere between EUR 20/t and EUR 40/t higher. Even that provided them with reasonable margin gains. The picture was similar in the C3 chain, where propylene declined again slightly, by around EUR 13/t. With price hikes of around EUR 30/t, PP producers still managed to improve their margins. PVC producers, who really needed the additional margin padding, were not quite so successful, winning increases of only EUR 10-15/t for the base material. With hikes of EUR 60/t, PS suppliers were just about able to cover the rise in SM costs, but EPS producers did not even manage that.
Despite a number of production problems, output cuts and export activity, supply nevertheless tended towards a slight surplus. This was also an indication of sluggish business generally, resulting from a combination of extended Christmas holidays at converters, lethargic end-markets, high prices and cautious inventory management. Over the course of the month, there were occasional signs of business picking up but there was no real cause to break out the champagne.
With a rollover for ethylene, a minor increase of EUR 10/t for propylene and a further decline of EUR 40/t in the SM contract reference price, the dice have been cast for polymer prices in February. Although polyolefin producers still have unrealised hikes of EUR 70/t on the agenda and styrenics producers will try to improve their margins by pushing through a rollover, they are unlikely to be fully successful unless demand unexpectedly picks up.